e a k - p e e k

Sn
Prime Entry Profit
(PEP) e-Book
Powerful Option Strategy
for the Active Trader
by
Wendy Kirkland
 Sneak-peak Prime Entry Profit- (PEP) e-Book

Powerful Call Option Trade Strategy

by

Wendy Kirkland

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 Copyright © 2015 by Wendy Kirkland

All right reserved. No part of this book may be reproduced, scanned or distributed
In any printed or electronic form without permission

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 Index

PEP Option (Long) Pattern Strategy .............................................. 4

Exponential Moving Average ......................................................... 4

ADX Lines ...................................................................................... 7

Average Directional Index .............................................................. 8

Percentage Price Oscillator ............................................................ 11

Trader's Mindset ............................................................................ 16

Chart Set-up ................................................................................... 17

PEP Pattern- Long ......................................................................... 19

First Pattern Stages For the Squeeze ............................................ 30

Profit Targets .................................................................................. 32

Which Option Expiration & Strike Do I Choose? ............................ 33

Trade Sample ................................................................................. 33

So What's Up With the ADX Indicator That's On Top of the PPO?. 35

PEP Strategy and Chatroom ........................................................... 36

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 PEP Option (Long) Pattern Strategy
The pattern defined in this e-book manual is a portion of the 6 patterns used in
the PEP trading program, but it is also a pattern that can be applied to other strategies,
perhaps one you are already utilizing.

So if you are interested in a new simple and easy to apply pattern-based-strategy

that signals explosive moves, read on.

This strategy uses 30 minute time frame charts and only a couple indicators for
entry and exits. It doesn't get any simpler or more effective than that.

The full PEP strategy book covers all the details, trading nuances and complete
chart set-up including indicators, oscillators, EMAs and pivot points to establish a
successful trading plan, including profit targets, stop loss, expiration and strike price
requirements as well as entry and exit signals. This e-book will briefly cover the basics
of 1 of the patterns discussed in PEP. An in depth discussion is available in the full
PEP manual if you'd like to understand more about the other patterns that pinpoint day-
trading these explosive Prime Entry Profit moves.

The PEP strategy is designed for the active trader who is interested in quick
moves, up and down, lasting from 1-2 days on average. The point is to capture the
exact moment the explosion takes place, where you enter and exit before a reversal
price change takes place.

Let's start with Exponential Moving Averages (EMA). Moving averages is a basic
concept and this is a good starting place.

Exponential Moving Averages

(EMAs)
There are numerous types of support and resistance and we will discuss several
of these as we proceed. One type of support and resistance lies with moving averages.
When we create a chart, we have the choice to set either Simple Moving Average
(SMAs) or Exponential Moving Averages (EMAs). For our purposes in this book, we will
be using the special EMA lines. The Fibonacci numbered lines-- 8, 13, 21, 34, 55, 89,
144, 233, 377 and 610 exponential moving averages.

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 I will add this note here for clarification. If you use stockcharts.com as your
charting service, they only go up to 600 EMA on their service, but 600 is close enough
to 610 for our chart reading.

When the EMAs are applied to a chart, they look like ribbons. You will be
amazed at how often these EMA lines absolutely nail the exact area of price movement.
If you have been trading for any period of time, you will have heard many traders use
20, 50, 100 and 200 EMAs. Notice that the 21, 55, 144 and 233 are not far off from
these numbers. I see it as fine tuning the numbers.

In the left hand corner of a chart, the notation will tell you which type of moving
averages (MAs) (either SMA or EMAs) are used and the price that moving average
reached.

If an equity is trading above any of the exponential moving averages (EMAs) that
are incorporated within the chart, watch what happens when the price reaches the
support of the EMA. Likewise, if it is trading below, watch what happens when it reaches
the resistance of the EMA. You will notice that the lines act as floors where the price
goes no further, ceilings where the price goes no higher, and general areas where the
price rests for a period of time.

As you become more familiar with the EMAs, you will notice that the 8, 13, 21
and 34 EMAs work as a short-term unit; the 55 EMA might be considered a very
important independent indicator and the 89, 144, 233, 377 and 610 EMAs work as a
long-term unit.

Let’s apply these Fib EMAs as our first addition to our chart.

Stockcharts.com Fig. 1

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 The chart above is a 30 minute chart for First Solar (FSLR). Take note of how the
8, 13, 21 and 34 EMAs move in tandem as the short-term unit I mentioned earlier. A
cross above and below each other is significant and we will delve into this further as we
proceed, but for the moment, look at the bigger picture of when the 8, 13, 21and 34
EMAs cross the 55 EMA, and then when they cross the larger-time frame unit of the 89,
144, 233, 377 and 610. These crosses above and below the large-time frame unit of
EMAs signify major trend changes. A cross above the 610 EMA can be a milestone.

I, also, mentioned the 55 EMA can work as an independent. I think of it as a line-

in-the-sand. Notice there was the period between October 23th and 27th where the 55
EMA provided a level of support (a floor) where the price was not able to break down
below it. The price dropped to touch this line several times, but could go no lower.

When the EMAs are lined up in downtrending-order like they were between
October 9th and October 16th, you can be sure the price will go lower, until the EMAs
start to curl and cross each other on the way up. So, too, as long as they are in
uptrending-order like they were between the 30th and the 31st of October, you can trust
the overall direction will be up until the short-term unit of EMAs cross over each other
and start heading downward.

Begin to rely on and trust your instincts as you look at the charts. You don't need
to have a financial background to be able to read and decipher what the charts are
telling you.

Trust you will absorb this information easily and will be able to apply it
successfully in your trading.

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The first indicator we'll discuss is the Average Directional Index (ADX). ADX
comes in two forms. The simple ADX line which shows momentum or the energy of a
move (without determining whether that move is up or down). The more complete ADX
adds two other lines which are directional lines, showing whether the momentum is
bullish (green) or bearish (red).

I will post charts that shows both types and then, we will concentrate on the ADX
with DI lines.

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 ADX Lines

Notice when the ADX line is heading up, there is energy behind the move. When
the line drops, energy is coming out of the move and when it flattens out the equity
usually is consolidating or trading in a straight line.

Chart Courtesy of Stockcharts.com Fig. 2

Next, I will add a chart with Directional Index lines.

Now take note of the times when the ADX line is heading up and when the +DI
(green) (bullish) line is in control by being on top. Also, note when the -DI (red)
(bearish) line is leading by being on top. Then, watch what happens to the trend when
the ADX line weakens by heading down or goes flat.

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Chart Courtesy of Stockcharts.com Fig. 3

Average Directional Index or ADX

Okay, here we go, hang on to the rails, the Average Directional Index (ADX)
determines the strength of a trend, whether it’s trending up or down or trading sideways.
As an oscillator, the ADX fluctuates between 0 and 100, but readings above 60 are
relatively rare. Low readings, below 20, indicate a weak trend and high readings, above
40 indicate a strong trend.

Studying the ADX you’ll note that the ADX indicator does not rate the trend as
bullish or bearish, but merely assesses the strength of the current trend. In other words,
a reading of 40 can indicate a strong down trend as well as a strong up trend.

To determine in which direction the trend is flowing or to indicate a change in

direction, two other lines are added to the graph. Usually two different colors, green for
bullish and red for bearish, they represent respectively a Positive Directional Index (+DI)
or Negative Directional Index (-DI).

As these green and red lines cross each other and the ADX trend line, we are
able to determine not only the strength of the trend, but in which direction it will head
before it fully takes place.

 When the green +DI crosses upward over the red -DI and/or the black ADX trend

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 strength line, we can expect the trend will be up.

 When the green +DI line, crosses downward and the red –DI moves upward and
crosses over the black ADX trend strength line, we can expect the trend to fall.

 On occasion it happens that the DI lines will touch each other prior to crossing
and they will act as resistance and will bounce off each other, resuming the
previous trend direction.

 There are other times that the DI lines braid as they swim up and down struggling
to be the dominant direction. When this happens the price most often goes flat
and trades in a tight range.

The ADX is special enough that it will be added twice to our chart. The basic
chart set up will be covered before long. We have one more indicator to cover, and then
we will create our chart template.

As these indicators are applied to our charts, their movement and the information
they impart will become crystal clear. Hang in there. These indicators are going to
create a picture that you will be able to spot as it is forming.

The default setting for ADX is 14 period and I am going to tweak this to 13 which
is a Fibonacci numbers.

Chart courtesy of Stockcharts.com Fig. 4

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 I will post the chart again without all the big text boxes so you can get a better
view of the information and how the different indicators work together. Notice that the
DI lines foretell a change in direction before the actual change, but on occasion, they
can braid, weaving back and forth as price goes flat because the two directions are
battling it out.

Stockcharts.com Fig. 5

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Chart courtesy of Stockcharts.com Fig. 6

This might seem like a lot of information to absorb. Take it slow. Before you
know it, your eyes will be circling around the chart in quick motions, gathering the
information that your mind’s eye will absorb and analyze instantly. Then it will slow and
zero in on the important portions. This analyzing ability comes rather quickly when you
spend just a little time looking at charts. One day they seem to be foreign and
confusing and within a short time, they become old friends that comfortably share their
story. Hang in there. It will happen!

Next, we will add the Percentage Price Oscillator (PPO).

Percentage Price Oscillator (PPO)

I present this oscillator as one of the main components of the Squeeze pattern
for the PEP strategy. For traders who are familiar with the MACD and prefer to use that
indicator instead of the PPO, they are welcome to do so. I prefer the PPO. The PPO is
similar to the MACD but uses a more complex, but more reliable formula; it’s based on
the percentage difference between two moving averages over a given period of time. It
uses two lines, one thicker and one thinner, to display its information as well as a series
of blocks located beneath the lines called the histogram.

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 The PPO is an indicator that either confirms or contradicts the signals given by
the special Fib exponential moving averages that we have inserted into our charts. As a
momentum indicator, it’s one of the simplest and most reliable indicators available.

The PPO is a lagging indicator, meaning it uses information based on a stock’s

past performance. This lagging indicator turns into a momentum oscillator and functions
by tracking the amount of difference between the short term moving averages and a
longer term moving average, often the 12-day MA and the 26-day MA. The results form
a line that oscillates above and below “zero,” without any upper or lower limits.

This equation is represented by a thick line. The other time period is included as
a reference point, seen as a thinner line. If the PPO is positive and rising, then the gap
between the referenced time periods widens.

 When the thicker line moves up, positive (bullish) momentum is building for that
underlying stock or index.

 When the thicker line moves downward, then the negative gap is widening, so we
see negative price (bearish) momentum.

 When the thicker line crosses upward over the thinner line, we see that as a
signal to buy. This buy signal will often confirm other buy signals depicted on the
chart.

 But, when the thicker line crosses the thinner line in a downward slope, we see a
signal to sell, depending on the option’s expiration time frame.

You’ll see two graphs within the PPO chart. One is formed by moving averages
and the other is a histogram, which notes what has transpired previously on a shorter
trigger exponential moving average (EMA).

The histogram is the bar chart along the bottom of the PPO graph. The size of
the bars fluctuate above and below the “zero” line. These bars are another way of
expressing the relationship between the PPO equation and an equation using a 9-day
exponential moving average.

 If the shorter moving average (the thicker, dark line) is above the longer moving
average (the thinner, lighter colored line), the PPO histogram will be above the
“zero” line, or positive.

 If the shorter moving average is below the longer moving average, the PPO
histogram will be below the “zero” line, or negative.

 The PPO histogram compares the PPO number equation with the 9-day EMA. If

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 the value of the PPO is greater than the 9-day EMA, the histogram will be above
the “zero,” or positive.

 If the value is less than the 9-day EMA, the histogram will be below the “zero,” or
negative.

Signals in the histogram to watch for:

1) Positive divergence that precedes a Bullish Moving Average crossover

on the PPO. A positive divergence (ever higher lows) in the histogram
indicates that the PPO is strengthening and could be on the verge of a
crossover.

2) Negative divergence (ever lower highs) that precedes a Bearish Moving

Average crossover. A negative divergence in the histogram indicates
that the PPO is weakening in momentum.

3) Broadly speaking, a widening gap indicates strengthening momentum

and a shrinking gap indicates weakening momentum. Usually, a change
in the histogram precedes any change in the PPO.

4) The main signal generated is a divergence on the histogram followed by

a moving average crossover.

5) Keep in mind that a centerline crossover on the histogram represents a

moving average crossover for the PPO.

The size of the histogram bars and the shape they create give visual clues,
representing the expected movement of the moving averages.

If you are feeling overwhelmed, just let this basic indicator information settle in,
we will get into the specifics and how to use the information when we apply the
indicators to actual trade set ups. Once you begin to absorb the basic information, you
can come back and reread the specifics. It is all part of the detail-layering-process.

The drawbacks or down-side to PPO’s histogram is that it is a second derivative,

based on the PPO’s equation of the price action of the underlying stock or index. The
further removed an indicator is from the underlying price action, the greater chance of a
false signal.

Because the histogram was designed to anticipate PPO’s signals, the temptation
exists to paddle beyond the wave, getting in too soon. But, by acting only on short-time
frame chart signals that have a confirmation before entry, you well have a great chance
for trading success. You will see this in action as we proceed. But, please, understand,

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the histogram signals need to be taken as part of a whole evaluation. Don’t be tempted
to plunge in on just the histogram information.

We are going to tweak the default PPO numbers to 13, 21, 8 (Fib numbers).

Chart courtesy of Stockcharts.com Fig. 7

As mentioned, the histogram blocks within the PPO are a leading aspect of the
indicator. Notice early on the 20th of October that the histogram suggested the rise
experienced on the 17th through the 20th was over and that a down move was going to
take place. The histogram blocks shortened and quickly crossed the zero line.

Study each indicator to see which one gave the first hint that a change was
forming. Then which one happened next. Which one followed?

Now that we have the PPO in place, we are going to add another ADX indicator.
Yes, we want two of them, one above the PPO and one below. This will be explained
later on. But for now, just know that the line-up of indicators is an important element to

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the PEP strategy, allowing us to ride a wave up and down

Chart courtesy of Stockcharts.com Fig. 8

This concludes the chart set-up for the Squeeze pattern outlines in this PEP e-
book. In the full strategy book there are a couple other indicators that are added to help
qualify stock candidates and to confirm successful entry and exits on the other chart
patterns. There are 5 additional trade patterns included in the full PEP strategy and
these indicators are necessary for them. The inclusion of 6 trade patterns gives a trader
opportunity to always find winning trades on a focused list of stocks with big moves.

Before we start our discussion on the specific pattern seen on the charts, give
me a minute to mention a Trader's Mindset.

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 Trader's Mindset
Have you ever had to give "tough love" to someone you cared for - to tell them a
truth that seems harsh but comes from a good place?

As a teacher/trader, I have to do this all the time.

Often, I have to tell traders to stop obsessing about their "limiting beliefs."

I also have been known to call our erroneous "Belief System" BS.

Traders say things like, "Wendy, my beliefs about failure are sabotaging me."

To which I cringe and reply, "Is it really about your limited belief? Or is it about a
limited vision for yourself?"

Thoughts like I am too old... too young... not educated enough ... poor health ...
too busy... too tired ... too broke ... and the list of self-defining, limiting beliefs goes on
and on.

Now, clearly, I'm painting a stark contrast. There is good reason to overcome bad
beliefs AND focus on our strengths. That combo is a one-two punch in personal
development.

But I do believe it's time we move past the silly idea that we have to quash all our
weaknesses, insecurities, doubts, limitations, and fears before we can proceed swiftly
on the path to greatness and contribution.

In fact, every high performer I know STILL has doubts and so-called "limiting
beliefs." If they didn't, they wouldn't be human, vulnerable, real. The issue isn't whether
we have them, but whether or not those beliefs win or our vision and growth-goals wins.
We need to work at refocusing our attention on possibilities and being open to breaking
through self-imposed boundaries.

So the challenge with working with new traders is to redirect their focus, broaden
their vision, give themselves permission to exert their true strength to achieve success
which leads to Financial Independence.

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 Any words you speak have a frequency, and the moment you speak them
they are released into the Universe. The law of attraction responds to all
frequencies, and so it is also responding to the words that you speak.

When you use very strong words, such as “terrible,” “can't” and “don't
have” to describe any situation in your life, you are sending out an
equally strong frequency, and the universal law of attraction must
respond by bringing that frequency back to you.

The law is impersonal, and simply matches your frequency. Do you see
how important it is for you to speak strongly about what you want, and
not to use strong words about what you don’t want?

Chart Set-up
The next chart is the set-up to use to begin to recognize the patterns for a quick
day-trade move. Below it I will post the lower portion of the chart that gives you the
exact parameters needed to duplicate the chart either at StockCharts.com or on your
charting service.

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Chart Courtesy of Stockcharts.com Fig. 9

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 The Chart Attributes on the image above shows the tweaked parameter numbers
that we will be using in the PEP strategy.

Let's move on to the pattern for entry and exit for these quick trades.

PEP Pattern - Long

We are going to discuss the first pattern of the 6 patterns included in the main
PEP strategy book.

The first pattern is the long Squeeze pattern. The Squeeze is a pattern I've
written about before. The more I trade it, the more I learn and discover about it. The
Squeeze goes through 7 distinct stages. The tradeable stage for this strategy is stage 4
of the 7 stages.

Let me describe what we are looking for and then I will add information about the
earlier stages.

For this pattern we are going to be using the ADX that is "below" the PPO
indicator. It is evident that PPO and ADX are individual indictors and have nothing to do
with each other. They are used independently in the information they share about the
equity's price movement. That said, some time ago, I discovered when placed together,
lined up as we have them, they create a unique pattern.

When an equity goes through a price drop of adequate size, the PPO crosses
over its signal line and heads down. At the same time, the ADX momentum line rises as
the bears show their strength. This movement in indicators create what I call the
Squeeze where the lines come close together.

At times this closeness is really tight and at other times, there is more space
between the lines. As we begin to look at charts with the Squeeze pattern forming, you
will quickly begin to recognize the pattern set-up.

I will circle the pattern on a few charts and then we will discuss the needed
elements for entry and exit to profit from the move.

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Chart Courtesy of StockCHarts.com Fig. 10

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Chart Courtesy of Stockcharts.com Fig. 11

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Chart Courtesy of Stockcharts.com Fig.12

I am sure you can already pick out the pattern on the chart. On the next chart, I
will leave it blank so your eyes begin to distinguish the squeeze areas without the help
of circles.

Look for the areas where the PPO and ADX come close together.

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Chart Courtesy of Stockcharts.com Fig. 13

Facebook (FB) has 4 squeezes on the chart above. Were you able to pick them
out?

Now that you recognize the squeeze pattern, go back over these few charts
again and pay attention to what happens when the PPO and ADX lines begin to push
away from each other and when the PPO crosses back up and over its signal line.

When the PPO and ADX lines push away from each other and PPO crosses over
the signal line, Price moves up. An extended upward move happens after the ADX +DI
crosses over the -DI line. This is our entry.

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 Entry prior to a +DI cross can result in weakness developing and a resqueeze as
the PPO crosses back down.

Chart Courtesy of Stockcharts.com Fig. 14

Let's see what happens on June 16th if the lines push away from each other and
if PPO crosses up and over the signal line and the +DI crosses over the -DI line.

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Chart Courtesy of Stockcharts.com Fig. 15

As seen on the chart above, the line briefly pushed away (very-very quick on
open) and then momentum moved in and the ADX line promptly turned up as the +DI
crossed the -DI line. It isn't often that the ADX line turns this quickly but it is a great
example of strength and a momentum build-up in the trade.

Let's look at a few other charts that show this quick pop up and then I will discuss
the squeeze stages that lead up to this explosive move and then we will focus on when
to exit the trade.

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Chart Courtesy of Stockcharts.com Fig. 16

Notice what happens to price when the +DI lines crosses the -DI line and really
takes control by remaining above the -DI line

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Chart Courtesy of Stockcharts.com Fig. 17

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Chart Courtesy of Stockcharts.com Fig. 18

By waiting for a +DI cross, you would have been kept out of a false trade on May
28th. June 1st through the 5th was the big move.

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Chart Courtesy of STockcharts.com Fig. 19

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Chart Courtesy of Stockcharts.com Fig. 20

Notice from June 5th to the 9th that the +DI did not cross the -DI line despite the
fact that there was 3 squeeze patterns that formed. It wasn't until June 10th that the
+DI finally stepped up and took control. It was then that Price started to gain strength.

Let's move on to the first stages of the squeeze pattern and then we'll discuss
exit signals.

First Pattern Stages that Form the Squeeze

What creates a Squeeze?

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 1. The PPO and ADX black (thick) lines come close together.
2. The PPO line crosses up over its signal line and the ADX black (thick) line
pushes away from the PPO line as if it is repulsed by it
3. As the Squeeze continues to unfold, the PPO and ADX lines will move
further and further away from each other
4. It is only when the +DI line turns up and eventually crosses over the –DI
line that the price will “really” move upwards. The PPO line cross itself
can only take the Price so far. If the +DI falters and doesn’t continue by
taking control, the squeeze is likely to fail and resqueeze because the
price will go flat or head back down.

Stage 4 is our entry point. Once the +DI crosses the -DI line after the PPO has
crossed up and over the signal line, we can enter on this confirmation signal with a level
of assurance that there will be a quick burst upward.

There are times that the pattern will falter and resqueeze. This is seen not only
when the +DI crosses back over the -DI but also when the PPO crosses down over the
signal line.

A cross down of the PPO line over its signal line is a line-in-the-sand stop exit.
Over the next day or two, the PPO may cross up again, but it is better to take a small
loss and then reenter when the equity confirms again with a PPO and +DI cross up.
Often as an equity starts to move, there will be some waffling of the DI lines, sometimes
they braid back and forth before the +DI takes control, but when the PPO crosses down
a trader is wise to take a small loss that will be quickly recouped when Price does make
an upward move.

Now you might be wondering what I mean by line-in-the-sand. Loss and risk
management are subjective, meaning each trader has his own level of comfort. Some
traders can't handle more than a 15% loss and other are okay with 50% and many
others fall somewhere in between. For me, a PPO cross down means the price's
direction has turned against the direction of the original trade and it is time to exit.

There are times when the PPO line will drop and test the signal line as an area of
support, which is why I hold out for an actual cross down with a some white space
between the lines. If your tolerance for loss is less than what comes with a PPO cross
down, then stick with your own loss-comfort-level. There will be other profitable trades
to recover the amount lost.

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 Profit Targets
We've discussed stop losses which is used when the trade turns against you
before you have earned a profit. So how do you know when to close the trade once you
have earned a profit?

Some traders set a percentage gain. Example: on each trade they would like to
earn 25% on their total investment. If they pay a premium of .80 per share or $80 per
contract and purchase 8 contracts for $640, they will set a sell order for $1 per share.
On this trade, they will make a profit of $20 per contract or $160 on their 8 contracts.

If a profit percentage appeals to you, you can put in a sell order at the same time
that you place your original trade order.

As a matter of fact, you can set a stop as well as a profit target at the same time
by using a "one-cancels-other" trade order (OCO).

Another way to take profit and close a trade is to set a trailing stop. This is a
service brokers provide where the sell order floats a certain percentage below the
current price. You set the percentage. If price drops to hit the stop amount, the broker
will close the trade.

There are two disadvantages to trailing stops. One, if you set the amount too
close to the current price, market-makers can manipulate price, trigger the trailing stop
and soon price will recover and continue to head up. Two, if price gaps down, it can
jump right over your trailing stop amount and the trade won't be closed as you expected.

If a gap down should happen, you will have to cancel the trailing stop and place a
sell order to close the trade.

Another profit target method is to evaluate the chart for recent resistance areas
and set a profit target just below that level if the amount is satisfactory for an adequate
profit. Or, perhaps, you feel that price will cruise through the closest resistance and
your profit target will be the next resistance area.

Traders who are able to monitor the charts can watch for the explosive price
burst to take place and continue to watch for weakness to set in. Weakness can be
seen as a couple of red candles or a bearish candle pattern formation, and again, a firm
signal to close is a PPO cross down.

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 It is important to know, we are not trading the full movement of the Squeeze
pattern as it unfolds going through all its stages, we are aiming to capture the initial pop
as the PPO and +DI cross. Get in and get out is the trade goal.

Another way to catch building weakness in the 30 minute chart is to step down to
a 15 minute chart once the trade moves into profit. The 15 minute time frame PPO will
cross down before it does on the 30 minute chart and will suggest in all likelihood the 30
minute PPO will cross down if price stays on its current course, so you would exit on the
15 minute signal.

Which Option Expiration & Strike Do I Choose?

After years of trading, I've figured out it only takes a equity price move of
approximately 2.5 to 4% for a weekly option premium to double. Every trade won't end
up being a double or higher, but it often does. Looking at it a different way and this
gives me a level of assurance, it only takes a move of 1.25 to 2% to earn 50% on my
trade and that can easily happen in a day or two with the PEP strategy.

Since most trades last 1-3 days tops, I select a weekly option that expires a full
week to 2 weeks out. This gives extra time for the trade to develop or go flat and not be
effected by accelerating time decay. The extra time gives a buffer.

I often select the strike price that is at-the-money. This is usually the strike that is
one out-of-the-money and it has extra leverage as it moves in-the-money.

As seen in the charts we have looked at, I find this strategy works best on the 30
minute chart. The pattern and strategy can be applied to other time frames, longer and
shorter term, but if you try another time frame chart, I suggest you paper trade or virtual
trade to test the moves and the time the trades take within that time frame.

Trade Sample
3M (MMM) had a +DI cross on the 16th of June and price started to rise. On the
17th, the Fed released the minutes from their meeting at 2:00 pm. Price dropped before
the news release and promptly rose afterwards.

A trader could have closed the trade when price started to drop before the news
and the trade would have closed at about even once fees were covered. The PPO line

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crossed down over its signal line in this pre-news adjustment. A trader, if he didn't sell
before the drop, could have held to see if price would recover as it often does after the
news was digested by traders.

In this case there was very little white space between the PPO lines and within
60 minutes the lines turned up and price recovered, moving to daily highs. The next
day price gapped up and continued to rise.

Midday, price popped above 600 EMA and began to weaken and it was time to
take profit.

This trade was opened on the 16th and closed on the 18th.

On the 16th of June, the premium for the June 4th week expiration that expired in
11 days was .65 when the trade was opened. On the 18th, when the trade was closed
the bid premium was 2.69. The gain on this trade was 2.04 per share or $204 per
contract. This was a gain of 314%. This profit was earned on a approximately 3% rise
in the stock's price.

The chart below illustrates the trade.

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Chart Courtesy of Stockcharts.com Fig. 21

The strategy to trade the Squeeze entry signal is as easy as this. Enter on the
+DI confirmation and exit either on a stop of PPO cross down or when it hits your profit
target.

So What's Up With the ADX Indicator That is on Top of

the PPO?
I wanted to share with you the full indicator set-up. The second ADX indicator is
used along with the PPO to point out short (Put) entries.

WendyKirkland.net Page 35
 Short entries create a pattern that is as clear as the Squeeze to see and trade. It
is different but as recognizable. Space in this e-book doesn't allow for full details but the
patterns are fully illustrated and discussed in the main PEP strategy manual.

PEP Strategy and Chatroom

The PEP strategy covers 6 day-tradeable or short-term patterns (3 long and 3
short). In addition to the strategy manual, there is a dedicated member chatroom where
specific trades are posted as they happen so that you can follow along, enter and exit,
as you learn and hang out with trading friends who are interested in the same type of
fast pace trades.

If you have never participated or considered the benefits of a trading chatroom

some of the advantages are listed below.

* Live trading room environment

* Participate in trades as they happen

* Trade candidates presented at opportune trade moment. Find the hottest stocks on
the move.

* Trades presented with highest probability set-ups

* Questions and answers with experts

* Individual trader selects their total investment based on their individual trade account
balance and risk tolerance and participate in as few or as many of the trades as
they like.

* Learn pattern recognition, pivot points, Fibonacci trading

* Powerful set-ups that are easy to learn and repeat each day

* Take control of your own financial future

* Support for traders who are new to investing

* Renewed confidence for those recovering from a bad trading experience

* Recovery from trade-burnout

WendyKirkland.net Page 36
* Resources that reinforce learning levels

* Bi-monthly Newsletter/Videos

* Free content (beginner's classes, newsletter, trader mindset)

* Member's only content

* Trading is a business. The live chatroom is like showing up at office to take care of
business.

* Calendar of events- economic reports, scheduled news

* Encourages members to stick to trading plan

* Courage to pull the trigger

* Live charts on your monitor

Further information on the PEP strategy program, membership chatroom and

other strategy books and their candidate newsletters can be obtained by calling
1/888/233-1431.

On the other hand, if you are using another teaching-trader’s strategy, you will
most likely be able to adapt the PEP Squeeze pattern information to what you are
already using to trade.

The trading opportunity that this easy to read pattern provides is a superb gift to
small retail traders, especially when it comes to being able to trade options on the more
expensive stocks.

I wish you trading success and financial independence!

Wendy Kirkland

WendyKirkland.net Page 37