Focus on Kase

Studies, Analytics and Forecasting

Presented by
Cynthia A. Kase, CMT, MFTA
Kase and Company, Inc. CTA

Copyright Kase and Company, Inc. All rights reserved

 Session Agenda

• Part One, 2:00-2:45

– Introduction
– KaseSwing
– Waves Analysis
• Part Two, 2:45-3:05
– Trading – Filtering and Entry
• Part Three, 3:05 – 3:20
– Trading – DevStops and Candles
• Break, 3:20-3:30
• Part Four, 3:30-4:10
– Trading – KaseMDA and Momentum Exits
– Trading and Portfolio Management
• Part Five, 4:10 – 5:00
– Overview of Kase Forecasting Methods
– Outlook for Various Markets

Copyright Kase and Company, Inc. All rights reserved 2010 2

 KaseSwing

Copyright Kase and Company, Inc. All rights reserved

 KaseSwing may be used for….

• Picking Waves
• Useful for Entries and Exits
• Identifying Geometric Formations
• Determine Peaks for Momentum Divergence
• Count Bars for Gann or Fibonacci Number

Copyright Kase and Company, Inc. All rights reserved 2010 4

 KaseSwing 1, 2 and 3
JNJ Daily

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 KaseSwing 1, Insides On and Off
JNJ Daily

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 KaseSwing 1, Insides On with Labels
LCM10 Daily

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 KaseSwing 2 with Date/Time Labels
SPX Index 60-Minute

Copyright Kase and Company, Inc. All rights reserved 2010 8

 KaseSwing 2 with Bar Counts (Beta)
GCZ0 Weekly

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 KaseSwing 3 with All Swing Labels
SPX Index Daily (Bar Count Beta)

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 GE Daily

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 KaseSwing 1 and 3
GE Daily

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 Adding KaseSwing Number Labels
GE Daily

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 Waves Analysis and Calculations

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 Forecasting is different from
Market Timing
• Forecasting
– Market going up for down?
– Opposite direction first?
– Where are the targets?
– Where is support or resistance?
– What are key threshold or decision points?
• Market Timing (Trading)
– When to buy or sell
– When to take profit
– When to cut losses
– When to add or subtract from a position

Copyright Kase and Company, Inc. All rights reserved 2010 15

 Wave Basics or Kase Wave Analysis
What Is a Wave and Wave Cycle
• Impulse Wave = XY
Down Cycle
• Corrective Wave = YZ
• Wave Cycle = XYZ
Up Cycle

Invalid and Irregular Waves

Up wave = Z lower than X

Down wave = Z higher than X

Copyright Kase and Company, Inc. All rights reserved 2010 16

 Calculating Targets and Proportions
Impulse Projections “X- Y”
Multiplier Extension Name Notation
0.62 ( 1 - 0.38 ) Smaller than S
1.00 Equal to E
1.38 ( 1 + 0.38 ) Intermediate I
1.62 Larger than L
2 * 1.38 eXtended C ( or 3 ) XC
Corrective Projections “Z- Y”
Math Multiplier Extension Name Notation
Φ 1.618 Phi to First Power P1
Φ^2 2.618 Phi to Second Power P2
Φ^3 4.236 Phi to Third Power P3

Also…. 3
Y /X 2

Copyright Kase and Company, Inc. All rights reserved 2010 17

 Wave Projections
T Daily X Y Z S E I L 3X XC
23.78 25.66 23.88 25.0 25.8 26.5 26.9 29.9 29.1

3X (25.66 3/23.78 2)=29.87

Within 2%
XC (25.66–23.78)*2.764=5.20
23.78+5.20=28.98
Within 0.58%
I (25.66–23.78)*1.38 = 2.59
23.88+2.59=26.47
Within 0.22%

Copyright Kase and Company, Inc. All rights reserved 2010 18

 Wave Projections
T Daily

X Y Z S E I L 3X XC P1 P2 P3
23.88 25.18 24.5 25.3 25.8 26.3 26.6 28.0 28.1 25.6 26.3 27.4

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 Wave Projections
T Daily
X Y Z S E I L 3X XC P1 P2 P3
23.88 26.41 25.79 27.4 28.3 29.3 29.9 32.3 32.8 26.8 27.4 28.4

X Y Z S E I L 3X XC P1 P2 P3
23.78 25.66 23.88 25.0 25.8 26.5 26.9 29.9 29.1 26.8 28.5 31.4
23.88 25.18 24.5 25.3 25.8 26.3 26.6 28.0 28.1 25.6 26.3 27.4
" 26.41 25.79 27.4 28.3 29.3 29.9 32.3 32.8 26.8 27.4 28.4
Copyright Kase and Company, Inc. All rights reserved 2010 20
 Wave Projections
TRV Daily

X Y Z P1 P2 P3
47.69 50.05 47.77 51.5 53.7 57.4
48.17 51.64 48.46 53.6 56.8 61.9
48.46 51.05 49.53 52.0 53.5 56.0

Copyright Kase and Company, Inc. All rights reserved 2010 21

 Wave Projections
TRV Daily
X Y Z S E I L 3X XC P1 P2 P3
51.22 50.03 50.76 50.0 49.6 49.1 48.8 47.7 47.5 49.6 48.8 47.7

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 Wave Projections
MCD Daily

X Y Z S E I L 3X XC P1 P2 P3
65.31 71.54 68.59 72.4 74.8 77.2 78.7 85.8 85.8 73.4 76.3 81.1
68.59 73.33 71.04 74.0 75.8 77.6 78.7 83.8 84.1 74.7 77.0 80.7
" 74.07 72.55 75.9 78.0 80.1 81.4 86.4 87.7 75.0 76.5 79.0

Copyright Kase and Company, Inc. All rights reserved 2010 23

 Wave Projections
EURUSD Daily

X Y Z S E I L 3X XC P1 P2 P3
1.1877 1.2487 1.2152 1.252 1.274 1.297 1.311 1.374 1.378 1.266 1.298 1.349
" 1.2722 1.2523 1.305 1.337 1.369 1.389 1.460 1.486 1.284 1.304 1.337
" 1.3334 1.2588 1.349 1.405 1.460 1.495 1.495 1.495 1.379 1.454 1.575
" 1.3647 1.3000 1.406 1.472 1.538 1.578 1.781 1.775 1.396 1.456 1.552
1.2152 1.2722 1.2523 1.288 1.309 1.331 1.345 1.395 1.410 1.284 1.304 1.337
1.2588 1.2919 1.2644 1.285 1.298 1.310 1.318 1.361 1.356 1.309 1.336 1.381
" 1.3647 1.3000 1.362 1.401 1.439 1.463 1.586 1.578 1.396 1.456 1.552

Copyright Kase and Company, Inc. All rights reserved 2010 24

 Wave Projections
EURUSD Daily

X Y Z S E I L 3X XC P1 P2 P3
1.1877 1.2487 1.2152 1.252 1.274 1.297 1.311 1.374 1.378 1.266 1.298 1.349
" 1.2722 1.2523 1.305 1.337 1.369 1.389 1.460 1.486 1.284 1.304 1.337
" 1.3334 1.2588 1.349 1.405 1.460 1.495 1.495 1.495 1.379 1.454 1.575
" 1.3647 1.3000 1.406 1.472 1.538 1.578 1.781 1.775 1.396 1.456 1.552
1.2152 1.2722 1.2523 1.288 1.309 1.331 1.345 1.395 1.410 1.284 1.304 1.337
1.2588 1.2919 1.2644 1.285 1.298 1.310 1.318 1.361 1.356 1.309 1.336 1.381
" 1.3647 1.3000 1.362 1.401 1.439 1.463 1.586 1.578 1.396 1.456 1.552

Copyright Kase and Company, Inc. All rights reserved 2010 25

 Detail of Wave A
GE Daily

X Y Z S E I L 3X XC P1 P2 P3
13.75 15.35 14.36 15.3 16.0 16.6 16.9 19.1 18.8 16.0 17.0 18.6

Copyright Kase and Company, Inc. All rights reserved 2010 26

 Detail of Wave a/A
GE 60-Minute

X Y Z S E I L 3X XC P1 P2 P3
13.75 14.31 13.81 14.2 14.4 14.6 14.7 15.5 15.4 14.6 15.1 15.9
14.57 14.99 14.78 15.0 15.2 15.4 15.5 15.9 15.9 15.1 15.3 15.7

Copyright Kase and Company, Inc. All rights reserved 2010 27

 Detail of Wave C
GE Daily

X Y Z S E I L 3X XC P1 P2 P3
14.25 14.81 14.31 14.7 14.9 15.1 15.2 16.0 15.9 15.1 15.6 16.4
" 15.56 15.21 16.0 16.5 17.0 17.3 18.6 18.8 15.8 16.1 16.7
15.97 16.47 16.08 16.4 16.6 16.7 16.9 17.5 17.4 16.7 17.1 17.8

Copyright Kase and Company, Inc. All rights reserved 2010 28

 More Detail of Wave C
GE Daily

X Y Z S E I L 3X XC P1 P2 P3
15.21 16.0 15.81 16.3 16.6 16.9 17.1 17.7 18.0 16.1 16.3 16.6
" 16.31 15.97 16.6 17.1 17.5 17.7 18.8 19.0 16.5 16.9 17.4

Copyright Kase and Company, Inc. All rights reserved 2010 29

 Gap Projection with Candlesticks
GE Daily

Made $17.29 on 10/08

Projection is 17.37

15.79

Pseudo Harami Star

with Hammer

14.24
X Y Z S E I L 3X XC P1 P2 P3
13.75 14.31 13.81 14.2 14.4 14.6 14.7 15.5 15.4 14.6 15.1 15.9
" 15.35 14.36 15.3 16.0 16.6 16.9 19.1 18.8 16.0 17.0 18.6
14.57 14.99 14.78 15.0 15.2 15.4 15.5 15.9 15.9 15.1 15.3 15.7
14.25 14.81 14.31 14.7 14.9 15.1 15.2 16.0 15.9 15.1 15.6 16.4
" 15.56 15.21 16.0 16.5 17.0 17.3 18.6 18.8 15.8 16.1 16.7
15.97 16.47 16.08 16.4 16.6 16.7 16.9 17.5 17.4 16.7 17.1 17.8
15.21 16.0 15.81 16.3 16.6 16.9 17.1 17.7 18.0 16.1 16.3 16.6
" 16.31 15.97 16.6 17.1 17.5 17.7 18.8 19.0 16.5 16.9 17.4
Copyright Kase and Company, Inc. All rights reserved 2010 30
 Calculating Retracements
Retracement Target Z = Y+/- ((Retrace %/100)*(Y-X))
Retrace % = 100*(Y-Z)/(Y-X) YZ “Retraces” XY
Percent Provenance
21 Fibonacci
33.3 Combined
CLZ0 Daily Retracements
38 Phi
50 Combined
62 Phi
66.6 Combined
89 Fibonacci

Calculating Target
79.75 – (0.62*(79.75 – 72.35))
79.75 – (0.62 * 7.4)
79.75 – 4.59 = 75.16

Calculating Percent
100*(79.75 – 75.1)/(79.75-72.35)
100* (4.65/7.4) = 0.628

Copyright Kase and Company, Inc. All rights reserved 2010 31

 Calculating Retracements for a Forecast
GCZ0 Daily

From: 1048.2 1089.9 1127.8 1161.2 1172

21% 1224 1233 1241 1248 1250
38% 1186 1202 1216 1229 1233
50% 1159 1180 1199 1216 1221
62% 1133 1159 1182 1203 1209
78% 1097 1130 1159 1185 1194
89% 1073 1110 1144 1173 1183

The market may be tough but I slept like a baby last night – woke up every hour and cried.
Copyright Kase and Company, Inc. All rights reserved 2010 32
 Filtering and Entry

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 KaseSwing Entry (1)
GE Daily

Swing Low Taken Out

Sell Short

Swing Low
Sell Short When Taken Out

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 KaseSwing Entry (2)
AAPL Daily

Swing High
Buy When Overcome

Swing High Overcome

Buy

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 KaseSwing Entry (3)
EURUSD Daily

Swing Low Taken Out

Sell Short

Swing Low
Sell Short When Taken Out

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 Synthetic Longer Bar Length

• Combines last X (default 5) bars to create

synthetic longer bar length

Daily Synthetic Weekly

5B B
4B
5A A
2B 3B
3A 4A
1B
2A
1A

Copyright Kase and Company, Inc. All rights reserved 2010 37

 Kase Permission Stochastic and Function
• Kase Permission Stochastic applies Stochastic to synthetic
longer bar
– Permission Long, when
• Oversold
• Neutral and K>D
– Permission Short
• Overbought
• Neutral and K<D
– Triggers earlier than longer bar length on higher time frame chart

• Kase Permission Function plots as On/Off Histogram

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 KaseSwing Entry (4)
GBPUSD Daily

Swing Low Taken Out

Sell Short (8/18/10)

Swing Low
Sell Short When Taken Out

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 Weekly Stochastic Filter
GBPUSD Weekly

7 trading days late

Slow Stochastic
Crossover = Permission Short on 8/27/10

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 Kase Permission Stochastic Filter
GBPUSD Daily

Swing Low Taken Out

Permissioned Short
on Higher Time Frame
Sell Short

Swing Low
Sell Short When Taken Out
and Filtered Short

Kase Permission Stochastic

Crossover = Permission Short on 8/12/10

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 Kase Permission Function Filter
GBPUSD Daily

Swing Low Taken Out

Permissioned Short
on Higher Time Frame
Sell Short

Swing Low
Sell Short When Taken Out
and Filtered Short

Permission Stochastic
Crossover = Permission Short

Permission Function Shows Long Permission as Green and Short as Magenta

Copyright Kase and Company, Inc. All rights reserved 2010 42

 KaseSwing Entry (5)
GE Daily

Swing High Overcome

Buy (7/13/10)

Swing High
Buy When Overcome

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 Weekly Stochastic Filter
GE Weekly

3 trading days late

Slow Stochastic
Crossover = Permission Long on 7/16/10

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 Kase Permission Stochastic Filter
GE Daily

Swing High Overcome

Permissioned Long
on Higher Time Frame
Buy

Swing High
Buy When Overcome
and Filtered Long

Kase Permission Stochastic

Crossover = Permission Long on 7/9/10

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 Kase Permission Function Filter
GE Daily

Swing High Overcome

Permissioned Long
on Higher Time Frame
Buy
Swing High
Buy When Overcome
and Filtered Long

Permission Stochastic
Crossover = Permission Long

Permission Function Shows Long Permission as Green and Short as Magenta

Copyright Kase and Company, Inc. All rights reserved 2010 46

 KEES – Kase Easy Entry System
Three Basic Principles

1. 2/3rds Momentum Xovers Long or Short

2. Permission by Filter and/or Pattern
3. Second Signals

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 KEES Filtered Entry Signals (1)
GBPUSD Daily

Pullback That Holds

1st Sell Previous Swing High

2nd Sell
Gets in One Bar Earlier

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 KEES Filtered Entry Signals (2)
GE Daily

2nd Buy

1st Buy
Pullback That Holds Previous Swing Low

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 KEES Filtered Entry Signals (3)
GOOG Daily

Pullback

2nd Buy Consecutive Buy

1st Buy

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 KEES Filtered Entry Signals (4)
S&P 500 Index Daily

Pullback

2nd Buy

Consecutive Buy
1st Buy

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 KEES Filtered Entry Signals (5)
TWX Daily

1st Sell
New Low and
2nd Sell
Consecutive Sell

Pullback
and 1st Buy

Copyright Kase and Company, Inc. All rights reserved 2010 52

 Kase DevStops
and Filtered Candlesticks

Copyright Kase and Company, Inc. All rights reserved

 Four Stop Levels
• Warning Line
S&P 500 Index
• DevStop 1
– Use after danger signs
– Use after partial exit
• DevStop 2
– Use when before trade is profitable
– During uncertain conditions
• DevStop 3 - Default stop
• Scale out using combinations
S&P 500 Index

10 Years Crude Oil TRD

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 Kase DevStops
CVX Daily

Dev3 (3.6 StdDev)

Dev2 (2.2 StdDev)
Dev1 (1.0 StdDev)

Warning line (average)

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 Kase DevStops
MCD Daily

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 Kase DevStops
BA Daily

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 Kase DevStops
BA Daily

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 Kase DevStops
SPX Index

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 Kase DevStops
SPX Index

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 Using Kase DevStops for Forecasting
Follow Through after Warning Line Hit

Example Table
Percent Chance of Hitting Next Stop
Hit/Hit Warn Dev1 Dev2 Dev3 Dev4.5
Dev1 85
Dev2 70 82
Dev3 61 72 87
Dev4.5 52 62 75 86
Dev6 44 51 62 72 83

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 Candlestick Patterns – False Signals

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 Filtering Candlesticks with Momentum

• Most turns preceded by a candlesticks

• Candlesticks often not followed by turn
• Filter with OBOS
– Bearish when overbought
– Bullish when oversold
• Use on daily and longer
• Accelerate stops
• Use in forecasting

Copyright Kase and Company, Inc. All rights reserved 2010 63

 Kase Filtered Candlesticks Identify

• Harami Line and Star

• Morning and Evening Star

• Piercing and Dark Cloud Cover

• Bullish and Bearish Engulfing

• Hammer and Hanging Man

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 Kase Filtered Candlesticks
NG Continuous Daily

Stochastic

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 Accelerating Stops:
Completing and Confirming Patterns
• “Completed” usually requires close against Harami Line midpoint
• “Confirmed” usually requires a close against the previous open
• Engulfing lines are by definition completed and confirmed
• Piercing patterns, Dark Cloud Covers by definition are not confirmed

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 Harami Line and Star
GE Weekly with Completion Point

Completion = 15.5
Confirmation = 14.97

Stochastic

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 Dark Cloud Cover and Hanging Man
GE Daily with Confirmation Point

Confirmation = 11.43

Stochastic

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 Harami Line and Star and Piercing Pattern
AAPL Weekly with Confirmation Points

Completion = 10.49
Confirmation = 10.66 Confirmation = 10.77

Stochastic

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 Bullish Hammer
Rough Rice Daily with Confirmation Point

Confirmation = 10.23

Stochastic

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 Morning Star
CVX Weekly with Confirmation Point

Completion = 62.9
Confirmation = 66.59

Stochastic

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 Bearish Engulfing Line
AAPL Weekly

Stochastic

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 Hanging Man
IBM Daily

Stochastic

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 StatWare™ for Bloomberg
Free Fully Functional Trial One Month Trial
Enable Trial, Download Manual Signup for Lessons
and Watch Training Videos at KASE<GO>

Weekly Forecasts on Crude Oil and Natural Gas

Enable Free Four Issue Trial and Get Sample Forecasts at FKST <GO>

KASE<GO> Kase and Company, Inc. CTA

223 N Guadalupe St. PMB 540
FKST<GO> Santa Fe, NM 87501
www.kaseco.com (505) 237 - 1600 (Call Center)
www.kasestatware.com (866) 526 - 2350 (Fax)

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 Kase MDA and Momentum Exits

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 Swing Exit
EURUSD Daily

Alternate Stop Placement

Swing Low Taken Out Based on Average Size of last few Swings
Sell Short Alternate Exit when Taken Out

Stop Placement
Exit when Overcome

Swing Low
Sell Short When Taken Out

Copyright Kase and Company, Inc. All rights reserved 2010 76

 Swing Exit
GE US Equity Daily

Swing Low Taken Out

Sell Short Alternate Stop Placement
Based on Average Size of last few Swings
Alternate Exit when Taken Out

Stop Placement
Exit when Overcome

Swing Low
Sell Short When Taken Out

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 Swing Exit
AAPL US Equity

Alternate Stop Placement

Based on Average Size of last few Swings
Alternate Exit when Taken Out

Swing High
Buy When Overcome

Stop Placement
Exit when Taken Out
Swing High Overcome
Buy

Copyright Kase and Company, Inc. All rights reserved 2010 78

 Momentum Divergence Signals

Bearish - Higher or equal high in price and lower or equal high in momentum.
Bullish - Lower or equal low in price and a higher or equal low in momentum.

CL Daily Continuous CL Daily Continuous

Bullish Divergence Bearish Divergence

KasePO

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 79

 Kase Momentum Divergence Algorithm
KaseMDA – Automatically Identifies Divergences

• Draws trend lines for divergences on price and momentum

– Red lines for KaseCD
– Green lines for KasePO
• Algorithm developed to filter divergences properly using:
– Slope filter
– Line of sight
– Tolerance
– Bridging and Take Outs
• Will be available as study for use with other non-proprietary
momentum indicators on Bloomberg

Copyright Kase and Company, Inc. All rights reserved 2010 80

 Kase Momentum Indicators

• Look at ratio of logarithmic price movement to volatility

• No. of standard deviations of excursion
• Use variable cycle lengths

• Based on 2 sigma idea

• Uses range and volatility, not price

Copyright Kase and Company, Inc. All rights reserved 2010 81

 Momentum Predicts Turns

How Well Indicators Predict Turns

Indicator Warn Dev1 Dev2 Dev3 Close >>
RSI 89% 70% 46% 26% 18%
M ACD 90% 72% 52% 30% 22%
Stoch 89% 68% 46% 26% 18%
KasePO 92% 75% 54% 31% 22%
KaseCD 92% 75% 53% 30% 21%
PeakOut 86% 70% 53% 47% 34%
KCDpeak 73% 51% 43% 40% 34%

Copyright Kase and Company, Inc. All rights reserved 82

 Kase PeakOscillator (KPO)

• Similar to simple
oscillator, except uses
serial dependency
• Difference between
degree of trend up versus
down

KasePO

Copyright Kase and Company, Inc. All rights reserved 2010 83

 KaseCD (KCD)

• Is to MACD as
PeakOscillator is to
Oscillator
• KaseCD (KCD) =
PeakOscillator - SMA
PeakOscillator

KaseCD

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 Kase Divergence Study
As Published in “The Two Faces of Momentum”
Cynthia A. Kase
SFO Magazine – October 2003

• Kase 77% - Traditional 52% for all turns

• Catches 50% more turns
• Kase 10% - Traditional 30% for big turns

Copyright Kase and Company, Inc. All rights reserved 2010 85

 KasePO, KaseCD and RSI
ESM0 Daily, Apr/May 2010

KasePO

KaseCD

RSI RSI Misses Turn

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 KasePO, KaseCD and RSI
NG Daily Continuous, Aug/Sep 2009

KasePO

KaseCD

RSI RSI Misses Turn

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 KasePO, KaseCD and RSI
CL Daily Continuous, Jun/Jul 2006

KasePO

KaseCD

RSI

RSI Misses Turn

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 KasePO, KaseCD and MACD
ES Daily Continuous, Feb/Mar 2009

KasePO

KaseCD

MACD MACD Misses Turn

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 KasePO and Stochastic
CL Daily Continuous, Dec 2009/Jan 2010

KasePO

Stochastic

Stochastic Remains Overbought

Copyright Kase and Company, Inc. All rights reserved 2010 90

 KasePO, KaseCD and Stochastic
EURUSD Daily, Dec/Jan 2010

Kase Pinpoints Turn

KasePO

KaseCD

Stochastic Remains Oversold

Stochastic

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 Double Divergence – Exit 100%
SPX Index Mar 2008

KCD and KPO Divergence

Exit 100%

KasePO
KaseCD

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 Divergence - Exit 80%
EURUSD Currency Jul/Aug 2010
KCD Divergence = Exit 80%
Pull Stops to Dev1

Dev1 Hit
Exit 20%

KaseCD

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 Late PeakOut – Exit 80%
GOOG Sep 2009

Late PeakOut
Exit 80%
Pull Stops to Dev1 Dev1 Hit
Exit 20%

KasePO

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 Early/Late PO and Divergence – Scale Out
GBPUSD Feb/Mar 2010

Dev1 Hit
Exit 33%

Late PeakOut and Divergence

Exit 80%
Pull Stops to Dev1

Early PeakOut
Pull Stops to Exit One-Third
At Dev1, 2 and 3 Equally Dev1 Hit, Exit 20%

KasePO
KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 95

 KCDpeak – Exit 50%
SPX Index Oct/Nov 2009

KCDpeak
Exit 50%
Pull Stops to Dev1

Dev1 Hit, Exit 50%

KaseCD

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 KaseCD, KasePO without Candlesticks
Overview, LCM10 Feb/Jun 2010

KasePO

KaseCD

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 KaseCD, KasePO with Candlesticks
LCM10 Feb/Mar 2010

KasePO

KaseCD

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 KaseCD, KasePO with Candlesticks
LCM10 Mar/May 2010

KasePO

KaseCD

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 KaseCD, KasePO with Candlesticks
LCM10 May/Jun 2010

KasePO

KaseCD

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 Comparison Table on Performance
Small and Large Turns

Indicator Combination Small Turn % Large Turn %

RSI and Stochastic 50 46
MACD and Stochastic 50 47
MACD and RSI 54 50
MACD, RSI and Stochastic 59 55
KasePO and KaseCD 80 82

Small Turn Addition Points Percent

Stochastic 4 7
Kase 21 40

Large Turn Addition Points Percent

Stochastic 5 8
Kase 27 50

Copyright Kase and Company, Inc. All rights reserved 101

 Kase StatWare™ Trade
and Portfolio Management Examples

Copyright Kase and Company, Inc. All rights reserved

 Trade Example (1) - Entry
CLN10 60-min, June 4, 2010

1st Sell

2nd Sell
6/4/10 - 0900
72.06

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 Trade Example (1) - Exit
CLN10 60-min, June 4, 2010

Inactivity and Warning Line Hit

Exit 20%
6/7/10 – 2300
70.45

Entry
6/4/10 - 0900
72.06

PeakOut
Exit 80% - Stop Dev1
6/6/10 – 1800
69.85

KasePO

Copyright Kase and Company, Inc. All rights reserved 2010 104
 Trade Example (2) - Entry
NGN10 60-min, June 6, 2010

1st Sell

2nd Sell
6/6/10 – 1800
4.818

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 Trade Example (2) - Exit
NGN10 60-min, June 6, 2010

Entry
6/6/10 – 1800 KCD Divergence and Dev1 Hit
4.818 Exit 100%
6/7/10 – 0700
4.783

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 106
 Trade Example (3) – Entry/Exit
CVX Daily Jul/Aug 2010 PeakOut
Exit 80%
8/11/10
77.13

Dev1 Hit
Exit 20%
8/12/10
76.83

2nd Buy
7/19/2010
1st Buy 72.0

KasePO

Copyright Kase and Company, Inc. All rights reserved 2010 107
 Trade Example (4) – Entry/Exit
USO Daily Dec 2009/Jan 2010
KPO PeakOut
Exit 80%
1/7/10
40.54

Midpoint of Harami Line and Star Hit

Exit 20%
1/9/10
2nd Buy 40.23
12/23/09
1st Buy 37.74

KasePO

Copyright Kase and Company, Inc. All rights reserved 2010 108
 Trade Example (5) – Entry/Exit
MSFT Daily Aug/Sep 2010

1st Sell 2nd Sell

8/10/10 Dev1 Hit
25.07 Exit 20%
KCD Divergence 9/3/10
Exit 80% 24.21
9/1/10
23.90

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 109
 Kase StatWare Long Only – Scale In/Out
SPX Index Daily

Reduce Position to 80%

Reduce Position to 60%

Reduce Position to 40%

KasePO

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 110
 Kase StatWare Long Only – Scale In/Out
SPX Index Daily
PeakOut, Scale Out Stops , Not Hit,
Remain at 100%
Dev1 Hit, Plus L
KCD Divergence Add Back 20%
Add Back 20% for 60%

Second Long, 100%

KasePO

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 111
 Kase StatWare – Long Only
CSCO Weekly
First Sell No Danger First Sell
Second Sell Exit 20% No Danger
First Sell 40% Total
Sells, Reduce by 20%
No Danger
At Each to 20% Total
PO, Stop Scale Out
Not Hit

Add 20%
Up to 60% for 100% Total
Up to 100%
Long 20% at each L Long 20% at each L
Up to 70% Up to 70% for 80% Total

Long 20%
KasePO

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 112
 Kase StatWare – Long Only
CSCO Weekly PeakOut and Divergence
Stop at Dev1

Exit 20%
Reduce to 80%

Dev1 Hit, Exit 80%

KasePO

KaseCD

Copyright Kase and Company, Inc. All rights reserved 2010 113
 Kase Forecasting Methods

Copyright Kase and Company, Inc. All rights reserved

 Five-Wave Labeling
Wheat July 06

X Y Z 351 369
326.5 339.5 332 I, P2 3X, XC
" 351 341 E, P2
332 " " L, P2

Copyright Kase and Company, Inc. All rights reserved 2010 115
 Three-Wave Labeling
Wheat July 06

X Y Z 351 369
326.5 339.5 332 I, P2 3X, XC
" 351 341 E, P2
332 " " L, P2

Copyright Kase and Company, Inc. All rights reserved 2010 116
 Five-Wave Labeling
Wheat July 06

X Y Z 400 433
325.5 365.5 341.5 I, P2
" 400 351 E, P1
341.5 " " I, P1
351 382 " XC, P2
Copyright Kase and Company, Inc. All rights reserved 2010 117
 Three-Wave Labeling
Wheat July 06

X Y Z 400 433
325.5 365.5 341.5 I, P2
" 400 351 E, P1
341.5 " " I, P1
351 382 " XC, P2

Copyright Kase and Company, Inc. All rights reserved 2010 118
 Evaluating Prices
Using Kase Grids and Kase Cascades

Forecasting Grid
X Y Z S E I L 3X XC P1 P2 P3
x1 y1 z1 Target 1 Target 2 Target 3 Target 4
x2 y2 z2 Target 3 Target 3 Target 4
x3 y3 z3 Target 3 Target 1 Target 4

Cascades X Y Z Target 1 Target 2 Target 3 Target 4

x1 y1 z1 S E I P1
x2 y2 z2 E L P2
x3 y3 z3 P1 3X P3

• Diagonal • Impulsive
• Down Column • Corrective
• Across Row • Mixed

Copyright Kase and Company, Inc. All rights reserved 2010 119
Across Row Impulse Cascade
EURUSD Daily

X Y Z S E I L 3X XC
1.1876 1.2467 1.2151 1.252 1.274 1.297 1.311 1.374 1.378

X Y Z 1.300 1.333 1.375

1.1876 1.2467 1.2151 I L 3X, XC

Copyright Kase and Company, Inc. All rights reserved 2010 120
 NGU04 Mixed Across the Row Cascade
X Y Z S E I L 3X XC P1
6.70 6.06 6.50 6.10 5.86 5.62 5.46 4.96 4.73 5.79

X Y Z 5.80 5.42
6.70 6.06 6.50 E, P2 L

Copyright Kase and Company, Inc. All rights reserved 2010 121
 CN07 Mixed Down Column Cascade
X Y Z S E I L 3X XC P1
248 393.5 352.5 442 498 554 588 991 755 419
352.5 420.5 391.5 434 460 485 502 598 579 438

X Y Z 437.25
248 393.5 352.5 S
352.5 420.5 391.5 S, P1

Copyright Kase and Company, Inc. All rights reserved 2010 122
 Simple Forecasting without Wave Counts
NGZ04 Diagonal Kase Cascade Forecast 7/25/03

X Y Z S E I L
3.365 4.437 3.98 4.64 5.05 5.46 5.71
" 4.53 4.37 5.09 5.54 5.98 6.25
" 5.554 4.88 6.23 7.07 7.91 8.42

X Y Z 5.05 5.55 6.23 7.07

3.365 4.437 3.98 E I
" 4.53 4.37 S E L
" 5.554 4.88 S E

Copyright Kase and Company, Inc. All rights reserved 2010 123
 NGZ04 Kase Cascade Forecast
Outcome 5/28/04

Within 0.56%

Within 0.96%

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NGX08 Daily Proportions from $13.998
X Y Z S E I L 3X XC P1 P2
13.998 12.454 13.11 12.16 11.57 10.98 10.61 9.86 8.84 12.05 11.39
" 10.94 11.255 9.37 8.20 7.03 6.31 6.68 2.80 10.75 10.43
11.255 9.30 9.969 8.76 8.01 7.27 6.81 6.35 4.57 8.89 8.22

Copyright Kase and Company, Inc. All rights reserved 2010 125
 NGX08 Daily Proportions from $9.969
X Y Z S E L 3X XC P1 P2
9.969 9.274 9.925 9.50 9.23 8.80 8.03 8.00 8.87 8.22
" 8.88 9.504 8.83 8.42 7.74 7.05 6.49 8.49 7.87
" 8.50 9.15 8.24 7.68 6.77 6.18 5.09 8.10 7.45
9.504 " " 8.53 8.15 7.53 6.80 6.37 8.10 7.45
" 8.276 8.848 8.09 7.62 6.86 6.28 5.45 7.92 7.35

Copyright Kase and Company, Inc. All rights reserved 2010 126
 NGX08 Daily, Labeling From $13.988
X Y Z 10.94 9.3 8.5 8.142
13.998 12.454 13.11 I
" 10.94 11.225 S, P1
" 9.30 9.969 0.38
9.969 8.88 9.504 E, P1 I
9.15 8.276 8.848 0.81

A’=C’(P1) = E’(P1)

E’ actually 1.25

Copyright Kase and Company, Inc. All rights reserved 2010 127
 NGX08 Daily, Labeling From $13.988
Alternate X Y Z 10.94 8.5 8.142
13.998 12.454 13.11 I
" 10.94 11.225 E
11.255 9.3 9.969 0.89, P2
9.969 8.88 9.504 E, P1
" 8.5 9.15 0.69

Copyright Kase and Company, Inc. All rights reserved 2010 128
 Early Waves, Grid and Cascades
X Y Z S E I L 3X XC P2 P3
13.998 10.94 11.255 9.37 8.20 7.03 6.31 6.68 2.80 10.43 9.92
" 9.30 9.969 7.07 5.27 3.48 2.37 4.11 -3.02 8.22 7.14
11.255 10.15 10.319 9.64 9.21 8.79 8.53 8.25 7.26 9.88 9.60
" 9.30 9.969 8.76 8.01 7.27 6.81 6.35 4.57 8.22 7.14
" 8.142 9.20 7.28 6.09 4.90 4.16 4.26 0.60 6.43 4.72
" 8.122 8.713 6.78 5.58 4.38 3.64 4.23 0.05 7.17 6.21
9.969 8.88 9.504 8.83 8.42 8.00 7.74 7.05 6.49 7.87 6.86
" 8.122 8.713 7.57 6.87 6.16 5.72 5.39 3.61 7.17 6.21
9.504 8.142 9.20 8.36 7.84 7.32 7.00 5.98 5.44 6.43 4.72
" 8.122 8.713 7.86 7.33 6.80 6.48 5.93 4.89 7.17 6.21

X Y Z 7.32 7.04 7.14 6.82

9.30 = S, P1 8.142 = E 13.998 10.94 11.255 I
8.142 = 0.38 " 9.30 9.969 S P3
Retracements 11.255 10.15 10.319 XC
to $13.998 8.142 = 0.89, P2 " 9.30 9.969 I P3 L
" 8.142 9.20 S
" 8.122 8.713 S
From: 5.242 8.50 = E, P1 9.969 8.88 9.504 3X P3
78% 7.17 9.504 8.142 9.20 I L
89% 6.21 " 8.122 8.713 E I

Copyright Kase and Company, Inc. All rights reserved 2010 129
 Intraday Labels, Grid and Cascade

X Y Z 7.62 7.32 7.17 7.04 6.82

9.969 8.122 8.713 S E
9.20 " " E I, P2
9.144 " " I P2 L
8.88 " " I P2 3X
9.20 8.792 9.144 P3

(8.792) 2 = 77.3
77.3/9.20 = 8.40
Off by 0.03%

X Y Z S E I L 3X XC P2 P3
9.20 8.792 9.144 8.89 8.74 8.58 8.48 8.03 8.02 8.22 7.65
" 8.122 8.713 8.05 7.64 7.22 6.97 6.33 5.73 7.17 6.21
9.144 " " 8.08 7.69 7.30 7.06 6.41 5.89 7.17 6.21
8.88 " " 8.24 7.96 7.67 7.49 6.79 6.62 7.17 6.21

NG Long Warn Dev1 Dev2 Dev3 Dev4.5 Dev6

DevStops Daily - X - - 7.93 7.80 7.48 7.17
Weekly - X 7.88 7.35 6.65 5.80 5.26 4.35
Copyright Kase and Company, Inc. All rights reserved 2010 130
 NGX08: Forecast Outcome
October 7, 2008

Copyright Kase and Company, Inc. All rights reserved 2010 131
 NGN10 Waves Up from $3.971
Kase Commentary June 4-18, 2010
“$5.196 probably going to hold”

X Y Z 5.07 5.20
3.971 4.587 4.036 L
4.036 5.071 4.628 S

Copyright Kase and Company, Inc. All rights reserved 2010 132
 NGX10 Waves Down from $6.964
Kase Commentary Oct 1, 2010
“Headed towards $3.58”

Wave X Y Z 3.58
A or I 6.964 5.61 6.548 3X
C or III 6.548 4.647 5.534 E
C' or 3 5.15 3.971 4.298 S

Copyright Kase and Company, Inc. All rights reserved 2010 133
 Market Outcome, NGX10
Kase Commentary Oct 8, 2010

Wave X Y Z 3.58
A or I 6.964 5.61 6.548 3X
C or III 6.548 4.647 5.534 E
C' or 3 5.15 3.971 4.298 S

Copyright Kase and Company, Inc. All rights reserved 2010 134
 CLX10 Waves Up from $70.96
Kase Commentary Oct 1, 2010

Wave X Y Z 79.5 84.4

A 70.96 83.91 71.49 S E

Copyright Kase and Company, Inc. All rights reserved 2010 135
 CLX10 Waves Up from $73.58
Kase Commentary Oct 1, 2010

Wave X Y Z 84.4
a 75.52 79.47 78.39 I
- 80.45 81.52 80.99 3X, XC

Showed $84.4 probable

Copyright Kase and Company, Inc. All rights reserved 2010 136
 Perpetual and CLX10 Retracements
Kase Commentary Oct 1, 2010

CLX10 Retracements to $70.96 Perpetual Retracements to $64.24

From: 85.7 93.14 From: 87.15
62% 84.7 89% 84.6
89% 84.1 90.7

Copyright Kase and Company, Inc. All rights reserved 2010 137
 Market Outcome, CLX10
Kase Commentary Oct 8, 2010

Wave X Y Z 84.4
A 70.96 83.91 71.49 E

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 Outlook for Natural Gas, Crude Oil,
S&P 500, Gold and EURUSD

Copyright Kase and Company, Inc. All rights reserved

 StatWare™ for Bloomberg
Free Fully Functional Trial One Month Trial
Enable Trial, Download Manual Signup for Lessons
and Watch Training Videos at KASE<GO>

Weekly Forecasts on Crude Oil and Natural Gas

Enable Free Four Issue Trial and Get Sample Forecasts at FKST <GO>

KASE<GO> Kase and Company, Inc. CTA

223 N Guadalupe St. PMB 540
FKST<GO> Santa Fe, NM 87501
www.kaseco.com (505) 237 - 1600 (Call Center)
www.kasestatware.com (866) 526 - 2350 (Fax)

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 Standard Disclaimer
The risk in trading and hedging commodities, commodity futures, commodity options, derivative instruments and
any other financial instrument can be substantial. Both traders and hedgers can be subject to mark-to-market
losses and the resultant calls for additional margin deposits, could potentially exceed the original deposit.
Anyone contemplating the use of commodities, commodity futures, commodity options, derivative instruments
and any other financial instrument for either speculative or hedging transactions should therefore carefully
consider whether such activity is suitable based upon commercial requirement and the financial condition of the
person or organization so engaged.

Information contained herein or otherwise transmitted by Kase is not to be considered as an offer or advice to sell
or a solicitation or advice to buy commodities, commodity futures, commodity options, derivative instruments
and any other financial instrument. Kase and Company, Inc. (Kase) makes no guarantees, either express or
implied, regarding the application of either its software, or comments, either written or oral. In no way is any
information transmitted by Kase including but not limited to publications, class materials, any oral comments by
Kase, its employees or sub contractors, any of Kase’s text or software products, or any other communication by
Kase, its employees or sub contractors, directly or indirectly, in person or via media to be construed as Kase’s
providing advice, either directly or indirectly, as to the advisability of buying or selling futures contracts, any
physical commodity, commodity options or any other financial instrument. Kase will not be responsible for any
errors or omissions, typographical or otherwise. Expressions of opinion are subject to change without notice.

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance
record, simulated results do not represent actual trading or hedging. Also, since the trades or hedges have not
actually been executed, the results may have under-or-over compensated for the impact, if any, or certain market
factors, such as lack of liquidity. Simulated trading and hedging programs in general are also subject to the fact
that they are designed with the benefit of hindsight. No representation is being made that any account will or is
likely to achieve profits or losses similar to those shown, discussed or transmitted in any way by Kase. THE
RISK OF LOSS IN TRADING AND HEDGING COMMODITIES CAN BE SUBSTANTIAL. The Client
should, therefore, carefully consider whether such trading or hedging is suitable for the Client in light of the
Client’s financial condition. Information provided through any Kase service is not to be considered as an offer to
sell or a solicitation to buy commodities, nor does Kase make any guarantees. Expressions of opinion are subject
to change without notice.

Copyright Kase and Company, Inc. All rights reserved 2010 141