Money in the Bank - The Modified PEMA Crossover | PivotBoss

The market created amazing opportunities for profit this morning. Fortunately, I deployed two of my best setups to capitalize on these opportunities during the first two hours of the day – the Magnet Trade and the Modified PEMA Crossover. Let’s take a closer look at the Modified PEMA Crossover to reveal how this setup can make you money!

Modified PEMA Crossover

I created the Modified PEMA Crossover system last summer and included it in my FREE 50-page ebook Profiting with Pivot-Based Moving Averages.

This trend-confirmed system capitalizes on pull-backs during unidirectional markets – like the one we saw this morning in the E-Mini’s.

The Modified PEMA Crossover system fires signals in the direction of the prevailing trend, as measured by a larger moving average. For this setup, I use 1- and 3-period pivot-based EMAs for crossovers (they’re hidden), and use a 21-period pivot EMA for trend confirmation.

Therefore, the system only allows bullish crossover signals to fire when price is above the 21-period pivot EMA, and only allows bearish crossover signals to fire when price is below the 21-period average. In essence, the results are usually highly qualified “buy the dip, and sell rip” opportunities during trending markets.

Real-Time Application

Take a look at the 5-minute chart from this morning’s E-Mini S&P 400 futures contract. Price opened the session with a gap up and quickly filled the gap. Once the morning’s bearish trend was clearly established, two sell signals fired, offering precise entries that easily yielded over 10 points combined – that’s over $1,000 per contract traded!

This system outperforms during trending markets, but is virtually useless in sideways or range markets. Therefore, when you see a clearly established trend, regardless of timeframe, this system can help you identify some of th best pull-back entries around.

The goal of each trade is to ride the move to a new cycle high (for Longs), or cycle low (for Shorts). As such, you’re able to pocket quick profits with minimal risk.

EOD Application

For swing and position traders, this systems works amazing well. I wrote about Patriot Coal (Time to Buy $PCX) a few weeks back and forecasted a target of $20 using this system, which was hit during yesterday’s market for a gain of 15% in just a few weeks!