**Mosaic Analytics Toolbox**

Shown: VIXEN TF (volatility mean reversion) model with volatility filter ON analyzing QLD

**(ProShares Ultra X2 bullish QQQ ETF)**

The Control Dashboard automatically displays the recommended limit stop for the benchmark.

Stops for other inputs can be calculated by running each input as a benchmark or inserting discretionary stops not calculated by M3.

In DN Models

If the first 2 inputs are divergent such as SPY and its inverse SH then the PREMIUM will display the relative stability of that divergence.

If the first 2 inputs are convergent such as SPY and QQQ then the PREMIUM will display the leading or lagging momentum of the benchmark versus the second input.

The RSQ linear regression trend line and P6 (6th degree polynomial) studies are provided as overlays on the chart with the benchmark as the target. The RSQ and P6 are forensic tools which are applied to many of the M3 studies and which provide a snapshot of current trend stability and likely inflexion points.

**PREMIUM**reflects the current momentum bias of the pair inputs.If the first 2 inputs are divergent such as SPY and its inverse SH then the PREMIUM will display the relative stability of that divergence.

If the first 2 inputs are convergent such as SPY and QQQ then the PREMIUM will display the leading or lagging momentum of the benchmark versus the second input.

The RSQ linear regression trend line and P6 (6th degree polynomial) studies are provided as overlays on the chart with the benchmark as the target. The RSQ and P6 are forensic tools which are applied to many of the M3 studies and which provide a snapshot of current trend stability and likely inflexion points.

A short term

**ALERT**chart embedded in all models displays the current trend momentum of a 2 day rolling Trend and Trend Reversal (STOP).

Generally speaking when the STOP crosses over the Trend to the downside then the model is risk off and cash positions provide the best insurance.

Once the Trend turns upslope and crosses the zero line odds for successful risk exposure on vested positions are greatest.

To keep model performance in perspective a 30 day view of the equity curve is provided. The equity curve is overlain with the a RSQ (Pearson linear regression line) and P6 (polynomial to the 6th degree) to warn that if the rankings are not generating a positive return then a cash position is warranted until market technicals stabilize in favor of vested positions either Long or Short.

RSQ and P6 should be considered "lines in the sand" for preserving capital. If either are downslope then the odds do not favor vested positions, whereas if either or both are upslope the odds for successful vested trades are substantial.

Additional tactics for dealing with the nuances of the various combined money management stops (like trailing stops and bracket orders) are frequently explored in the daily Mosaic newsletter.

RSQ and P6 should be considered "lines in the sand" for preserving capital. If either are downslope then the odds do not favor vested positions, whereas if either or both are upslope the odds for successful vested trades are substantial.

Additional tactics for dealing with the nuances of the various combined money management stops (like trailing stops and bracket orders) are frequently explored in the daily Mosaic newsletter.

**Pivots**are one of the most basic technical trading tools and are traditionally calculated as the high+low+close/3. In the good old days when floor traders dominated trading pivots were an easily calculated means of establishing support & resistance levels for intraday trading and, perhaps surprisingly, most large cap high volume issues and the major indices still display daily support/resistance levels that are only a few pennies from key pivot levels.

The value of pivots is especially relevant for equity trading and both the DN and MVP models track the current benchmark pivot and the 60 day trend of the pivot using a 3 day moving average.

The RSQ and P6 overlays on this basic chart are often useful in detecting underlying weakness or strength in the benchmark before it is revealed in a simple price chart.

The pivot trend line also helps to smooth out daily volatility noise and clarify momentum.

The

As a general rule the highest odds for a paradigm shift and/or a reversal in momentum of the benchmark are present when the pair SKEW approaches and crosses over the Zero line.

While there is often a degree of lag around these transition or inflexion points it is instructive to be acutely aware of when the SKEW approaches parity since a failure of reversal once the ZERO line is touched or crossed slightly is highly unusual, especially in the large caps and index ETFs where market manipulation is more constrained.

**SKEW**graph examines the differential in volatility between the top 2 inputs in the same manner that PREMIUM looks at the differential in momentum. If there is only a single input then both the PREMIUM and SKEW charts will not display results as there is no basis for comparison.As a general rule the highest odds for a paradigm shift and/or a reversal in momentum of the benchmark are present when the pair SKEW approaches and crosses over the Zero line.

While there is often a degree of lag around these transition or inflexion points it is instructive to be acutely aware of when the SKEW approaches parity since a failure of reversal once the ZERO line is touched or crossed slightly is highly unusual, especially in the large caps and index ETFs where market manipulation is more constrained.

**TRENDX**is a smoothed momentum and relative strength indicator that tracks the price action of the benchmark and seeks to detect when the current trend is about to exhaust or reverse.

TRENDX is a simple graphical interface where the momentum/relative strength impetus is either upslope or downslope. As with the PREMIUM and the SKEW approaches and crosses of the Zero line are significant risk milestones, especially when such milestones are in sync with Zero line crosses on the the SKEW graph and in sync with the slope of PREMIUM graph.

TRENDX generates 2 signals of different duration and intensity which are termed Trend and STOP.

The shorter term STOP line routinely detects the waning and impending reversal of the Trend line.

The composite 3 panel

Calculated STOP values may fluctuate substantially daily and intraday as market volatility rises and falls and as the intrinsic volatility of each model input reacts to idiosyncratic risk factors.

The STOP dashboard examines 3 price attributes of the benchmark:

ATR or average trading range and both the 8 day and 30 day average values are considered.

PCL or precious close to today's low which reveals the exact value of overnight risk exposure relative to the limit stop.

OC or open to close range which is a different intraday view than the ATR, which looks at the low to high range.

These 3 databases are only a starting point SKEW and standard deviation of each are then factored into our STOP recommendation.

Each of the STOP dashboard graphs displays an RSQ linear regression and P6 overlay indicator. These overlays enable a quick visual analysis of the current volatility dynamics in the benchmark. Downslope RSQ lines reflect a market environment with declining volatility while upslope RSQ lines reflect a market environment with rising volatility.

Positioning of P6 slope and crosses over the RSQ aid significantly in detecting impending changes in the volatility environment.

**STOP Dashboard**(below) is a critical element in defining the risk/reward situation at any given time.Calculated STOP values may fluctuate substantially daily and intraday as market volatility rises and falls and as the intrinsic volatility of each model input reacts to idiosyncratic risk factors.

The STOP dashboard examines 3 price attributes of the benchmark:

ATR or average trading range and both the 8 day and 30 day average values are considered.

PCL or precious close to today's low which reveals the exact value of overnight risk exposure relative to the limit stop.

OC or open to close range which is a different intraday view than the ATR, which looks at the low to high range.

These 3 databases are only a starting point SKEW and standard deviation of each are then factored into our STOP recommendation.

Each of the STOP dashboard graphs displays an RSQ linear regression and P6 overlay indicator. These overlays enable a quick visual analysis of the current volatility dynamics in the benchmark. Downslope RSQ lines reflect a market environment with declining volatility while upslope RSQ lines reflect a market environment with rising volatility.

Positioning of P6 slope and crosses over the RSQ aid significantly in detecting impending changes in the volatility environment.

M3 massages these various risk factors and generates a "best odd's limit stop for the benchmark.

This is not a hard stop but a

By repositioning each of the model inputs into the benchmark slot and then running a risk profile (Data Update) a best odds limit stoop can quickly be determined for each input and loaded into the discretionary STOP value cells on the control dashboard.

This is not a hard stop but a

**limit stop**and understanding the difference in the 2 types of stops is crucial.By repositioning each of the model inputs into the benchmark slot and then running a risk profile (Data Update) a best odds limit stoop can quickly be determined for each input and loaded into the discretionary STOP value cells on the control dashboard.