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Pristine Trained Traders (PTT) whether Core Trading, Swing Trading, or Day Trading are "Pattern Traders." Each Pristine pattern is clearly defined and is taught with an understanding of not only the pattern, but also what the pattern communicates about those that created it. Most learn candlestick patterns and their names, which is elementary. Additionally, because the names define those patterns as bullish or bearish they can be completely misleading, wrong and result in losses. Here's one. In the above chart of Sandisk Corp. (SNDK), the combination of the last two candles is what is called a Bullish Harami. Any candlestick scanner software will mark it as such. The pattern is one in which a large red candlestick is followed by a smaller candlestick whose body is located within the lower range of the larger body. Obviously, the two candles meet that definition, but there is nothing bullish about them to an educated chart reader. To understand this from candlestick terms, the Bullish Harami views the large red candle range that is followed by a small candle range as the bulls taking control. While the selling pressure has eased for the moment, this pattern cannot be construed as bulls taking control. What's happened for the moment is that the sellers are taking a breather after crushing those bullish and will return. Supply clearly overcoming demand. SNDK was clearly in a strong uptrend and in an uptrend like this price either pullbacks to Minor Support (mS) or "creates support" during corrections. What they don't do is slice through Major Support (MS) like it isn't there at all. That is what SNDK did and it is a bearish event that is in no way bullish. What typically happens next is the pattern will continue lower if prices break under the low of the last green candle; a 123 continuation pattern. They may consolidate a bit longer under or slightly above the area that was MS, so it is possible to trade above the high of the green candle. That would not be a confirmed 123 pattern; it would develop into a slightly different continuation pattern. To understand what is happening let's take a look at an intra-day chart. Wide Range Bars (WRB) like the one that occurred in SNDK on Thursday (the #1 bar) are multiple smaller bars moving in one direction with strong momentum intra-day. The rapid price movement lower leaves little to no areas of consolidation or retracements. Without those areas to use as tradable reference points to sell into, we have what I refer to as a "Price VOID." After a period without a retracement (continued supply) a base forms intra-day and a narrow inside bar (the #2 bar) on the daily time frame. This is "creating a new area of resistance where there was none. If prices continue lower on the next bar (#3 bar), we would then have a confirmed 123 pattern. What I have explained above it a basic understanding of the 123 continuation pattern and used SNDK as an example to make the point that candlestick pattern names can be very misleading. That being said, there is a higher level of understanding for the use of the 123 pattern. For example, view the weekly chart of the stock EOG Resources Inc. Symbol (EOG). It's not a 123 pattern yet because the #2 bar has not formed yet, it may this week. However, you will see a large red candle breaking below a base. While SNDK broke below a base of MS, it started its move lower from a pivot high. See the difference? Both patterns signal lower prices, but these differences are what the PPT takes note of. Greg Capra President & CEO Pristine Capital Holdings, Inc.

Typically, an increase in volume occurring in tandem with a price increase or decrease is seen as a significant indication of a trend reversal. A price change without an accompanying increase in trade volume is not usually a true indication of future price movement. Trade volume is a function of the size of the positions assumed by traders on the buy or sell side, as well as the number of traders making up these volumes. By looking at the volume changes in relation to the price movements and positions taken by traders, a trader can analyze an asset and know whether the future price of the asset will be on the buy side or the sell side.

Good afternoon. I have recently started my diploma work in my university about trading robots on stock market. There are a lot of books about stock markets and automated trading systems, so i really need help here... I have started with Pardo and Barry Johnson's books and technical analysis by achelis. Are these bookes good enough? or can you recommend other books about strategies, indicators, theory or any other info, that would be helpful? Thank you!

First introduced by Karl Pearson, they are used to plot data densities and for density estimation. A histogram consists of tabulated frequencies which are depicted visually as adjacent rectangles that are constructed over discrete intervals.

Good Morning All; Webster defines trading as: "to engage in frequent buying and selling of (as stocks or commodities) usually in search of quick profits". Notice the key words that even Webster knew to include, "...in search of..." making an implication to the fact that 'quick profits' are ever so illusive. This definition works fine if you are learning English as a second language. It gives you a notion of what the word means. It does not do justice to the process. I am going to take this article to share some ideas regarding what makes up the essence of trading. This is MY definition, you do not have to agree with it, but perhaps if you read it closely, it may open up some ideas. As a matter of fact, if you get any 'light bulbs', please email me. What is Trading? Part One of Two. Here is a definition to consider. Trading is "Using technical analysis to find a moment in time when the odds are in your favor. Then trading becomes a matter of your entry and management." In other words, it is having the KNOWLEDGE to know when the odds are in your favor, having the PATIENCE to wait for that moment, and then having the DISCIPLINE to handle the trade properly when it goes in your favor and properly when it goes against you." Now let us dissect a little. The opening words are 'using technical analysis'. Now, I know Webster's definition would let you trade with fundamentals, but not ours. At Pristine we feel there can be no argument that the opening words are not a misprint. We begin our search on the charts. This is the only place where we find truth and useful information in the markets. We do not find useful information from analysts, not from brokers, and not from accountants. Next comes 'a moment in time'. How long is a moment in time? It depends on your timeframe. For a core trader, that moment may be a day, for a swing trader several minutes, for a day or scalp trader, perhaps only a few seconds. The point is that there is only ONE moment when that exact trade is proper. Anything past that moment, and that trade is gone. Note, there may be other similar trades that occur later (such as buying the first pullback), but these are separate trades, each one of them will have their 'moment'. Next, when are 'the odds in your favor'? Well, that comes down to a matter of knowledge of technical patterns. Every so often, a stock will 'show its hand' and give away a key secret. It will let you in when a pattern develops that appears to be something other than just random noise. "Then it becomes a matter of entry and management". In other words, here is where the psychology comes into play. Once you learn how, the intelligence actually required to enter and manage a trade is minimal. The ability to do so is rare. This is where you become your own worst enemy, and this is the level that even the most astute traders seldom pass. Then notice the three capitalized words in the last part. KNOWLEDGE to know; PATIENCE to wait; and DISCIPLINE to handle. It sounds like the beginning of the Boy Scout Creed, but is a sentence you may want to cut out and put on your monitor. Next Monday we will examine some of the finer points, such as how many traders arrive at their own definitions. Paul Lange Vice President of Services Pristine Capital Holdings, Inc

A breakout occurs when prices are able to clear a prior price area that has been a point of resistance in the past. But this doesn't mean all breakouts are the same. A breakout can occur after a decline that is followed by a period of whippy consolidation - that in time "tightens up." It can occur in one fast move from a low to and above a prior high. Not the ideal entry. It can also occur after a rally that is followed by a period of consolidation. Consolidations can happen in various forms, a base being the most widely used. Ideally, a tight base or a tightening in the last few bars occurs just prior to the breakout. Let's review some examples. In the above example, prices began to move up after a retest of the prior low and rallied all the way back up to the prior resistance area. The second to last candle that formed was a Topping Tail (TT) that signaled that sellers are focused on the prior high area - resistance. However, the next candle ignored the TT or in other words, buyers continued to step up regardless of the prior resistance area; a bullish sign. Prices could continue higher above the prior high and the supply of shares there. But without a small period of consolidation that would display buyers "absorbing" that supply, the likelihood of a retracement into the prior rally is high. Absorbing that supply reduces the possibility of a breakout failure. Some buyers that own shares from lower prices are going to sell at resistance after such a move. If prices move above the prior high without a stalling first, many more are going to cash in on the quick profit. Buying a breakout after a straight through rally above the prior high from a low can be done, but not without a stop-loss based on the move. The size of the stop and share-size must take into consideration the retracement that is more than likely to occur. In the above example, Prices rallied from a base after the signal bar formed. The initial move stalled for moment (shaded area) where the opens and closes of the three candles are overlapping. Pristine students know these overlapping opens and closes are a base on a lower time frame. This is where buyers will step up on a pullback, should that occur. That pullback did not occur here, rather buyers continued to step up above that level and form a new pivot low; a bullish sign. That low provided a new support reference point that was taken advantage of on the rested. The last bar engulfed the most recent candles, which is bullish and tells us that buyers are anticipating a breakout above the recent resistance. Large bullish engulfing bars like the one seen are typically followed by a smaller candle or candles. Typically does mean always, especially with this pattern since the bullish bar came after a period of consolidation and retest. In this example, prices broke out of a whippy consolidation and while there were clues that shares were being accumulated, there was no clear signal bar of the breakout occurring at that moment as there was in the prior example. This long period of uncertainty was followed by two Bullish Wide Range Bars (+WRB) signaled huge increase in buyers and higher prices. Fast, igniting moves like this create a void of price support below. However, this pattern (two +WRBs out of a consolidation) is less likely to correct by pulling back since the move began from a consolidation. It is also less likely for prices to base or consolidate for a long time for the same reason. The last candle in the pattern actually signals the low of the correction after the +WRBs and higher prices - a breakout - will follow soon. I have shown you the same stock Boeing (BA) in different time frames and explained how to interpret the price movement in those time frames. Traders using these time frames or others could potentially enter BA on signals that come together at the same time. This is what makes for explosive moves when they happen. However, each could also enter at different times depending how the patterns developed from here. For example, the traders using the weekly time frame could enter on the next candle's move above the high, which could happen immediately. To the trader on the hourly time frame that entry would not be ideal since there is no clear reference support level to use as stop-loss because of the straight up momentum move. Also, such a move would certainly setup other new entry points in the hourly time frame or other lower ones. All traders can have the same bias, but entering at very different times. All entries can be right for that trader in their time frame of choice with confirming price patterns. Pristine Tip: Intra-day traders use signals from higher time frames for a bias and then trade signals (price patterns) in a lower time frame in alignment with that bias. Greg Capra President & CEO Pristine Capital Holdings, Inc

In uptrending markets, most of our swing trade setups are stocks and ETFs (with relative strength) that are breaking out above bases of consolidation. We also buy pullbacks of uptrending equities when they retrace to near-term support levels. However, another bullish chart formation many technical traders profit from is the “cup and handle” pattern. In this article, we use current annotated charts of United States Natural Gas Fund ($UNG), a commodity ETF that roughly tracks the price of spot natural gas futures, to show you how to trade the cup and handle chart pattern. Let’s begin by looking at the weekly chart timeframe of $UNG below: Notice that the left side of the pattern begins in November 2012, after a 60% rally off the lows. This is positive because proper cup and handle patterns should not form at or near 52-week lows; rather, there should already be an uptrend in place for at least several months in order for a correct cup and handle to develop. The selloff in December 2012, as well as the bottoming action in January and February of this year, combine to form the left side and bottom of the “cup.” The right side of the cup was formed when $UNG broke out above major resistance of its 200-day moving average and rallied to the $22 area. Zooming in to the shorter-term daily chart interval, note the “handle” portion of the pattern that is currently developing: The handle typically requires at least a few weeks to properly develop (sometimes more). While forming, price action will typically slope lower. In the case of $UNG, even an “undercut” of the March 25 low and 20-day exponential moving average would be acceptable. However, the price needs to hold above the $20 level during any pullback. Otherwise, a breakdown below that important support level could signal the pattern needs a few more months to work itself out. If buying $UNG, it is important for traders to be aware of possible contango issues that could result in an underperformance of the ETF, relative to the actual spot natural gas futures contracts. Nevertheless, contango is typically not a big deal if exclusively swing trading the momentum of $UNG over shorter-term holding periods (less than about 4 weeks). Conversely, the negative effects of contango become much more apparent over long-term “buy and hold” investing timeframes. For our rule-based ETF and stock swing trading system, the technical chart pattern of $UNG is not yet actionable. Still, the annotated charts above clearly explain the specific technical criteria we seek when trading the “cup and handle” chart pattern. As always, we will promptly alert newsletter subscribers with our preset entry, stop, and target prices for this swing trade setup when/if it provides us with an ideal, low-risk buy entry point in the coming days.

Good Morning All: As traders enter the arena, they are always full of questions. That is a good thing. As they progress, traders have even more questions. When they start to get good, they have even more questions. The trader always feels that they have good questions, and that their questions are also unique, things that only they would think of after the long journey they have been on. While it is true that all these questions are 'good', they are far from unique. As a matter of fact, it seems that we all end up on almost the same exact path, running into the same questions, in search of the same answerers. For a long time I have been known to say, "I have not heard an original question in years". I say it because it is true. We all go through the same process, which brings about the same questions. There was an exception once. A few years back, someone asked a question I actually had not heard before, and truthfully, have not heard since. Someone very simply asked, "How do you know when it is time to quit?" When to Quit Believe it not, this caught me by surprise. I am not use to 'new' questions. However, just as surprisingly, an answer came out of my mouth instantly, and without even thinking about it. I said, "When you can no longer do what it is that you know you need to do". Surprising answer? It actually is the perfect answer. When a new trader starts out trading, they usually try to begin with no education or with very little education. If this is the case, struggle will be expected and be the norm. The answer at this point is not to quit, but rather to get a quality education. At the next phase, traders take all this valuable information, and while they feel great about it, they often do not use it well. They do not have a plan to assimilate the information, so it is used inconsistently or not at all. They usually do not even know they are doing this, they 'think' they are doing things by the book. The answer at this point is not to quit, but rather to develop and use a trading plan. At the next phase, traders write a plan, but there are several problems. The plan may be just words on a paper done just to accomplish this step, but have little real meaning. Or it may have meaning to the trader, but has never been tested so may actually be an ineffective plan. Or, the trader may have a good plan, but is not following it. Traders rarely follow their plan, and rarely realize that they are not following it. The answer at this point is to check your plan, and follow up on your actions to see if you are following your plan. If the plan is not effective, change it and/or seek help to make it more effective. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

have an announcement to make. I'm happy to report that the never-ending search for that perfect indicator is alive and well. It has never ceased to amaze me how people can take epic journeys towards attaining such mythical tools. They spend countless hours and money in the pursuit of that perfect tool that will provide perfect buy and sell signals, no matter what stocks and market conditions they're dealing with. Let me state here and now that I have no prejudices against indicators. But in my journey as a trader (and many of you might agree with this), I've not been able to find any formula that can successfully produce buy and sell signals of quality, every single time in all market situations. But that's all right. Indicators aren't supposed to do that. In fact, it's our opinion, and that of many others I've had the pleasure to work with through the years, that the real purpose of indicators isn't that of providing reliable buy and sell signals. For that we have price patterns. Indicators (at least some of them) serve us well as "guides" that help us accelerate the analysis of a security's price behavior. Let's review this with an example. One of the most archaic uses of indicators I can remember occurs when someone looks at crossovers on moving averages as buy and sell signals. I would bet countless individuals have paid thousands of dollars for "trading systems" that exclusively use this concept. Any trader with some knowledge of the way moving averages work would instantly recognize that by the time such moving averages "crossover", the price action has already occurred. In some instances, such signals might provide a continuation of momentum, but in general, by the time you get the signal, it's too late. That's the typical use of an indicator as a "price predictor". We're not in this business looking to predict. Our goal is to analyze opportunities, evaluate odds, and manage our trades. For us, a better and more objective use of moving averages is as trend following tools. Looking at a stock that presents a rising 20ma will quickly give us information about the trend of that stock, without having to look at 12 months of price data. Then, we will use price data to find reliable opportunities for trading. So, the next time you look at a chart that includes your favorite indicator, try to use the information provided by it in such a way that helps you to evaluate the securities trend, strength, volatility and velocity. Don't try to use it to predict prices. In this way, you're bringing a level of objectivity to your trading that will serve you well through the years. KURT CAPRA Contributing Editor Instructor and Traders Coach

Eurostoxx tested the 200 week MA and Oct high at 2575/78 and blipped higher to 2582 in the afternoon but could make it no further. If we beat 2582 today this should lead to a test of 2012 highs and the big double top at 2602/07. Clearly this is a very significant level and with the market overbought on daily and shorter term charts there is a strong chance of a high here for this 2 week recovery. We have to attempt shorts here with a stop above 2613. We then run in to the 61.8% retracement level of the losses from the highs in 2011 at 2638 and this therefore should be very tough resistance. Attempt shorts once again with a stop and reverse in to longs above 2650. Support at 2567/66 but below 2556 we could test better support at 2546/43. A low for the day here is very possible so worth covering any shorts but if attempting longs we need stop/reverse in to shorts below 2532 for a move to 2521/19. FTSE broke 5859 but has so far failed to test the Oct/Nov highs at 5903/07. With the market no overbought on daily and shorter term charts we may not each this far as profit taking sets in. A move below 5855 signals weakness creeping in and should see last weeks high at 5837 then possibly 5820/15 support tested. Watch for a low for the day here so exit any shorts but if we try longs here we need stops below 5804. Sell in to shorts on a break here as this could keep the market under pressure for 5783/73. If we manage to push through 5886 we run in to the Oct/Nov highs at 5903/07 and a good chance we go no further. However if we do continue on through here the Sept highs of 5933 could be the next stop. Dax broke trend line resistance at 7409 but the move was limited to 7418 as the market starts to look over bought on daily and shorter term charts. Even so we cannot rule out a break above yesterday’s high to test October & November highs at 7440/49. We should struggle here so worth exiting any remaining longs and moving in to short positions up to the 2012 highs at 7476. We will be looking to stop out of shorts however and buy back in to longs on a break above 7500. Support at 7382 then 7360 is the target below. Failure here sees us drifting further towards 7341, possibly 7323. Exit any remaining shorts here and look to buy in to longs on a move towards 7310/07. Stops on longs needed below 7295. Look to sell back in to shorts then with a move to 7270/65 likely. S&P did break 1416 but only made it as far as 1418. This is 55 day MA as well as the high for the first half of this year. The market is overbought now on the daily and shorter term charts so there is a risk we make it no higher now and start to hit profit taking. 1410 is the level to watch as a break below here sees us back towards 1407/05 and the 100 day moving average. We then find good support at 1401/00 and a probable low for the day if tested. If attempting longs here we need a stop/reverse in to short positions below 1395 for 1390/88. We are in a very strong 2 week up trend so we cannot rule out a break above 1418 for a test of the 1423/25 resistance level. This should be very tough to beat so worth exiting longs and trying shorts with stops above the Nov highs at 1432. eurostxx.pdf Dax.pdf Ftse.pdf S&P.pdf

Special Thanks to Burton Malkiel for graciously joining our discussion on Efficient Market Theory and his book "Random Walk Down Wall Street". Mr. Malkiel is a Professor at Princeton, Noted Author and Market Participant. As die-hard Technical Analysts ourselves, we have waited months for Burt to find time in his busy schedule to chat with us. You will find him charming even if you disagree with him. To listen to the interview simply click the headphones above. Please share your thoughts on what Burt has to say regarding his theory and popular book (now in its 11th printing) and why you as a Technical Analyst do not believe the markets are random. I look forward to your comments.

Market analysis is in important part of our everyday activity. Pristine Trained Traders (PTT's) are taught to use our renowned Pristine Market Analysis techniques, which advocate a macro-to-micro approach. This means analyzing the market and internals first, then doing the same with the diverse sectors contained in your universe, and ultimately performing the same analysis on individual stocks. This ensures that you're trading in the same direction of the markets, and not against them. One important part of this process is sector analysis. This analysis allows the PTT to quickly identify potential trading opportunities in an individual sector of the economy. It's a well-known fact that institutions move their funds from one sector to the next rather than from an individual stock to another. This is called Sector Rotation. Sometimes, this rotation occurs because money is moving from assets perceived to be more risky (e.g. Tech Stocks) to assets perceived to be less so (e.g. Gold) and vice versa. But this rotation isn't always intended to be protective in nature. Institutions tend to have a "flavor of the month" approach, where they lock on a sector of interest, and direct all their efforts to invest their funds and sell to their clients the idea of investing in such sectors. This creates an avalanche of funds getting into or out of any given sector, as most institutions will play the same game in order to avoid falling behind the "average" performance of its competitors. This rotation effect caused by funds being allocated to or from any specific sector will create price movements that oftentimes will be presented as a Stage 2 (Uptrend) or a Stage 4 (Downtrend) in those sectors, as measured by the different sector indexes that exist, allowing for tradable opportunities for the educated PTT. This is nothing new, as the "Sector Trading Tools and Tactics" we teach in our seminars let you trade in the same direction of most institutional traders and market makers. Here are just but a few different ways in which a PTT can use sector analysis: As a means to quickly search for trading opportunities in stocks within the sector. As a benchmark with which to measure Relative Strength and Weakness. As a trading opportunity by using sector following securities. Let's briefly delve into each of these categories. Sector Analysis as a means to quickly search for trading opportunities in stocks within the sector. One very simple and quick way in which the PTT looks for and finds tradable opportunities is by looking at the several sector indexes in his "universe". These indexes, being a basket of the different securities that conform to a given sector, will often show recognizable Pristine Setups (taught in our TPM and ATS seminars) that are formed because many stocks in that given sector have formed such patterns. Thus, a Pristine Buy Setup (PBS) in a daily chart of the $BTK.X (Biotechnology Index) should produce several stocks in that sector that show similar price patterns. In this way, the PTT can quickly focus on opportunity, by analyzing the macro list of sector indexes, and then finding the best setups within that sector. Sector Analysis as a benchmark with which to measure Relative Strength and Weakness. Within any given sector index, some securities will outperform the index and some will under-perform it. This is only natural, as you'll always have leaders and laggards in any sector. The PTT uses "Relative Strength Analysis", taught in our famed ATS Seminar, to evaluate the performance of individual securities within any given sector, vs. their sector index, in order to determine which patterns present the best odds of a successful trade. Sector Analysis as a trading opportunity by using sector following securities. As a trader, you have several options to try to benefit from a sector move. One that is becoming more widely used is trading "Index Tracking" Securities. These securities (Holdrs, ETF's and I-Shares), traded mainly in the American Stock Exchange (AMEX), are trusts that hold a basket of stocks that mimic the sector index composition. Some of them are liquid enough even for Micro-Trading, even though most are better suited for swing and core trading. Trading these securities is an efficient way to do Core Trading, as it allows you to participate in any sector's potential multi-week move, while reducing the risk of any individual stock in that sector gapping down or moving against your position. Jeff Yates Contributing Editor Intra-Day and Swing Trading Specialist Instructor and Traders Coach

Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. This series of articles discusses this issue, and are geared toward the 'intraday trader', not the swing trader. That was the opening paragraph the last two parts of this three part series. Last week we looked at the key morning reversal times, and began to discuss lunch. Today we will discuss lunch, and the afternoon reversals. When to Trade What, Part 3 of 3 Lunch: Lunch can be a little tricky to pin point on some days. At its broadest moments, lunch begins after the 11:15 reversal time (remember, all times are ET, market time) ends the move, and can last all the way until the 2:15 reversal time. This is what typically happens on sloppy, non-trending days. On nice trending days, lunch may be as short as 12:00 until the 1:30 reversal time. The most precise reversal times over the lunch period are 1:30, and 2:15 (2:15-2:30 range on most days). Below is a typical day. Notice a few things, and then look at the charts for yourself. These revelations will save you, and make you money, everyday. 1. Note the range (the fluctuations from the highs to the lows), or volatility, before lunch, after lunch, and during lunch. Note again, from last week, the power of the 10:00 and 10:30 reversals 2. Note the volume during lunch. 3. Note the last playable event was at 11:30, and the next one was at 2.15. 4. Note the narrow bodies and tails during lunch; you do not see the rest of the day. These are the reasons traders get frustrated at lunch, real moves rarely happen on the market or typical stocks. And After Lunch: After 1:30 comes the 2:15 time. If 1:30 does not begin the afternoon move, then 2:15 will. If 1:30 does produce a big move, then 2:15 is often the target. The last times of the day are 3:00, when the bond market closes and 3:30, which usually provides the high or low into the close to end trading for the day, as the last 30 minutes is often sloppy. Here is one more chart. Here we see another typical day. You will find, when you study this, there are only a small handful of patterns that happen over and over again. Here we have a retest at '1' that holds for the end of lunch. The first playable move is the 2.15 reversal, and finally the 3.30 reversal ends the pull back for a rally into close. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today, is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. That is the point of this article. When to Trade What, Part 2 of 3 That was the opening paragraph last week in part one of this three part series. In the last letter we looked at some 'pre market' organization, and we discussed the first reversal time, 9:35 (all times are Eastern, New York, 'market' time). We then mentioned the next two reversal times, 10:00 and 10:30. This week, we will talk about those two key times, as well as the beginning of the 'lunch hour'. Next week we will conclude with part three. There are 9 micro reversal times. 4-5 of them are major and critical. Also, understanding HOW to use them and HOW they interact is imperative. Let's look at the morning reversals, 10:00 and 10:30: There is also a minor reversal time at 11:15. It is simply amazing how many traders do not use the reversal times to their advantage. This probably spawns from the fact that many traders do not even know or understand them. If you are one of those traders, you are going to learn something that will change your trading career in the next couple of paragraphs. A picture says a thousand words, so look at the charts below. These are the three five-minute charts of the QQQ from the last three days, period. We generally give the reversal times a window of 5-10 minutes on each side. The key is when the Pristine Buy or Sell setup occurs, at the approximate time. The yellow 'stars' show the two major reversal times we are discussing. They are all happening 'right on the money', though they do not need to in order to be effective. Note two things. First, the second chart is slightly off on the 10.30 reversal, but the 10.30 low was only pennies off the low of the day, and again, it is the buy setup that happens once in that area that matters. Second, these charts are simply that last three days. They are not the result of a special search. If you continue this exercise on your own, you will be astonished. Most other days are even more amazing. Note, that the 10:00 and 10:30 major reversal times form a reversal, every time, and one of them usually sets the high or low for the day, or at least for the morning. This is typical of what you will find every day. Again, no effort was used to find these charts for this article. The only time this is not 'amazing' is when we have 'power trend' days that do not really reverse at all, and that is because the very definition of a power trend day is that the market carries a trend one way all day. Sometimes these days don not begin until the 10:00 reversal time puts in the first reversal, but these power trend days are rare; usually one every other month. Don't believe it? No problem, go take a look for yourself. Go print out a bunch of five-minute charts. Print them from the market, the futures, or your favorite stocks. Print some from this week, some from a month ago, some from two months ago. It does not matter. Then go through and draw vertical lines at 10:00, and 10:30. You will be shocked and amazed that virtually every day, you have drawn lines though the high and low of the day, or at least the high, until much later in the day. And you thought trading was tough. The next time period to look at is the beginning and ending of lunch. These times can change a little depending on if the market is 'trending' or choppy. Generally, the last true move ends around 12:20. We often count lunch as starting at 12:00, but if there is a strong trend in place, it may follow through until 12:30. On strong trend days, the last reversal around 1:30 often sets the trend back in place. If it is a choppy market (80% of the time), lunch may stay choppy, until the 2:15 reversal time. This one is usually in stone, and the whole lunch concept, as well as the afternoon reversals, will be discussed next week. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

rading is one of the most fascinating, challenging and rewarding businesses on earth. Very simply, we are looking for price patterns that have high odds of follow through, then we look to the market internals to see if it makes sense to enter a bullish or bearish trade and, if acceptable, we calculate share size per our Trading Plan, enter the trade and then enter "management mode." When looking for stocks to trade in a particular sector, it is best to trade the cleanest patterns that are showing relative strength for longs (relative weakness for shorts). There are various ways to determine strength. Some include comparing the stock to the sector, comparing it to market internals, or comparing it to itself. For example, if the SMH (semi-conductor holders trust) has a bullish daily, gapped up, and is a Pristine Buy Setup™ (PBS) into the gap fill on the 5-Min. chart, but AMAT also has a bullish daily, also gapped up, but is basing at the high into the first reversal and did not pull back, it is showing relative strength to the market. Now assume the S&P Futures pulled into the gap fill on the 5-Min. chart (and the TICK fell and the TRIN rose), but both SMH and AMAT also have a bullish daily, also gapped up, but are basing at the high into the first reversal and did not pull back, they are showing relative strength to the market internals. Finally, many novice traders believe that a stock's Relative Strength Indicator (RSI) measures relative strength to the market. Remember, the RSI, like any oscillator, is a derivative of price and volume; therefore, all compare stock action to itself, not to a broader market index. So RSI measures the momentum of a stock's price action compared to its price "x" periods ago (default is 14 days), but to the Pristine Trained Trader, offers no benefit that is otherwise not readily ascertainable from price action. In addition to watching my long and short lists for possible entries, I watch two market minders looking for relative strength or weakness. If the market gaps down, and I am considering fading the open and looking long, I see what is showing relative strength compared to the broader market. Similarly, if the market gaps up and I am looking for a short, I will focus on the weak stocks, which are those down at the open that did not participate in the market's gap strength. (Note that this is a short-term counter trend strategy that is applied only when the market internals suggest it. In fact, we might actually be buying the stocks that gap up with the broader market, on pullbacks into the first reversal period, or over a 30-Min. high. Jeff Yates Contributing Editor Interactive Trading Room Moderator Gap and Intra-Day Trading Specialist Instructor and Traders Coach

In this Chart of the Week (COTW), I want to show why one trader who is focused on swing-trading would never consider buying and another that is focused on intra-day trading would. However, both traders would initially view the chart as bearish and both may have it on their watch list for a short sale the next day. In the above daily chart, we see a stock that has broken down under Major Support (MS), the 20-MA and the 200-MA. While the stock did form a Bottom Tail (BT) on the break lower, it never was able to trade above that high for several days. Over those days of basing, the stock formed two Topping Tails (TT) as buyers tried to get the stock above the 200-MA. With the formation of the last TT the price action did suggest that the stock would move lower and possibly the next trading day. For that reason, both the swing-trader and the intra-day trader would have a bearish view. Based on what had occurred at this point, the swing-trader would never consider buying stock with a chart like this the next day regardless of what it did at the open. However, the intraday trader having an understanding of gaps, multiple time frames as well as how bearish traders have become trapped would be willing to buy the stock in the short-term under the right conditions. Let's look at what it at the open and did happen. Rather than move lower at the open, the stock gapped up a small amount, rallied and closed above prior resistance and the daily TTs. To the intra-day trader this is a clear breakout with a Tradable Void above. It's a great long setup for that trader! The next step for the intra-day trader is to find an entry, which could be a Pristine Buy Setup (PBS) a Pristine Breakout (PBO) or any bullish pattern confirming the bullish breakout and signal of higher prices that should come. A textbook PBS formed at the 10 o'clock reversal period signaling that buyers did in fact step up on the pull back and prices were ready to move higher. While we cannot know for sure that prices would move as high as they did, there was the tradable void, so there was nothing to stop that from happening. Once the gap was filled, the odds increased that the stock would retrace then. Above is the completed daily chart of Altera Corp. (ALTR) as of the close on Friday February 1st. It's still not attractive for a swing trade, and at this point it's not of any interest to an intra-day trader either. It had a good day on Friday, but now the current pattern does not suggest good odds in either direction for either trader since the prior bearish daily price action has been neutralized and the gap filled. All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc.

Good Morning All: Over the years, Pristine has become a pillar in the education field. Pristine began training ordinary people about the financial industry in 1994 and has a perfect reputation for quality and honesty in presenting the best material, with the best instructors, and with the follow-up to ensure students have every opportunity to go on to make money. People new to trading or investing may not appreciate all that goes into that. In an industry that sometimes gets a bad name by companies that are dishonest and offer sub-par training, it leaves many people asking the question: "Who can actually do this thing we call trading or investing?" Who Can Do This? Let's get right to the answer. Anyone. Anyone can do this. Not everyone, or everyone would, but anyone can, and relatively simply. Here is what CANNOT be done. We, as well as anyone else, cannot show you a magical technical indicator that makes money. There is no such thing. If there were, it is all I would use. We cannot show you a kindergarten system that makes this as simple as "red light - green light". These claims are insulting to professional traders all around the world. We cannot guarantee that any ONE person will be successful at this. I know of no college that guarantees their graduates will be successful. The college supplies the tools, but the student must put them to use. Here is what we CAN do. We can supply you with the best education that gives you all the tools you need to make money in the market. It IS very doable. Here are some interesting things you should know. 1. You do NOT need any special background. In fact, the less background you have in the financial world the better. I have always said that my favorite student would be a 13-15 year old teen-ager who likes video games. 2. You do NOT need an advanced education. "The world is full of educated derelicts" is a famous quote form Herbert Hoover. The complexity of what is needed to make money can be learned by junior high students. Many people make money shortly after our two day seminar. 3. Once you learn the method, you do not need to spend time dissecting or even listening to financial reports, earnings statements, or news stories. They are all irrelevant. 4. You do not have to compete with big boys on Wall Street. Many places teach the wrong methods. We like to ride the coat tails of big money, not compete against them. There is no other way. 5. You can easily beat the big funds. Billions of dollars cannot be moved around quickly or efficiently. In fact, they are forced to resort to very passive long-term buy and hold strategies that have been proven to not work. 80% of funds underperform the market. The confusion arises because hucksters looking to make a quick buck make this look 'too' easy. People forget what 'trading' is. It is a profession. It is an occupation. And like any other, you don't buy your degree on line with a piece of software and you don't earn your degree reading a book or watching a single DVD. You do earn your degree buy getting educated by professionals, testing what you know, and making adjustments if you did not apply the information properly. This information is the same but everyone is different. Think of any university. The same information is taught to all. Some go on to be top-notch lawyers, doctors, and scientists making the highest salaries out there. Some do well, but are not the highest paid. Some don't make it. Can the ones that don't make it say that what they learned was incomplete? Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

When a stock market is in runaway uptrend mode and refuses to pull back substantially, most investors and traders think, “I am not buying stocks at this level; I’ll just wait for a pullback.” Eventually that pullback will come, but often only after a multi-month advance has passed. This is why, in strongly uptrending markets, we find it much easier and more profitable to focus on the price action and technical patterns of individual leadership stocks and ETFs, rather than paying much attention to whether or not the charts of the S&P, Nasdaq, and Dow are “overbought” (we hate that useless term). As long as there remains institutional rotation among leading stocks, with new breakouts continually emerging, the broad market will continue to push higher (although the major averages must also avoid significant distribution). That’s why “overbought” markets often become even more “overbought” than traders would expect before eventually entering into a substantial correction. We are trend traders, so we simply follow the dominant trend as long as it remains intact. When the trend eventually reverses, our rule-based stock market timing system will prompt us to exit long positions and/or start selling short…and that’s just fine by us. We are equally content trading on either side of the market because being objective and as emotionless as possible is a key element of successful swing trading. The majority of ETF positions presently in the Model ETF Portfolio of our end-of-day trading newsletter are international ETFs because they continue to show the most relative strength (compared to other ETFs in the domestic market). One of our open positions, Global X FTSE Colombia 20 ($GXG), has not yet moved much from our original buy entry point, but we like the current price action: Since undergoing a false breakout on January 15, $GXG has pulled back to and held support of the 20-day exponential moving average (beige line on the chart above). In the process, it also formed a higher “swing low,” which is bullish. Notice that the price has also tightened up nicely since mid-December of 2012. All of this means $GXG could finally be ready to break out above the $22.60 area. If it does, we plan to add to our existing position in The Wagner Daily swing trade newsletter. Regular subscribers should note our exact buy trigger and adjusted stop price for the additional shares of $GXG in the ETF Watchlist section of today’s report. While on the theme of international ETFs, let’s take an updated look at the technical chart pattern of the diversified iShares MSCI Emerging Markets Index ($EEM), which we initially mentioned last week as a potential buy setup if it made a higher “swing low” and held support of its 20-day exponential moving average: Although the price of $EEM did not hold above the 20-day EMA, a quick dip (“undercut”) below that moving average, followed by a quick recovery back above it, would keep this bullish setup intact. Therefore, if $EEM can rally above the short-term downtrend line annotated on the chart above, and subsequently put in a “higher low,” we might be able to grab a low-risk buy entry point as early as next week. As always, we will keep subscribers updated if any action is taken on $EEM, or any other ETF with a buyable chart pattern that crosses our radar screen while doing our extensive nightly stock scanning.

Have you ever been excited about a new experience? Maybe heading to the golf course for the first time or going to the go-kart track to show your stuff? Do you remember the butterflies and excitement building inside as you near this new experience? It's common to have such exhilaration when a new experience arises. Just imagine with me for a moment, that you were going to have some weekend fun with the family at the go-kart track. As you seat yourself into the kart your smile is ear to ear. You feel the butterflies fluttering as you rev the gas getting ready for this experience. Prior to taking off, you glimpse over and notice your family giving you the thumbs up, chanting things like go dad, you can do it, you can take these guys, show them who's boss. Suddenly you realize your eyebrows are lowering, your smile moves to a determined grit and you now have something to prove. This is not a fish story about the one that got away; you have a live audience! This friendly little driving around the track has escalated to the Daytona 500, so it seems. You move onto the track with fierce determination and no experience I might add. That's ok, how hard can it be, I drive to and from work every day and have never had so much as a fender bender. You move around the track like you're the only one there and suddenly you get squeezed out and your kart slams into the tires. As if that is not enough, you get rear ended from another kart. That actually hurt. With pride on the line, you immediately get back into action only to have a similar experience. This one could leave a mark! Now intimated by this new adventure and in a great deal of pain, you finish your ride and force your smile every time you near your rooting family with the bulk of your thoughts concentrating on when this ride will be over. I share this story with you to press upon you how most people enter the trading environment. Excitement turns into determination which often leads to pain. If you FIRE before you AIM that is... The bulk of new traders will embark on their new career this year that is similar to the story above. They fail to practice, and get kicked around and 90% of them will not exist as a trader in 12 months. They have told all of their friends about their new career and when they ask how things are going they shrug it off with "The market is not right yet" or some other excuse that is just as poor as the first one. You see, people that want to start trading to offset their income or potentially make a career of it have no business entering the trading environment until they get education and practice. The title of this article is how most people attempt everything. They get READY and FIRE before they know what they are really AIMING for. Some ventures may be forgiving but Wall Street takes no prisoners. It will under-handedly seek out anyone with little to no experience or practice and make sure you end up in the tires. Do not let that happen to you! Do you walk over to the fireplace and ask it "If you give me some heat, I will give you some wood"? No, it doesn't work that way, nor does trading, and you absolutely have to get education FIRST. Many people only have one shot at this, burn through your capital before education and you may never get the opportunity to share what is one of the greatest businesses on the planet. I mean think about it, a business that you can work anywhere in the world with just a laptop and a internet connection; a business with no employees, no overhead, no inventory, etc... etc... Most businesses exist for 11 months to pay the bills and employees, only to make a profit in just one of the twelve months. Your trading career should not be taken lightly especially when you think about what you have your hands on. You should not open a business without education and training, so why would trading be any different? Trading potentially could give you more freedom and enjoyment than you could possibly imagine if you take the right steps to succeed. If you were to open a franchise do you think you could do that before you spend the required time practicing and learning the proper procedures? Not a chance! Seek education, practice and have the desire to win, so you don't get "pushed into the tires". Get READY - AIM -FIRE!!!! Traders' Tip: Pristine education is the single most proactive ingredient one could learn prior to risking capitol in trading. The Pristine Method has been proven time and time again as a technical approach that has been developed and time-tested over the past 18 years by Pristine. This dynamic trading methodology is now used by professional and semi-professional traders all over the world. Make sure to register for any of our other FREE programs that interest you the most. I would be happy to see you join us and to answer any questions you may have. Jeff Yates Contributing Editor Interactive Trading Room Moderator Gap, Intra-Day and Swing Trading Specialist Instructor and Traders Coach

If you're not aware that the markets have been going higher and nearing all-time highs, you must not have a television. Finally, the media has noticed the bull market that started from the 2009 crash low. Now, that drop and low was about as ugly as it gets and of course, we really didn't know that it was 'the low" until a bit later. However, the markets have been going up for just over four years and the media is just getting excited! The saying, "Better late than never" doesn't always apply when it comes to the markets. With the markets late typically means losing money, but can it be different this time? I am seeing some not so obvious signs of change that could be signaling that this market has a way to go in the long-term. There has been a huge amount of money pumped into the system to hold off recession, deflation and bankruptcy of countries. We can logically assume that the equity markets believe that it has worked since most are at or nearing all-time highs. However, the fact that interest rates have been in a decline for years tells us there has been little demand for that money for business investment (higher risk, higher rewards). Rather, a lot of that money has been going buying bonds (low risk, low reward), which causes interest rates to drop. During times of economic expansion the demand for money increases (borrowing) and interest rates rise. The charts are starting to point to this. The above being said, long-term interest rates have been in an overall downtrend since the early 1980s. However, during times of an improving economy those interest rates have risen within that very long-term downtrend. So interest rate movement up and down is relative to this. The above chart is of the ETF symbol TBT, which is for being short bonds prices and interest rates moving higher. In it, we see a classic pre-bottom free-fall drop on high volume, a lower low with less momentum and low volume and a retest of the low with an increase of volume. The next step would be to move above the most recent highs. As explained above, a move higher in interest rates suggests a pickup in business and the economy. If that is the case, then stocks that are affected by that like industrial metals would have been under performing and should now move up with interest rates. Let's look. The chart of United States Steel Corp. (X) looks very much like the chart of TBT. Not surprising. If interest rates move up (bond prices down), I think that X should have a minimum potential to move to the 30 area. If the economy is at a significant turning point, and I hope it is for all of us, the potential for X is much higher. You now know the inter-market analysis to monitor. Alcoa Inc. (AA) is a manufacture of aluminum, which is used in planes, cars, construction and even the foil that you use in the kitchen. As you can see, its chart is also similar to that of TBT and X. If one moves higher they all should. These bottoming patterns do take time and when they move higher they typically don't do it with a lot of speed until others take notice of the movement. Especially, the media that are just starting to realize that the markets are really going up! This not so obvious sign of change is encouraging after such an extended period of bad economic times. It's early in the turn and false starts (bottoms) do happen. Right now the charts are pointing to better times for everyone and the potential for more people to make money. In the prior Chart of the Week (COTW), I showed you a simple approach to market timing. It has not given a sell signal, but don't stop monitoring those internal gauges. It may take the market blasting higher to get those option traders all-in. If we get that sell signal, remember this is a short-term signal. We will need more information for any long-term change of bias and with what I have explained in this COTW, that change isn't likely should TBT, X and AA move higher. PRISTINE - A Trading Style, Often Imitated, But NEVER Matched! All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc.

Good Morning All: In the last issue, I gave you part two of a four part series. This series is a set of exact steps that will help you tremendously if you have the technical knowledge, but cannot seem to turn the corner on making good profits. There are four things that you can do that I feel will 'dramatically change your trading career'. The results will be immediate, every week, and this will be item number three. It should be stated again, that if you do not have the technical expertise, you are not at the level that these comments will help. If you don't know how to look at a chart, no amount of refining will help you. Where do you get this expertise? There is no better place than the Trading the Pristine Method Seminar. After a long time of working with many traders, one discovers that there are certain truths that cannot be denied. There are four things that are done so consistently wrong by new, and even fairly experienced traders, that each of these mistakes results in bad trades 90% of the time for most traders. If traders would simply follow these four rules, they would eliminate most of their losing trades. The fourth rule does not really fall into this "90%" category, but is perhaps the most important. Four Things That Will Change Your Trading Career: Part Three of Four Here is the third rule, and the subject of this lesson. Traders should always follow the power of the market (or an individual stock). When the market or stock is having a bullish day, the daily bar is green, and the intraday trends are up, buy pullbacks; do not play short. When the market or stock is having a bearish day, the daily bar is red, and the intraday trends are down, short the rallies; do not buy the pullbacks. This sounds simple, yet this rule actually addresses the number one mistake traders make in selecting plays. Most traders, especially newer traders, try to short strong stocks, or buy weak stocks. They try to 'short the top', or 'buy the bottom'. They may not even realize they have the problem. Most issues like this are not discovered unless the trader takes overt action to find the problem. Why would so many traders pick up such a bad habit? The answer is simple; it is the same problem that causes so many traders to not trade the way they want to trade. Psychological issues step in and cause the trader to trade improperly. Catching a bottom or a top in a stock makes a trader fell like a 'hero' when right. And, if they do get an occasional trade correct, that is all they remember. They forget the dozens of losses it took to get the one winner, and remember only the glory of 'shorting that one at its high'. There is a strategy for shorting a strong stock, or buying a weak stock, but it is only used when the stock goes 'climactic'. Unfortunately, this play seems to be difficult for most traders to recognize, and requires patience, something most new traders do not have. Below is an example. Would you short this pattern as a 'climactic sell setup' (CSS)? Many traders see patterns like this and feel that it just cannot go any higher. So they short the first red bar, at the '?'. Unfortunately, the usual result is shown below. As the stock advances, they realize that they were not just off, they were way off. They needed the patience to wait for this high at the new'?', above. Surely THIS, is a much better place to short; or is it? Well, maybe not. The stock did not drop at all, and after a little rest, it is back off to the races. As a matter of fact, it turns out that shortly after every 'short' attempt, the truly great play was to go long, even though it looked 'extended'. Bottom line, stay with the easy play. Look at all the money that could be made on the LONG side of this trade, yet so many traders are drawn to finding the top. It is often never found. This is not an unusual chart, I am sure you encounter this every day. Closing Comments The concept illustrated above refers to avoiding playing a stock against the power of a strong trend. It is also applicable to avoid shorting stocks in general, if the market is in a powerful trend (and the same for not going long on a 'red bar' day). While there are certain stocks that will drop on bullish days, they are much harder to find, and as a rule, drop much less. Next week we will look at the fourth 'secret' that will change your trading. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

I am software engineer and i am looking for technical analysis.

While there are many concepts and nuances to be learned to be a complete technical trader and/or investor, there are a few basic criteria that if followed can make making money easy or relatively easier. Of course, this requires having the patience and discipline to wait for these high probability setups to occur. Can you do it? I will show an example of what to look for. Then it's up to you. In the weekly chart of Google (GOOG), prices broke above price resistance with strong momentum. This was followed by the first pullback after that strength to Minor Support (mS). As a general rule, the first pullback to mS after a strong momentum break above resistance will always be buyable. This is based on the basic concept that resistance once broken will become support. This area of mS is where we know buyers will be. Now we wait to see the price action of that actually happening in this time frame and the daily time frame. This concept can be used in a combination of lower time frames as well. It also applies to any tradable instrument; that being Forex, E-minis, Commodities. The basics covered - Prices have made a strong move above price resistance and we wait for the first pullback to mS where buyers are. Then wait for confirming price action in that area. oving down to the daily time frame, GOOG was not looking bullish at all before the turn. However, realize that the lower time frame never looks bullish when the higher time frame is pulling back to mS. For example, if you saw the EUR/USD currency pair in a 60-min. uptrend that was pulling back to mS, the 5-min. time frame would be in a downtrend. The expectation is that the lower time frame is going to turn in the area of mS in the higher time frame. Now wait for confirming the price action in the lower time frame before taking a position. As GOOG moved into the mS area shown on the weekly time frame, the confirming price action began (in this time frame) with a gap higher and then a strong close into resistance. Here is where it gets interesting and it will become obvious if the big money buyers are continuing to step up. We want to see that big green bar's low and ideally its mid-point defended by the buyers. While the buy signal candle came five days later, it could have come after only two days. There is no set number and this is where our Bar by Bar analysis concept comes in to tell us when GOOG will move. Bar by Bar analysis combines each new bar's meaning within the context of our bigger picture analysis. One bar can be meaningless in of itself, but when combined with our bias and the other bars, it's a powerful concept. The basics covered - While our lower time frame is moving down, the higher time frame area of mS is where prices should produce the price action that confirms that area and reversal of some type happens. Reversals can happening in many ways, so do not be set on it having to happen in "your way." Once the action occurs find an entry signal using Bar by Bar analysis. I have shown you the basics of what to look for in those easy money situations using two time frames; I used the weekly and daily. We can also take that bias into the intra-day time frames as I explained above with EUR/USD, but it could be anything. Now, let's look at some detail that occurred on the 60-Min. of GOOG that showed the "early turn" and a couple of Pristine concepts to understand the price action of the turn. As GOOG was trending lower into the area of mS on the weekly time frame a 60-Min. bearish Wide Range Bar (-WRB) formed accompanied with a huge volume spike. That's a bearish event, but remember this was right into the weekly mS! That was followed by a stall and bullish Wide Range Bar (+WRB), that's a very bullish group of events that started the early turn. Pristine Tip: That 3-bar reversal was the Bottoming Tail (BT) on the daily time frame. The Advanced Candlestick reader understands how different arrangements of candles can mean the same thing in the same time frame and/or different time frames. Names of candlesticks are meaningless and are more likely to confuse traders that use them or worse by causing avoidable losses and/or missed opportunities. Once GOOG gapped up and ran higher a Pristine Price Void (PPV) was created. In other words, there was now no price support below for traders to bid at. Support would need to be "created" for traders to bid at. Creating support and resistance is a powerful concept used by Pristine Traded Traders (PTT) to see where the big money is entering prior to existing support or resistance. Pristine Tip: Strong upward price moves often do not pullback to support, they create it. With the bias from the time frames shown above, intra-day traders could move to lower time frames of their choice to find confirming buy setups to enter. At this point, this is still the case. Side note, while I have used a 20-MA on all time frames. It has no relevance to being actual support, resistance or the trend. It is simply a "visual aid" to speed the analysis once understood. PRISTINE - A Trading Style, Often Imitated, But NEVER Matched!!! Greg Capra President & CEO Pristine Capital Holdings, Inc.

On the close of December 13, our stock market timing system shifted from “buy” to “neutral” mode. This means we now have no firm bias with regard to near to intermediate-term market trend for swing trading. The lack of substantial bullish follow-through in leading individual stocks in recent weeks, the absence of leadership in most ETFs (other than international ETFs), and the bearish pattern on the weekly chart of the S&P 500 Index (below) are all valid reasons to avoid the long side of the market now. Nevertheless, recent price action in the stock market has not yet convincingly confirmed the balance of power has shifted back to the bears, so we are a bit cautious about aggressively jumping in the short side of the market just yet. Below is a longer-term weekly chart pattern of S&P 500 SPDR ($SPY), a popular ETF proxy for trading the benchmark S&P 500 Index. Notice that $SPY will likely print a bearish “shooting star” candlestick pattern for the week. This is a topping pattern that often indicates near-term bullish momentum is running out. Since a weekly chart is a longer-term interval than a daily chart, the formation of this shooting star pattern on the weekly chart is more important than if the the same pattern occurred on a daily chart: Notice that the formation of the shooting star candlestick also occurred as $SPY “overcut” resistance of its downtrend line from the September high. This overcut of the downtrend line is significant because it sucks in new buyers, just as institutions are starting to sell into strength. This creates additional overhead supply that subsequently increases the odds of a resumption of the dominant downtrend. This would be confirmed if $SPY breaks below the horizontal price support shown above, which is merely a move below the low of its current weekly candlestick. Although the weekly pattern of $SPY looks a bit ominous, at least in still trading above technical support of its 20, 50, and 200-day moving averages on the shorter-term daily chart. That’s more than one can say about the Nasdaq 100 Index, which sliced back below its 50 and 200 day moving averages yesterday. As you can see on the daily chart of $QQQ (an ETF proxy that tracks the Nasdaq 100), a break below yesterday’s low would coincide to the Nasdaq sliding back below its 20-day exponential moving average as well: We concluded yesterday’s technical commentary by saying, “Given the lack of explosive price action in leadership stocks and the late day selling in the averages the past two days, the market could be vulnerable to a sell off in the short term…We are not calling the current rally dead, but we do not mind stepping aside for a few days and monitoring the price action.” To coincide with this statement, we made a judgment call to take profits on all long positions in our model trading portfolio by selling at market on yesterday’s open. Given that the broad market subsequently trended lower throughout the entire session, this worked out pretty well. Now, we are back to “flat and happy,” sitting on the sidelines 100% in cash. One big challenge for swing traders right now is that volume levels in the broad market will likely begin heavily receding next week, as we approach the Christmas holiday. As we have warned several times in recent weeks, swing trading in low-volume environments is challenging because day-to-day price action tends to be more erratic and indecisive. Therefore, we’re not in a hurry to enter multiple new positions (either long or short) ahead of the holidays, but will still consider new stock and/or ETF trade entries (possibly on the short side and/or inverse ETFs) with reduced share size if an ideal trade setup with a firmly positive reward-risk ratio presents itself.

As we near the end of the year, here is a look at the long-term to put the short-term gyrations in perspective. For the very bullish case, you want to see the markets consolidate at the top of the range. That is likely to be months. Pullbacks ideally hold the area of first support. A move to the area of second support makes the bullish case very questionable and would at least suggest a much longer period of consolidation. For the ultra-bearish, a clear break below last support, and tent-housing communities could be high-end living for many. All the best, PRISTINE - A Trading Style, Often Imitated, But NEVER Matched!!! Greg Capra President & CEO Pristine Capital Holdings, Inc.