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  1. Good Morning All; New traders often find themselves very challenged to have the discipline to follow the trading plans that they have created. The truth of it is, few have created any real plans and even fewer have a comprehensive working plan. Those that do, often find it difficult to follow their plan in the heat of the day. One of the reasons this can happen is because traders often do not spend their time properly, before, during, and after the market. Organize Your Time Of all the time a trader can devote to their occupation, most new traders usually fall into the schedule of spending 90% of their time actually trading the market. They spend 5-10% of their time preparing for the market, either the night before, or the morning prior. They spend 0-5% of their time following up on their trades after the market. Unfortunately, for new traders, this can be a big down fall. Being caught up in the excitement and overtrading, without stopping to evaluate trades, is a bad combination that can lead to failure. It is fine to be with the market all day. Just make sure your trading plan identifies what times you should be trading. It is a great idea when you start out to use about one third or your time preparing for every day, about a third of your time following up on your plays and reviewing them, and only one third actually trading. This is very different from where most new traders are. This does NOT mean that if you spend 6.5 hours trading, you must devote another 13 hours to your trading. You should have strategies identified that only take place at certain parts of the day. There should be parts of everyday where you will not be trading. You can use this time to review the morning trades, or the prior day's trades, and to update your record keeping and journals, and even paper trade new strategies. Closing Comments Many newer traders feel like they are missing something if they are not part of every possible trade. Patience will pay off for those who are selective and take the time to review each of their trades and learn from the ones that did not work out. The concept of following up on trades and how to do it is immensely important, and beyond the scope of this commentary. Make sure you understand it well, before trading.
  2. It was almost twenty-five years ago that I began my education on the markets and technical based trading. After a period of time using the indicator based method still used today, I came to the realization that method was too subjective. I also saw times (too many) that price could move in the opposite direction signaled by an indicator or a group of them. Pattern recognition was the only concept that made sense; however, the most powerful price concept I discovered was NFT. Before I get to the concept of NFT, I first have to touch on some basics of Candlesticks. Candlestick analysis essentially is the recognition of reversal patterns. There are one, two or three bar candlestick reversals have different names like Dark-Cloud Cover, Morning Star, Evening Star, Shooting Star, Star, Hammer, Inverted Hammer, Doji and there are many more. All indicate a turn and the probability of a price movement in the direction of the reversal. Some with a stall in momentum first or at the same time of the reversal pattern. It all depends on the time frame being viewed, so candle patterns change or can even conflict. The explanation of these candle reversals related to multiple time frames (MTF) analysis is virtually non-existent in the education industry. Why? Because an understanding of MTF makes all of these names unnecessary. If you understand that if prices move in one direction and suddenly turned in the other, it's a reversal. What difference does it make if it happened in one, two or three candles? A two or three candle reversal is a one candle reversal in a higher time frame and vice versa. It comes down to understanding MFT and retracements between reference points. You're getting an insight into Pristine education. As I studied and traded these individual candle or multiple candle reversals that had No follow Through (NFT), it became clear that NFT was a very powerful message. Price patterns are a reflection of what traders and investors believe and have acted on with real money. Money, put into action has emotion connected to it, and when beliefs and emotions in the moment change abruptly - it's a message to pay close attention to. Let's look at a normal or typical type of a reversal and an NTF. Both are tradable when combined with other supporting technicals; however, the NFT concept expands your opportunities and increases your odds of profitable trading setups. The above chart of Citibank © shows typical reversal signals within an uptrend. It doesn't matter what the name of the signal is according to the candlestick textbook. Even the novice to candle technical analysis can see the turn. Can you begin to see how the names are irrelevant now? If there was a Doji candle between those reversal candles, would it change your opinion of the turn? In the above chart of QCOM, there's a big bearish candle (doesn't matter what its name is, it's big) signaling lower prices. Rather than following through lower, QCOM had NFT and negated the bearish signal. Clearly, buyers were in control and were going to continue running over sellers. Can you imagine being a seller inside that big bearish candle? How are feeling the next day? What are going to do? As a trader or investors recognizing the NFT, can you take advantage of this? he concept of NFT is universal to all tradable instruments, since anything traded is affected by human beliefs and emotions. In the above chart of the Aussie dollar versus the U.S. dollar is another big bearish candle that had NFT. The move above that bearish candle hasn't happened to confirm the signal yet, but the NFT to it suggests that short-sellers are caught and a counter-trend move that will likely test price resistance and the declining 20-MA is coming once prices move above that bearish red candle. No Follow Through is a concept that I developed years ago after getting caught in trades based on candles that were negated. The NFT concept along with my Bar-by-Bar concept will put you the right side of most trades. While there is no guarantee of a sure thing in the markets, NFT when combined with other Pristine concepts is the closest thing to it you're going find to it. Greg Capra President & CEO Pristine Capital Holdings, Inc
  3. Good Morning All; Sometimes identifying the process we go through in learning can help the learning process itself. For example, any difficult task, such as trading, is generally learned in four phases. This assumes of course that one even gets to the later phases. When students read the following, it often helps them understand they may be making great progress, even if it does not appear that way. The Learning Process The first phase is what we call the "unconsciously incompetent" level. This means that we do not know the material, and worse than that, we are unaware of the vast amount of material we need to know. Most traders are in this phase when they begin trading. Perhaps you know someone like this. They feel they have all the tools they need to make proper decisions and are completely oblivious to what the market has in store for them. The next learning level is a vast improvement as it is what we call the "consciously incompetent" level. At this level, the trader still does not know material, but at least they are now aware that there is a vast amount of information they need to learn and they need to begin that process. In other words, at least at this level, they are aware of their ignorance, and that is a big step forward. Many traders who seek out seminars or who begin to look for training are at this level because they have tried on their own, and not succeeded. The next level of learning is the one that takes longest time. It is to get to the point of being "consciously competent". This is all that traders should be striving for, realistically. This is the ability to be able to know and memorize all the techniques that have been studied, and to be able to reproduce them, with the trader consciously making an effort to follow the same plan every day. The next level would be the final level and considered one of mastery. It is rarely found in trading. It is the level of "unconscious competence", where all the rules and strategies fall into place without effort by the student to enforce them day after day. Closing Comments If you are learning to trade, you will pay your tuition one way or another. You can pay a fair amount toward education, or you can pay a lot more to the market. Often when you pay it directly to the market, it is more of a 'fee' because you do not get an education in return. People often put off an education thinking they will try it on their own, or they should wait for a better market. Unfortunately new traders often get the attitude of waiting to pay for an education with the profits they get from the market without an education; so it never happens. The market is ALWAYS good. There has never been a better time to get involved in the market. Paul Lange Vice President of Services Pristine Capital Holdings, Inc
  4. Your level of confidence (not arrogance) as a trader will have a huge positive impact on your success. The more confident you are the less time you will spend on second guessing your decisions. The more confident you are the more positive energy you will focus toward your desired outcome. Confidence is based on two things; what you do and who you are. When a trade stops for a loss your confidence becomes rattled. This is because confidence is based on what you do. When confidence is based on who you are and your ability as a trader, one who is prepared for all outcomes whether a loss or a profit, then you are consistent with yourself no matter what the result. You will feel confident because you took the loss as intended or because you closed with a profit. You will choose correctly in either scenario! This is because confidence is based on you. Each time you correctly make a decision in trading whether it is for a loss or gain, the more confident you will become with your ability to act accordingly to the current market situation in a manner that is appropriate. Your confidence is now based on your awareness as a trader (you) not on failures, mistakes or missed opportunities. Let me say that again . . . Your confidence is now based on your awareness as a trader, one who will make the correct decisions. Help build confidence by reviewing your trades diligently to discover when, why and how you chose to act during the time of the trade. It will help your understanding of the markets and yourself. The more you choose to learn from each trade failure and success the stronger and more confident you will become. This confidence will increase your flexibility in your decisions and your behavior. This flexibility will help create comfort in your trading. This comfort will feed your confidence and the cycle continues. Begin working on your confidence today. Believe in yourself and have faith in your abilities. KURT CAPRA Contributing Editor Instructor and Traders Coach www.pristine.com
  5. Good Morning All; Have you ever felt the inability to pull the trigger to get in a trade at the right moment, and then chased the stock only to your detriment? Have you ever taken profits way before your target the first time a stock 'jiggled', only to sit on the sidelines as your stock ran to its original target? If so, you are experiencing the effects of fear. You are not alone. Psychological aspects make up 85% of the trading equation. Fear is one of the aspects. Ideally, we would all be "emotionless" traders. No fear, no greed, just pure discipline. While this may be a worthy goal, not many can take the leap to this level just because I say you need to. While most people cannot eliminate fear, there are some things you can do to keep it in check. Here are some suggestions. First, the greatest enemy of fear is a well-laid plan. Have a trading plan that you use that clearly spells out what strategies you will play, when, you can trade, when you cannot trade, how many shares you will play, how much money you are willing to lose on a single trade. There are many aspects to a trading plan, these are some of the basics. Next, plan the individual trade. When you see a trade come up that fits into your plan, study the play to find the proper stop loss and target. Play the proper share size so a stop out does not violate your maximum loss per trade. Make your decisions before the trades hit, while you have a clear level head, then follow the plan without question. You must "execute" the trades you have "planned". The next step may be the most important. Let your plan go to work. Let the play finish. Unless something changes about the trade, let it come to its natural conclusion, either the target or the stop, or perhaps management based on your plan; not an overreaction to what you see. Think about it. You have planned a trade while you had a clear head. You believe the trade is worth your hard earned money. Give it a chance to finish. There are sometimes reasons to end the trade early. Perhaps there has been a change in market environment. For example, you might be long in your play and the futures just took out key support. Alternatively, maybe you planned on reaching the target by reversal time and it is almost at the target with reversal time now here. However, this happens the minority of times; the majority of times you should leave the play alone. Do not be jiggled out by your Level 2 screen. The chart pattern is all that matters. If you are still so nervous that you can't handle it, try this next. Sell half the position at the reduced target. Get used to taking partial profits and this will let you have confidence letting the back half hit the target. This will also be likely to put you in a 'no lose' situation with the trade, giving you some patience. Good traders sell incrementally, on the way up all of the time. If that does not help, then you need to cut back on your share size so the size of the potential loss does not trigger your "pain factor". Closing Comments The real answer to this question is 'just do it', but few are able to. Playing with a share size that doesn't trigger your 'fear button' is critical until you develop a winning record. Try these ideas if you are having a problem with 'fear'. Paul Lange Vice President of Services Pristine Capital Holdings, Inc. www.pristine.com
  6. APPLE Inc. (AAPL) moved the NASDAQ 100 Index (QQQ) for the most part for a long time, but in 2013 that disconnected. AAPL moved lower as QQQ moved higher in 2013. Now AAPL has reached a point where those that have been in love with this stock (rightly so) have to step up to keep the very long-term trend alive. AAPL made its high in mid-2012 and QQQ pulled back also into the end of that year, but in 2013 that correlation disconnected as the two moved in opposite directions. AAPL is now retesting the low it made in April and buyers have an opportunity to add to those positions. With last week's reversal in the QQQ at support and AAPL retesting the prior low made in April, it's a point in time where the two are aligned again to move higher. If one or the other fails to hold its support level shown, the odds are that the QQQ will move to the second support shown and AAPL will move to the $350 dollar area marked. Join us for this week's Free Workshops and Happy 4th of July to you all! PRISTINE - A Trading Style, Often Imitated, But NEVER Matched! All the best Greg Capra President & CEO Pristine Capital Holdings, Inc.
  7. You're scanning your interest list of charts and making a list of symbols separated into minders of uptrends, down trends, pullbacks, retests, etc. From those lists, you look for the various setups within your trading plan and you come up on one that you've seen countless times, and it's as close to a sure thing as it comes. Well, I came across one of those about a week and a half ago. What happened is... Trading with the trend is always the highest odds play, however; counter-trend setups have their place at the right time. One of those "right times" setup in the Dow Jones Utilities Average ($DJU), many stocks within that average and/or stocks and ETFs related to the sector. You may have spotted them. For a counter-trend play, it had multiple technical concepts coming together that suggested the setup had to work out and it started to, but you just never know. Let's review it. The break below Major Support (MS) in May signaled a change in trend and that the odds of lower prices were high. However, shorting after a sharp drop like the one seen requires a setup that provides an entry point and reasonable reward-to-risk. Retest patterns are a favorite since sellers have "created a new area of resistance" that should not be overcome if the trade is working, of course. From the retest, prices fell hard and fast. It was what we refer to as a "fluid move" that creates a "Price Void." These types of moves leave little to no overhead resistance, so prices tend to retrace back up to price resistance with relative ease. Typically, prices will not retrace the whole drop that occurred, but enough of it to make for an attractive trading opportunity. This fluid move lower stopped right where it should have. It was text book. Price support was to the left and the 200-day moving average was in the same area. Pristine students learn that moving averages are subjective reference points of support and resistance. However, widely followed moving averages like the 200-MA on the daily time frame often become a self-fulfilling prophecy. The initial reversal was retested and the reversal that formed on the retest was a larger green candle that even occurred with an increase of volume. It doesn't get much better for a counter-trend play. The combination of concepts coming together should have/could have moved prices to the red area on the chart where those candles were overlapping. It didn't happen. Prices stopped at the Topping Tails (TT) just to the left and then setup failed completely. I could have shown you many setups virtually the same as this one and how they moved higher for large profits. Technical analysis done properly can put the odds overwhelmingly in your favor, but it cannot guarantee a winning result. Educated investors and traders know that it's an odds game, and even with the odds in your favor, you just never know. So have that stop-loss in! All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc. pristine.com
  8. Good Morning All; You buy a stock and watch it climb to its target. You see it becoming extended, and into resistance at a key reversal time, and you sell it just as it rolls over. It was a perfect trade. If you sold it, it means someone bought it from you. Did you ever wonder who just bought your stock? Who Just Bought That Stock - In case you were not aware, for every buyer there is a seller. There is no magic "stock warehouse", where you load up on stock, and dispose of it when you are finished. In addition, you are not dealing with the company who issued the stock. You are buying and selling from other people. Traders, investors, fund managers, market makers, etc. The only exception is when stock is first offered to the public, or when additional shares are made available from the company, but these are rare instances. So if you sold your stock at the 'perfect' spot, the question remains, who bought it? Well, there are two answers. The first one you may be thinking but are afraid to say. Yes, a 'fool' may have purchased your stock from you. On any day when the market stays flat, the market is a zero sum game (negative after commissions) and for every winner there is a loser. It is possible that someone made a very untimely purchase of your stock and took a loss on it. Do not feel bad, the market place thrives on novices who feel it is "easy" to take money from the market. They are needed to support the market. Just make sure you are not on the losing end of too many of these trades. The second answer is a bit more complicated. It is possible that you sold your 'scalp' for a nice profit, but the area you sold possibly took out resistance on the 15 minute or hourly chart and got the interest of a day trader who is willing to hold for a bigger target with a wider stop. Then the day trader who buys if from you may hold it for several hours, and sell into the prior day's high, and wonders, "Who bought this stock at this extended price?" The answer to that question may be the 'swing' trader. While it may be extended on an intraday basis, the fact that it traded over the prior day's high may be the trigger needed to entice a swing trader. Again, with a wider stop and target expectation. In addition, at any 'buy point' in any timeframe, there may be a host of other players jumping in based on sound, or not so sound, reasons. There may be real price support. There may be a nice trend holding. There may also be things like moving average crossovers, Gann Lines, Fibonacci levels, uptrend lines, stochastic triggers, MACD crossovers, etc, etc, etc. While any one of these may not be terribly relevant, a certain price area may trigger several of these and begin a rally. The bottom line is simple. Having as many time frames pointing in the same direction as possible, combined with as many 'triggers' hitting in the same area, will be the best chance of getting a stock moving in the right direction. Then your job is to beat the crowd getting in. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
  9. When scanning for stocks that are likely to continue to move in one direction overall, I want those stocks to have a few criteria in alignment. I want the move up to have already started, but not that long ago. I want multiple time frames in alignment. I want the sector that the stocks are in to be in favor by institutions. I also want - and this is important - there to be a VOID of overhead resistance. Here are two stocks that meet all those criteria and are going higher. he above stocks, Prudential Finl. (PRU) and CME Group (CME) meet all of my criteria to move higher. The daily time frames have clearly established their uptrends and are well on their way. The monthly time frames have just move above long-term resistance. The Financial sector is a favorite of many analysts featured in the media. Lastly, there is a clear "tradable void" above for prices to continue the move higher that has just started. These two stocks are going higher based on the criteria I've defined. Greg Capra President & CEO Pristine Capital Holdings, In
  10. The prior Chart of the Week (COTW) dated May 20th was titled "Ripe for Breakout Failures." In it, I showed you a couple of breakout failures and I gave you a few stocks to watch including the S&P 500 ETF symbol SPY. Break-out failures (BOF) are all over the place now and are obvious to even the most novice chart reader. Pristine students, and hopefully you as a reader of these COTW lessons were prepared for the moves lower that have occurred since that time. Many of the daily Break-Out Failures (BOF) have now formed monthly Topping Tails (TT) in May, so let's look at a few and the differences in how they have formed. A Topping Tail (TT) is a signal that buying (demand) was not strong enough to overcome selling (supply) at the high of the range, so prices fell. This can often signal that the end of a long-term uptrend is at hand when the TT forms on the monthly time frame. However, the truth is that we really never know when an uptrend is no longer an uptrend until it doesn't meet the definition of one; higher highs (HH) and higher lows (HL). That being said, with the signal of a monthly TT, those educated in the proper use of multiple time frames analysis can find excellent "swing-trading" and "day-trading" opportunities. Let's look at some different chart patterns with monthly TTs. Before we review the charts, here is some food for thought for those of you are not Pristine Students, yet and are in search for the truth when it comes to understanding technical analysis. I said above that the definition of an uptrend no longer being in effect is a simple way of knowing that an uptrend no longer exists. It's that simple, but virtually every commercial we see to open an "online trading" account (they seem to be endless) and from those that tell you they can teach you how to use technical analysis will show you a break of an uptrend trend line, a moving average, a retracement level or any of the other technical trend tools used to do it. Also added are some of the hundreds indicators that come with an endless combination of settings. All of these are often meaningless as a guide to a trend break and are outright misleading. Sometimes, it may even look like they got it right because the definition was violated at the time (e.g. the break below a prior low) Why do so many use these indicators? I assume it's because that is what they were taught and they never seriously questioned why those indicators fail as a guide so often. Why do the brokers wanting you to open an account with them show these? First, most actually know nothing about the technical analysis tools in the platforms they offer. To them more is better compared to than what the competition may have. They also want you to believe software can make you money. An educated, disciplined investor or trader - with a plan - can make money with any charting software. Let's continue. The TTs in the above charts all formed after what we refer to as a "fluid move" higher. Fluid moves have continuous higher high (HH) and higher low (HL) candles and these preceded the TT. This type of price move is the strongest possible and displays the most certainty about the buyers' view on the stock. This is the type of trend you want to buy on the pullback in anticipation of a higher swing low to be followed by a higher high in the trend. Realize that the lower time frames will not look good to the untrained eye at the time the monthly swing low is forming. That is when the knowledge of how to use multiple time frames will benefit you most. Without it, you'll miss a big part of the move. Here price have spent time moving sideways before the TT formed, so there is a larger area of supply (caught buyers) above. These can also form a higher swing low on a pullback, but these highs tend to be more difficult to overcome. The uptrend has not been violated on any of these, so keep them on your watch list. The TTs within a range tend to continue the erratic price action that has been happening. Red Hat (RHT) has the largest TT compared to its most recent price ranges. For that reason, it has higher odds of testing the bottom of the range. Notice that BRCM has an opposing Bottoming Tail (BT) that is significantly larger than the TT. This suggests that BRCM is least likely to move to the bottom of the range. YUM Brands (YUM) is more neutral since its TT is inside the range of the prior candles. YUM could be a breakout play higher if it stays at the top of the range during a market correction (i.e. relative strength). These two TTs have formed after a breakout above their resistance areas and failed to hold onto the move higher. A breakout above resistance followed by prices falling back to the breakout point historically will result in more selling. Everyone that bought the breakout as well as points inside that TT candle are now holding a loss and are likely to sell on any further weakness. United Parcel Service (UPS) is likely to see more selling pressure than BEAM if it moves below the prior candle's low, which was a BT candle. The reason for that is because of how it moved up from the 2012 low (star). UPS moved up in a "fluid" arrangement of HH - HL candles whereas BEAM move up, but within a sideways to upward motion. You're most likely thinking, "but UPS was the stronger move up, so why would it be likely to see more selling pressure?" That's an excellent question. The answer is because fluid price moves like seen in UPS leave little to no support reference points for traders to use as new buy points if prices pull back. In addition, the BOF in UPS was preceded by a continuation buy signal. BEAM on the other hand has many overlapping candles that display a higher level of uncertainty. Another way of understanding the traders' expectations within these patterns is this: The UPS price move up (fast and fluid) is virtually a sure thing (trade) to continue its move higher. The BEAM move up (slow and overlapping) should move higher, but a stall would not be a big surprise since that is how it has been moving all along. The TT candle in both has changed that to different degrees. Buyers of UPS are shocked to see its continuation of the prior strong move result in a TT. Pristine Tip: Technical Analysis of current price movement and the patterns that preceded it is a representation of the thoughts, beliefs and expectations of all those that created the chart. This includes independent traders, investors, hedge fund managers, money managers, those running auto-trading computers, etc. Lastly, the TT candles in these stocks are also in the process of making lower highs. A move under the respective TT candles lows will begin to establish those lower highs. Each stock fell relatively hard in 2012. Notice the large red candles and the weak recovery in 2013. Clearly, these stocks have shown relative weakness and have higher odds of falling to their prior lows, and potentially below them to make lower lows. The month of May has produced many Topping Tails (TT) candles that have signaled increased selling pressure. As you have read and viewed, the knowledge of a TT without an understanding of the price action that preceded it is close to no knowledge at all. Having some knowledge may be even worse than no knowledge at all, since you are likely to use that information incorrectly and potentially lose a lot of money. Isn't that what we all do when starting out? As you can see, TT candles can and do come with many different arrangements of patterns and the reaction to that TT will be different based on those different patterns. In addition, there are other technical factors to consider like volume, prior support and resistance, market environment at the time, sector rotation, multiple time frame analysis, relative strength or weakness, market internals and more. At Pristine, we teach all of these and most importantly how to combine their information together to find high probability investing, swing-trading and day-trading opportunities. All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc.
  11. The Trend Really is Your Friend How many times have you heard the saying "The trend is your friend." Most likely more times that you've wanted to and if all you had to do is follow the trend to make money there would be a lot more successful traders. The saying really is true, but it's not that simple. There can be many different trends in different time frames, so which one do you use? Here is what I suggest. What I am going to show you is for intra-day trading. However, you can use the concept for swing-trading or long-term investing. Simply change the time frames used. First, understand that is no best time frame to use. It's a choice, there are many and none will be perfect providing you with what will work all the time. Those of you searching for a trading method will hear about using minute charts ranging from 1-minute to as high as a 240-minute chart and anything in between. Charts can also be viewed in seconds of time. They can also be view in Ticks, which is an activity based chart. This can be useful for viewing overnight or pre-market activity when trading volume is low. Then there is also range based charts, which create bars that are all the same range from high to low. There may be other types, but these are the main types used. All of them manipulate the same data to expand or contract it, so make a choice what you'll use and stay with it. Getting caught up in a search for the best type and for the best setting will put you on a never-ending quest for that Holy Grail. Don't do it. Okay, hear is my suggestion that I have taught to many traders for you to consider. Use the 60-minute time frame as the primary trend for your intra-day bias. The definition of an uptrend is higher pivot highs and higher pivot lows. A downtrend, lower pivot highs and lower pivot lows. If a prior pivot low in an uptrend is violated the trend is no longer up since the definition of an uptrend no longer exists and vice-versa for a downtrend. I am going to use a 20-period moving average as a "visual aid" to speed up the analysis here. This helps when scanning many charts quickly to simply view if prices are above or below the moving average. If above the moving average, think long and if below think short. If the moving average is intersecting through the middle of prices back and forth it would indicate that there is no trend, so stand aside. Very simple. Think you can do this? Once you have your bias from the 60-minute time frame, wait for setups that you have defined as such in the 5-minute time frame to enter. For example, if the prices on the 60-minute time frame are below the 20-MA and trending lower, a 5-minute Pristine Breakdown (PBO) or a Pristine Sell setup (PSS) would be taken as a short-sale and vice-versa for a 60-minute uptrend. The price pattern on the 60-minute chart is not important to us for entries. Those come from the 5-minute time frame. It's the trend we are interested in on the 60. Now I am going to show you how to know what that is without having to look at the 60-minute time frame. You may find this helpful since you will be looking at less information; one chart. Here is how to do that. As you recall, I said we would use the 20-MA on the 60-minute chart as a visual aid. What we are going to do is put a moving average on the 5-minute chart that is the equivalent of the 60-minute 20-MA. Here is how to do that. There are twelve 5-minute bars that make up one 60-minute bar. For that reason, we are going to multiple the 20-MA by twelve, which gives us a 240-period moving average. View a 60-minute time frame with a 20-MA and then look at a 240-MA on the 5-minute. You will see that they are virtually the same and end in the same place or very close to it. Here is the plan. When the 20-MA is under the 240-MA and trending lower on the 5-minute time frame take short setups. When the 20-MA is above the 240-MA and trending higher on the 5-minute time frame take long setups. Be aware of prior support and resistance areas and more importantly the lack thereof. These will affect turning points within the trend or allow prices to trend. Greg Capra President & CEO Pristine Capital Holdings, Inc.
  12. This stock isn't going to be the next big mover like Apple (AAPL) was in its hay-day, but it has formed a bottom and signaled the start of a move higher last week. Bottoming formations take time and typically have multiple retests of prior lows, breakdown failures (BDF) and false starts. One signal that has had a high degree of not being a false start coming out of a base is the Bullish Wide Range Bar (+WRB) on increasing volume. After falling lower with virtually no bounces at all in 2011, Corning Inc. (GLW) began to form a bottom. Like most bottoming formations GLW had its retests, failed attempts to move higher, (none ever cleared any prior highs) and a breakdown failure that was retested. Notice after the move up from that retest GLW based sideways at resistance. Pristine Tip: Basing at resistance after a move up signals buyers absorbing the supply and bullish. Last week, GLW formed a +WRB with increasing volume and closed above its recent resistance area. Look further to the left and you will see other large green candles, some even with an increase in volume, but none of them cleared prior highs. Those prior highs still have to be overcome; however, the price action that has occurred after them suggests that is going to happen. By putting together the parts of the overall price action that has occurred we have the making of a bottom and bullish signal. I could have put a few indicators on the chart to show you how they are becoming bullish and signaling a move higher also. Most likely would create a belief in those indicators as a reliable way of determining a bottom. In time, you would be moving on to the next indicator someone else used. This is the cycle most go through forever and never understand how to read the interaction between buyers (demand) and sellers (supply). Bottoms form in different ways, but if you learn to read the price action the way I've explained, you will be able to determine when that is happened. Whether you trade stocks, commodities, currencies or the market indices learn to read the price action, not indicators that attempt to read the price action for you. All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc.
  13. This stock isn't going to be the next big mover like Apple (AAPL) was in its hay-day, but it has formed a bottom and signaled the start of a move higher last week. Bottoming formations take time and typically have multiple retests of prior lows, breakdown failures (BDF) and false starts. One signal that has had a high degree of not being a false start coming out of a base is the Bullish Wide Range Bar (+WRB) on increasing volume. After falling lower with virtually no bounces at all in 2011, Corning Inc. (GLW) began to form a bottom. Like most bottoming formations GLW had its retests, failed attempts to move higher, (none ever cleared any prior highs) and a breakdown failure that was retested. Notice after the move up from that retest GLW based sideways at resistance. Pristine Tip: Basing at resistance after a move up signals buyers absorbing the supply and bullish. Last week, GLW formed a +WRB with increasing volume and closed above its recent resistance area. Look further to the left and you will see other large green candles, some even with an increase in volume, but none of them cleared prior highs. Those prior highs still have to be overcome; however, the price action that has occurred after them suggests that is going to happen. By putting together the parts of the overall price action that has occurred we have the making of a bottom and bullish signal. I could have put a few indicators on the chart to show you how they are becoming bullish and signaling a move higher also. Most likely would create a belief in those indicators as a reliable way of determining a bottom. In time, you would be moving on to the next indicator someone else used. This is the cycle most go through forever and never understand how to read the interaction between buyers (demand) and sellers (supply). Bottoms form in different ways, but if you learn to read the price action the way I've explained, you will be able to determine when that is happened. Whether you trade stocks, commodities, currencies or the market indices learn to read the price action, not indicators that attempt to read the price action for you. Greg Capra President & CEO Pristine Capital Holdings, Inc.
  14. 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.
  15. Good Morning All; Last week I began discussing a definition of trading. Today we are going to discuss how newer traders often define trading, and the process they go through to get there. What is Trading? Part 2 of 2 Many people 'invest' in the market by placing a 'bet' on the future of the stock market as a whole (usually the bet is that the market is going up). For those who decide to make income by actively trading, they usually feel the market is easy. They have been inspired by a great (or not so great) book, free seminar, or 'infomercial'. They have heard of great success, been introduced to a strategy that worked one time, and feel that since they are clearly above average in both intellect and perseverance, this stock market game will just be another conquest. Their definition of trading is likely along the lines of 'buy low and sell high, over and over again to produce a profit'. Soon after trying the concept that they learned which had introduced them to the market, they become frustrated. It is not working. They have probably justified many reasons why it is not working, and have concluded that to truly master the markets, they need more information. Therefore, they go on the crusade to become experts at everything. They read Barron's, IBD, Fortune, and Money. They study all terms learned on CNBC. They become an expert on all news and economic numbers. Suddenly the party conversation becomes analyzing the last 'book to bill number' or how foolish Greenspan was or Bernanke is. The quest now becomes to find stocks that they have determined to be 'undervalued', based on the superior knowledge they now have. Their definition of trading is now likely along the lines of 'looking for obvious overvalued and undervalued situations to capitalize on'. Soon they discover that 'undervalued' does not mean the price has to rally. If it does rally, their timing may be so far off, being 'right' did not matter. They also find they are not 'right' very much. They also discover that 'undervalued' goes hand in hand with 'really weak' and they are now starting to think that they are still missing something. They are also getting frustrated. This was supposed to be easy. Most still view it as easy at this point. They simply have had some bad breaks, rotten timing, poor luck, and naturally needed to overcome some growing pains. Unfortunately, it is at this time that they become most susceptible to the prey of the 'Holy Grail' vendors. Those who are selling products that are 'guaranteed' to make you money by following a simple 'how to' manual. When this crosses that, buy; when this changes color, sell, etc. Their definition of trading is now becoming blurred, and they start to think about many in depth questions about 'fundamental versus technical', about using 'technical indicators'. Desperation and lack of confidence often sets in and the definition of trading is sounding more like 'buy whatever the newsletter or market guru says'. If this flow sounds shockingly familiar, do not be surprised. At some point, a few will wipe the slate clean and seek out an 'education'. To learn to think for themselves and evaluate what is happening, not what they are being told. They come to understand that trading is a complex ever-changing environment that requires understanding as only derived in a total learning process. Below is the definition we gave you for 'trading'. If you read over it lightly yesterday, take another look today. "Using technical analysis to find a moment in time when the odds are in your favor. Then it becomes a matter of 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, then having the DISCIPLINE to handle the trade properly when it goes in your favor and properly when it goes against you." Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
  16. Last week, the broader markets broke out above their current resistance areas and S&P 500 finally joined the all-time high list. With no area of prior price resistance above, it's safe to assume that the markets will be continuing their march to higher levels. Finally, mutual fund investors that bought into the market at the highs in 2000 or 2007 and suffered long through 50% decreases and slow recoveries will see a gain on their investment. Happy times are here again!!! Hold on a sec., it's not that easy. As students of the markets and educated investors, swing traders or day traders, we don't assume anything. Following the trend is the simplest approach there is, and it works. However, human nature being what it is, without an objective method of determining the underlining strength or weakness and sentiment of the markets. We are more likely to ignore or rationalize the warning signs of change or the actual trend change itself when it comes. Of course, this assumes you have a method of doing that. I have seen enough trending markets to know that they always go further than you think they will. They continue their move until they have rung out the last few doubters and I think the markets now will do that with this uptrend as well. An example of a trend that moved beyond what the majorities believe was possible is Apple (AAPL). It moved from 100 a share to 300, 400, 500, and then 600! The doubters were rung out. At 700 there were few that doubted it wasn't going higher. Then when the turning point came; well, it's a temporary stall. It will be back to new highs shortly. Maybe it will at some point, but AAPL is now down 40% from its all-time high and still showing relative weakness to the broader markets. The greed and fear that comes with being human cannot be stopped. AAPL investors are realizing this now, but with an online trading education you can empower yourself to overcome that human fault as it relates to investing your money in the markets. Here is what I am looking at now to guide me about the recent move higher in the broader markets. n the above chart, I've put together four market index ETFs. The S&P 500 ETF symbol SPY, the Nasdaq 100 symbol QQQ, the Transportation index symbol IYT and the Russell 2000 index symbol IWM. I also have two market internal gauges. The McClellan Oscillator, which is a measure of market breadth and a Put/Call ratio with a 5-period moving average of its closes. We have many markets that have made all-time highs (not shown other than SPY) or have broken out above resistance like the Nasdaq 100. However, IYT did not move to new all-time highs with the recent move higher and is under its resistance. IWN also could not move to all-time highs and is under its resistance area. Historically, these two indices not confirming have been warning signs of underling weakness that preceded a market correction. It's too early to say these two indices will not move higher above their respective resistance areas, but should they establish lower highs and move toward their recent prior lows, it will be a bearish signal. If they move above their resistance areas, it's happy days - onward and upward! The internal gauges shown here are neutral. The McClellan is near zero and the 5-MA of the put/call ratio is in the middle of the range, so no guidance there of a turning point. However, those typical "wrong-way" option traders immediately jumped to buying puts (bearish bets) Friday. This is a short-term bullish sign that supports the breakout last week in SPY and QQQ and a continuation of that strength last week. That strength was not confirmed by all indices, so we have divergences that are concern. However, with option traders that are historically wrong and betting that the markets will move lower, the divergences are offset by those excessive bearish bets. With this, I'll be neutral over the next few days, but siding with the breakout to continue higher. Greg Capra President & CEO Pristine Capital Holdings, Inc.
  17. There is a common sequence of events that most traders go through during their development. This begins when many of the strategies that the trader is learning begin to come together and the trader begins to see the light. This can happen slowly with a cautious trader who has been paper trading or playing with a small share size. This can happen for aggressive traders as they start to have some big numbers in profit on some of their better days. However, while the trader begins to feel good, there usually are some lingering problems. While the light seems to be coming on, the account is not growing. It seems that every time some progress is being made, something happens that stops this progress and the account does not grow. It is 'one step forward, and two steps back'. If this is something that you can relate to, you are not alone. Spending time in this area to understand this process is very important to your development as a trader. If you review your records you will likely find several good trades throughout the week, and then a bad trade. One so bad it really sticks out. So bad, it erases all the hard work of the prior gains that you were so proud of. It may show up as several profitable days and then one day that erases all the prior gains. If this is the problem you are having, there is good news and bad. The good news is that you are now doing well with the 'technical part' of trading, and now have to deal with the psychological part. The bad news is that you are now doing well with the 'technical part' of trading, and now have to deal with the psychological part! Psychology is not an easy thing to deal with. The answer? First, it's self awareness. It's identifying the issues at hand as being psychological. Once we've admitted we have the problem, we must build and change our Psychology so that it is conducive to making money in the markets consistently and without fail. We teach many procedures that traders can take to help their progress at this point. Use a trading plan, keep detailed records, and track the strategies you use. Print charts of your trades to analyze your discipline, trading plan, and strategies. Make a plan to eliminate recurring problems. Use money management that prevents catastrophic trades or days. Once the trader eliminates their 'demons', they will likely see an improvement in their trading. Unfortunately, that is not the end of the psychological issues. Sometimes a trader uses all of the above tactics to make great improvements and even become successful, then gets 'over confident' with their new success and abandons everything that got them where they are. The road will always be full of new challenges, the traders that thrive have on ongoing plan and a commitment to patience and discipline. Jared Wesley Contributing Editor Interactive Trading Room Moderator Gap, Intra-Day and Swing Trading Specialist Instructor and Traders Coach
  18. 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
  19. 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
  20. 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.
  21. 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
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