PristineTrading

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.

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.

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.

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

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

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

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.

Last Monday, February 25th, the broader markets gapped higher and then declined all day to close near the session lows. It was a wide range bearish day that suggested more selling was to come and it did - for a couple of hours. I too thought there would more selling than what did occur, but here's why I knew it wouldn't be a major decline as so many thought it would be. At the end of the day on the 25th, there wasn't much reason to think there wouldn't more selling to test lower price support. That night I posted at the Pristine Facebook Group "Today's reversal suggests more selling is coming. However, major declines historically do not happen with the typical wrong-sided option traders already betting heavily on a drop. I cannot get too bearish based on that." The above current chart was updated until the 25th and was also posted to show my reason why I did not expect a major decline. Historically, major corrections do not happen with option trader sentiment being bearish already and they positioned for the drop. That being said, I didn't think the drop was over that day either. Most options traders have a short-term bias, which tends to cause erratic moves in the ration day today. For that reason, we smooth the day-to-day fluctuations with a moving average (blue line) for a bias at extremes. We can also look at the sentiment of intermediate to long-term investors as a guide. The American Association of Individual Investors (AAII) surveys their membership each week if bullish, bearish or neutral. Let's look. Other than short periods in 2010 and 2012, these investors have been bearish on the markets. Those times of bullish extreme a market pullbacks happened that turned them bearish again. Not enough of these investors have turned bullish now, which would signal a correction. So this ratio is also saying to stay still bullish. When AAII Bull Ratio turns bearish and the typical wrong-sided option traders are buying too many calls (bullish bets), it will be time to look for a larger correction. Markets moving to new all-time market highs are likely to start that shift in sentiment. The brown line above is of the S&P 500 ETF symbol SPY. Prices are close to the all-time high from 2077 and that does suggest corrective price action. Isn't that what we have been seeing? Yes, so far that corrective action has been sideways on the daily time frame, rather than down. On the above weekly line chart of SPY, the dark green line is marketing Minor Support (mS)and the light green line is Major Support (MS). A pullback to the dark green line or midway between both lines (if prices do pullback) would be a normal bull market retracement. Below the light green line and MS and the weekly uptrend would be broken. The blue line is one of our guides of when a larger correction of more than 20% is not far off. The line is the difference between long-term interest rates and short-term interest rates. Historically, when it moves under zero (an inverted yield curve) a recession and larger bear market is not far off. As you can see, it's nowhere near that level and still bullish. It may be hard to accept a bullish bias when the markets have moved as far as they have over the last few years, but that is why we use market internals as a guide. Not our emotional beliefs. Until sentiment becomes bearish, history tell us that the markets are not likely to experience a major decline. That doesn't mean bull market corrections will not happen. I hope we get one that will setup a new buy. However, the odds that the majority of the option traders will ever or are catching the top now are low. Greg Capra President & CEO Pristine Capital Holdings, Inc

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.

You find a near perfect Pristine Buy Setup, meeting all the requirements of your trading plan, and devise a plan to trade it. Now the stock is at your established entry price, you click on the buy button, and it's done! You just bought yourself a position in XYZ. Whatever outcome is produced by this position should be considered your responsibility. Both a positive or negative one. But this isn't always the case. Our culture has suffered from a loss of the personal responsibility values that built it. These days, an individual walks into a McDonalds and after getting fat due to the excessive consumption of burgers, sues the company for making him fat. It's the old "the devil made me do it" rationale. But we have to understand that every action, even the decision not to-do something, is made by the individual out of free will. When an individual considers taking some course of action, he will compare the perceived positives and negatives of taking such action, and if the positives outweigh the negatives, he'll proceed with it. This same rationale can be applied to trading. When you take a position, it should be because the probable positives of taking such a position outweigh the potential negatives (High odds). A proper trading plan should see to this. Novice traders, never seriously considering the negative potential of any trade, will base their decisions on a constant bias towards the positives. When your stop loss price is hit, you and only you are responsible for the outcome of your trade. It's easy to blame specialists, market makers, or other dastardly subjects for your loss. But it was you in the first place that decided to buy/sell short that position. You should have considered all the probable positives and negatives of taking such a trade. Is this a NYSE stock? Learn about the execution conditions that exist in listed stocks before taking that trade. Is Bernanke speaking while you plan to hold on to your position? It's your responsibility to know all possible implications. At the end of the day, you take a position, and it either moves in your favor, or against you. If you're right, you'll make money; if wrong you'll lose some. In either case, you and only you will be responsible for the outcome. Understanding this is a step towards professionalism. KURT CAPRA Contributing Editor Interactive Trading Room Moderator 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. 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

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. These next three articles will discuss this issue, and are geared toward the 'intraday trader', not the swing trader. When to Trade What, Part 1 of 3 The comment above said that trades can be done any time of the day, does that mean even lunch? Yes. While it is often much discussed 'not' to trade lunch, part of that statement is left off. Do not trade lunch, unless you know how to trade it. Lunch is the time when many traders get into trouble, because they do not realize that many things will not act the same during lunch as they do during 'non-lunch' times. The first issue to consider is the volatility and target expectations. If you could give a 'volatility rating' to the market, or stocks in general, it would look like this. If things move '1' during lunch, they move '3' between 2:15 and close, and move '5' between open and noon. If you do not realize this, targets will be unrealistic and lead to frustration. Before Open: So how do you focus your time? For many people, the time spent between 8:30 and 9:30 may be the most productive (all times are Eastern, New York, market time). Preparing your watchlist, forming a gap list, and starting a market bias can be key to how your day goes. Get ready for the open by picking the best of your favorite stocks, the best of your daily watchlist, and the best of your gapping stocks and know how you will play them, if at all, before the market opens. The First Five and Thirty Minutes: Very few traders realize the power of reversal times, or the power of having the knowledge of how to trade each part of the day. Most traders, who play trends and breakouts, should not even be playing the first thirty minutes of the day. Look at your records. The chances are that you have a very low batting average for trades taken during the first thirty minutes. The only trades that should be taken during the first thirty minutes are based on gaps or other very special strategies. The 9:35 reversal time is one of the most reliable, yet few traders realize its power. Many get stopped out of plays, rather than profiting from, the 9:35 reversal. The above chart shows an example of a price pattern that gapped bearishly, sold off hard for less than two minutes, and turned around so quickly, most traders who mistakenly tried to short the move down suffered losses. Knowing that this flurry move down offers a buying opportunity on a regular basis when played on the right stock can turn potential losers into big winners. Once the five-minute reversals are over, many stocks have solid moves into the 10:00 reversal time. This reversal time can run anywhere from 9:50 - 10:10, but the power move usually comes closer to 10:10. Trends between 9:35 and 10:00 are usually very reliable, if backed by a strategy. However, 10:00 or 10:30 are the reversal times that often set highs or lows for the day. Stocks that do not reverse at these key times may go on to be 'power trends'. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

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.

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

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.

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.

Trading today is more popular than ever. Countless individuals flock each year to the markets, hoping to make large amounts of money, many attracted by misleading commercials promising simplicity and easy access to riches. Many of these aspiring traders fail. In as much as we would like to think that each individual commits different and very particular mistakes in his quest for success, my experience as both a trader and Pristine Certified Trainer (PCT) has shown me that most traders typically fall prey to the same problems and mistakes. The following are just but some of the typical ones: Lack of a Trading Plan. Most traders lack a well conceived plan to trade the markets, and most mistakes committed by them can be summed up in this category. The lack of a decent plan means that the trader won't know which "events" to focus on, the rules to trade those events, money management rules, etc. Typical mistakes such as not taking stops and overtrading can be attributed to this problem. Lack of Confidence in his Tactics. Traders will only execute effectively if they're confident about the odds of any particular tactic. Learning it in a seminar isn't enough. You have to test it yourself, and reach a level of comfort and confidence that will allow you to execute with precision. Trading Under Monetary Pressures. Since people think that this is an easy road to riches, many leave their jobs or expect to make an immediate living trading the markets. Nothing is more detrimental to your success as a trader than facing the pressure to perform. Now, traders are focused on money, instead of technique and this leads to "dollar counting" which is detrimental to a traders progress. Trading with Insufficient Capital. Undercapitalized traders face two typical problems. One is the fact that they'll tend to take positions that will utilize a big percentage of their accounts, which in turn might produce losses that will be more significant than they should be. This is another reason why traders don't take stops. Lack of Proper Technology or Too Much Reliance on Only Technology. Traders that lack the proper technology, either because of the fear of using advanced systems or lack of commitment to obtaining them as a necessary cost of doing business, face a debilitating disadvantage as they can't process information quickly enough, and as we all know, this is a business that deals with the rapid analysis of information. On the other hand, there are those that think that technology alone, without the proper training and method, can solve their problems. An aspiring trader with no method, who just relies only on technology, is operating at a huge disadvantage. KURT CAPRA Contributing Editor Instructor and Traders Coach

Good Morning All: In the last issue, I gave you part three 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 four. 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 do not 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 our famous 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, and is the subject of today's discussion. Four Things That Will Change Your Trading Career: Part Four of Four It is time for the fourth and final rule of this series. As we have mentioned in the introductory paragraph of each of these four lessons, this is not really a 'new' rule. However, the first three rules are ineffective and worthless if you do not know the fourth rule. The fourth rule is to simply follow up to make sure that you are doing each of the first three rules properly. Now, DO NOT stop reading this and say, 'yea, yea, follow up, I know'. There is an exact procedure that must be followed. When this is followed, traders are always shocked and amazed at the results. 1. Print out the chart for the relevant time frame(s) for the trade you took. If it was a five minute Pristine Buy Setup, print the five minute chart. 2. Write the name of the strategy you played on the top of the chart. 3. Take a 'green' marker, and mark in the correct entry, stop, targets, and management, based on your trading plan. 4. Now take a 'red' marker, and mark in the actual entry and exits you had based on your trading records. 5. Now decide if the play you did was substantially correct according to your trading plan. If it was, write a 'good' on the top of the page. 6. If the play was not correct according to your plan, write a 'bad' on the top. 7. If the play was bad, put the reason why on top. Save these until the end of the week. Over the weekend, take all the 'good trades' and start a binder of good trades, saving the best examples of each of your strategies. We are very visual people, and learn best by pictures. Take all the 'bad' trades and categorize them by the reason they were bad. Take the number one mistake you committed that week, and do whatever necessary to resolve that problem the next week. Eliminate ONE mistake every week. Please keep a couple of important rules in mind. First of all, this process MUST be done at least 30 minutes AFTER the market closes. Traders often do not think properly when the market is open, and you will 'rubber stamp' any trade you do if you look at it soon after you close out the trade. The best case is to wait until that evening. Second, it is BEST to hand write on the chart. Print the chart, then use your own hand to write on the chart. Many like to use Power Point or other software, but the best learning will come from having all of your senses involved. If you must, it is better to do this on the computer than not at all, but try doing these by hand, as shown in the example above. This concludes a very important series of four lessons. If you are serious about your trading, see how well you currently do at these, and vow to follow them religiously for a week. You may be surprised. Closing Comments Even if you have not been following these four 'secrets', take the time to do this one. Print up some charts, and go through the procedure, even if you do not have good plan, or don't feel you even know what to look for. You will be shocked, and you will have a whole new perspective on the four things that were discussed over the last four weeks. I hope you have enjoyed this series of articles. Until next week, good trading. Paul Lange Vice President of Services 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.

Good Morning All: "Amateur traders want to be right; professional traders want to make money." Today's topic reflects off the very true and powerful quote above. Many of these Monday Morning 'Eyes' editions are technical ones with charts and lots of markings on the charts. However, many of the best ones are just words. They are comments on 'soft' topics, such as the topic today. The Need to Be Right If you are in the stages of learning to trade, you will become a compilation of all those from whom you learned. You will become your own unique breed of trader. We all come to the table with certain expectations and beliefs. We all come with some emotional baggage. We all learn from reading, studying websites, and other traders. Some informally, some by paying for education in the form of trading rooms, seminars and mentors. Every time you learn something, it adds to your experience as a trader. Eventually you become the sum of all you have learned. Even if you have a mentor you have tried to emulate, you will never be exactly like your mentor. You will be unique. However, while no two traders are identical, most successful traders do share some common characteristics. Most have learned the value of a trading plan. Most have learned the need for stops. Most have learned many other disciplines that have I have addressed in a previous weeks of "Eyes". It takes many a long time to understand the subject of this article. That subject is, the belief traders have that they need to be "right". The topic is a simple one. Yet it eludes many traders. It seems only obvious that if we want to be successful, we need to be right in our underlying assumptions in our trades. If we want to trade stocks, we should focus on being 'right' about the direction stocks are going. Correct? Well, not really. Most traders focus too much on their need to be right. This can be detrimental and needs to be addressed. The truth of it is, we are dealing in the stock market. There is not a system, method or pattern that can produce accurate results all the time. If there were, it would be known to all. All would be using it. Ironically, if this was the case, when all started using the system, it could no longer work. A 'catch 22' of sorts, but just goes to show that it is obvious that there will never be a perfect system or indicator. The best we can do is to study each situation, collect the evidence, and make a high probability decision at the proper moment. What is of primary importance is how the situation is handled when the trader is right, how the situation is handled when the trader is wrong. What is the most common reason traders fail? The answer is not following stops. What is another top reason traders fail? The answer is not letting winners run. Not following a stop is an example of handling the situation improperly when a trader is wrong about the trade. Not letting a trade hit a target is an example of handling the situation improperly when a trader is right about the trade. What good is being 'right' if you are not paid for it? Good traders assume from the beginning that the trade may go bust. They know how much money they have risked. They know when they will get out, and they will analyze other options, such as profiting from the stock, which is now moving 'against the odds'. Good traders also know how go balance being 'right' and being timely. I know of an advisory service that took credit for predicted the fall of the Dow in 2001. The only problem is that they began that prediction when the Dow hit 6000 a long time before that. Quite a hollow victory. Waiting for too much information may make you 'right' more often, but to what avail? It is like the trader that finally decides the NASDAQ is going higher intra-day, because it broke the high of the day. The only problem is that the NASDAQ rallied 30 points to come back to break the high of the day, it is so extended, there is no room left for profit. The trader may be 'right', but his late decision awards him no money. Closing Comments: Yes, we need to be 'right' a fair amount when we trade. However, if your average winner is three times your average loser, you only need to be right 25% of the time to be breaking even gross. Accept that this is not an exact science, and never will be. We are reading peoples emotions. Accept that you will be wrong a certain amount of the time and accept that graciously. Done properly, this is a very profitable business. Focus on how you handle your winners and losers. Make timely, high probability decisions when you have sufficient evidence, and do so consistently and objectively. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.

Market timing can be made complex or simple. I have studied many methods and definitely found the simple approach the way to go. Those studies were a quest for finding that method and what works for timing and what doesn't? What you'll find surprising is that the typical tools used by the majority do not work. I know you're interested in what does and I'll show you. Before we review what to use, let's review some of the methods often talked about to determine market turns. Almost all of them will give a signal after a turn of some form has already happened. For example, the break of an uptrend trend line will signal a violation of the uptrend since prices have already moved lower. However, haven't you see uptrend lines broken that were followed by an almost immediate reversal back up in the direction of the trend? I have many times and found them inaccurate. Let's think about the use of a trend line. An uptrend line is drawn by "connecting the dots" and is supposed to show you a support line that is projected into the future. If that line is violated, it signals the end of that uptrend. Why should that be the case though? Can you really locate significant reference points of support by drawing lines on a chart? How do you know you are connecting the right dots? And since there are different points that the line can be connected to, should you draw from all of them? And, what if those lines intersect, does that make for a more significant support point? And then, what if you change the time frame from a daily one to a weekly one? Doing that has now changed the "dots" to connect to. Are the lines in the weekly time frame more significant than those in the daily time frame? Getting complicated and confusing isn't it? What about moving averages as a market timing guide? Okay, which one should be used? Is a break of the 50-day moving average a trend violation? How about the 100-day? Surely the break of the 200-day moving average would be bearish. However, by the time prices made it below the 200-day moving average the trend would have been violated long ago. There are also moving average crossovers. Again, which moving averages should be used? The 5-MA crossing the 20-MA is a popular combination. Then there is the "Golden Cross" of the 50-MA crossing the 200-MA. Golden cross sounds impressive. Then of course, there is the question of what type of moving average to use. Simple, exponential, weighted and there are others, even optimized. The combinations are endless. If you have asked yourself these questions in an attempt to figure out a method of timing the market's turns you're not alone. I suggest that you forget these types analysis and others revolved around price indicators. They are useless for market timing. If you're thinking we need the more esoteric types of analysis like Gann lines, Gann Square of Nine, Elliot Waves, Any Waves, Fibonacci Lines, Cycles or planetary alignments you can be relieved. We want no part of that hocus pocus type of analysis. What you need to use for market timing are market internal gauges based on market breadth and traders' sentiment. Data to measure breadth consists of stocks making new highs and lows, advancing and declining stocks, the volume in advancing and declining stocks. These can even be combined with formulas that use that data. These are excellent ways of determining the odds of a market turn, since they give us a clear measurement of when they reached an historical extreme. In other words, they tell us when the broader markets have moved too far in one direction or the other based on what has actually happened compared to the past years. They also warn us before the turn. We don't have to use all of these breadth gauges and are going to keep this simple. You may think prices have moved too far, but how many times have prices continued to move much further than you thought they could. Or you thought that prices would move further only to see them reverse. Breadth gauges provide an objective measurement based on the history of the broader market's internal movement, not the recent price movement of one index. Sentiment gauges tell us how traders, investors and institutions "feel" about the markets. Are they too bullish, too bearish or too complacent? Sentiment surveys, Put/Call Ratios and Volatility Indexes are excellent tools for measuring the current sentiment against the historical extremes. This letter cannot cover all the breadth and sentiment gauges available, but what I will show you are a few things that can be found at free websites or in your charting program. They are also easy to use and understand. The Volatility Index (VIX) is a measurement of anticipated future volatility in the market. Extreme highs are associated with market lows and extreme lows are associated with market highs. In other words, the Volatility index moves inverse to the market. A move to support in the VIX is short-term bearish and a move to resistance is short-term bullish. I say short-term because a significant turning point would require other information that the VIX cannot provide. Pristine Tip: short-term market timing requires a combination of breadth and sentiment gauges. Currently, the VIX is at a low point where it has turned up from over the last few years. This is not near an all-time low, so the VIX could move lower or sideways. Over the last few trading sessions, the VIX has been holding this area and the daily ranges have been narrow. This type of price action in the VIX has historically preceded a short-term move up. Set an alert at 14.00. A move above would be a short-term bearish confirmation. In the above chart, is the S&P 500 ETF symbol SPY, the McClellan Oscillator and the Equity Put/Call Ratio with a 5-period moving average of that ratio. The McClellan Oscillator is simply the difference between to moving averages of the daily fluctuations of advancing stocks minus declining stocks. Historically, when the oscillator moves to between plus or minus 100 and 200 a short-term reversal is likely. However just like the VIX, we won't rely on the McClellan Oscillator alone for a signal. At times, extremes are actually confirmation of a move to trade with, not against it. The Equity Put/Call Ratio tells us how many puts are being bought (bearish bets) verses calls (bullish bets). The ratio moves up when more puts are being bought than calls and down when more calls are being bought than puts. The day-to-day movement can be very erratic and may not mean much. However, when the ratio moves to an extreme, we want to take note of it. When the 5-period moving average of the ratio is at an extreme as well, it is a much stronger indication of a short-term turn. Again, we will not rely solely on the Put/Call Ratio. What we are very interested in is when there is an extreme in put buying (bearish sentiment) at the same time there is an extreme in stock selling (bearish breadth). This would signal a market low (green area). We are also interested to know when there is an excessive amount of call buying (bullish sentiment) with an excessive about of stock buying (bullish breadth). This would signal a market high (red area). Currently, The McClellan Oscillator is into a short-term bearish extreme and the Put/Call Ratio moved to a bearish extreme last week; however, the 5-MA of the Put/Call Ratio has not reached an extreme yet. This is telling us that risk for longs is rising short-term based on the gauges covered, but without the 5-MA at an extreme of call buying there is still the potential for higher prices. Any market move to higher prices should get option traders "all-in" and the odds of a pullback in the market would increase based on our gauges. There you have a simple method for market timing. Is it 100%? Of course not, but it is good, simple and easy to understand. I know it will serve you well over the years as it has for me. Greg Capra President & CEO Pristine Capital Holdings, Inc.