Trading To Win - Bryce Gilmore

w
Course
One Doy of o Time

By
BryceGilmore
lcl2004
A completeguideto S&P500FuturesTradingIntra-day
All RightsReserued:
BryceGilmore& Associates
PtyLtd.
Australia.
Queensland.
Trading to WIN Course - One day at a time
[c] Bryce Gilmore2004
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The Author:
I havebeena successful
traderin oneform or anotherfor mostof my adult
life.I haveworkedindependently
for myselffor the past32 years.
In 1981whileI was in Londona traderfriendof minetook me into his
broker'sofficefor lunch.This is whereI sawfor the first time a completely
differenttradingworld,the futuresmarkets!
WhenI returnedto AustraliaI openeda commodity
futurestradingaccount,
bought2 contracts
of ComexSilverandproceeded
to try my handat trading
paper.MyfirsttrademademeUS$11,500
in twoweeksandI washooked.
It wasn'talwayseasygoingbut overthe next few yearsI was completely
absorbed
withthe mechanics
of the futuresmarketsandbeganto developmy
ownsofturare
to explorethe methodologies
of ElliottandGann.
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BryceGilmore
By 1989I had gaineda reputationas an authorityon Time and PriceAnalysis
and becamewell knownto serioustechnicalanalystsfrom aroundthe world.
It has beena pastimeof mineto teachpeopleto trade from my earlydaysin
this business.
In recentyearswith the adventof electronic
tradingand cheap
commissionrates the growth in day trading volume has openednew doors
andthat is whatthis courseis about- takingadvantage
of the opportunity.
I believewith the helpof this TTW courseand also my Dynamicnme & Price
Analysisbook (2002), anyonewho is willing to put in the hard work will
definitelybe ableto makean excellentlivingas a professional
futurestrader.
Formoreinformation
on my profileyou shouldvisit my web site:
http: / /www. bryce-gilmore.com/
Tradingto WIN Course- One day at a time
[c] BryceGilmore2004
Contents:
Subject
Page
Introduction
Tradingto WINTools
Section1: Practical
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CloseStops
2
3
4
5
6
7
8
Market Mechanics- howfuturesmarketsoperate

Suppoft - Resistance& TREND
Three Bar Swing chafts - buyingandsellingbias
Old Highsand Lows- areasof support/resistance
The 50o/oBalancePoint Rule
The 1:1 OverbalancingRule
The 2 day correctionrule
15
23
25
28
29
32
3B
Shoft Term Trend Indicators
39
10
Bars
Bars- OutsideReversal
ReversalBarc - Reversal
Doji Hammers.
Gravestone
- Numerous
examplesof Intra-day
Patterns
Revercal
Patterns 3 drivesto a top.
Reversal
- Old
- Breakouts
ContinuationPatterns - Rectangles
Support= NewResistance.
43
13
GeneralPatternTools- Linesin the Sand- Higher

HighsHigherLows- Lowerhighslowerlows- Trendlines
Triangles.
5B
T4
DailyRange.
Days,TheAverage
Gaps,GapReversal
63
15
OpenInterest in futures markets.
7B
16
NewsEvents/ Repofts/ EconomicIndicators.
87
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Fail SafeTRADEENTRYtechniquesand exit rules.
96
11
t2
t7
47
53
There are others but I will introduce these later in the course as they require
extra knowledge to implement correctly.
1B
Daily RangePatterns
106
19
Section1: Summary
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Contents
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- tradingtools
PriceGeometry
Section2: Dynamic
you needto understand
to WIN.
Ratios
SacredGeometryandthe Cardinal
Ratiosin MarketCorrections
Geometric
BearMarketTrends
BullMarket
Trends
10
24
33
Alternate Waves& RetracementLevels

The ReverseCross
Inside, Outside& DoubleCrossLevels
50
52
56
Approach
My X-ABCDPriceGeometry
5B
9
10
11
t2
Pastexamples
reversals
of X-ABCD
Levels& Targets
OddBallRetracement
Bread& ButterTradingSet-ups
MarketLogic
73
B2
B5
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Section3: Dayto DayandWeekto Week

Daily Check List
MOB(Makeor Break)Levels
1: 1 Overbalancing
levels
61.8 50 38.2levels
3 day Swing
AverageDailyRange
DailyTrendIndicators
MarketReports
Weekly Check List
Timing
GannLevels
ElliottLevels
MarketMood
t4
Contract Rollover - 1"t Month

Thingsto considerin the rolloverperiod.
26
Section
4: Summaries
The PsychologicalAspectsof Tradingto Win
in the S&P500
A day by day accountof my experiences
2003.
fromthe endof July2003to midSeptember
My thoughts on how to beat the market
42
A look at the S&Pmarket prior to publication
46
Esignal- APPENDIX
s4-Bs
Information on my internet Tradingto Win Group:

This group is a selectclub of traders,and is steadily
growing.Detailsfor entryare on the bulletinboardof my
website.
http: / / bryce-qilmore.com
/ bulletin.htm
Testimonialsfor studentsand professionaltraders:
Theseareon mywebsite:
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http://www.bryce-g
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Iletin.htm
com/bu
Steve Rifl<in'spersonalS&Pmentoring program
Information
for traderswho needhandson helpto grasp
Youwill find linK to
the correctapplication
of my methods.
thisinformation
on mywebsite.
http://bryce-gil
more.com/bulleti
n.htm
INFORMATION ON MY XABCD INTRA.DAY

SOFTWARE
pricegeometry
Foranalysing
eitherintra-dayor daily,
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http://www.bryce-g
iImore.comDGBCDpa
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Contents
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Tradingto WIN Cowse- One day at a time
Introduction:
Oneof the failuresof mosttradingbooksI havereadin the pastis thatthey
leaveout the "humanelement"associated
with the day-to-day
of
behaviour
mostof ourmarkets.
Marketsare livingthingsand reactto currenteventsas well as technical
eventsratherthanto just movealongwith no consideration
for the outside
you
world,as mosttechnical
bookswouldlike
to believe.
Technical
Analysis
tradingrequires
an
alonewill nota tradermake.Successful
understanding
of the players,as well as the technicaland the fundamental
aspects
of anymarket,anda continuing
handson day-to-day
approach.
My way is all about technicalpreparation,
studyingthe fundamentals,
listeningto the currentnewsand evaluating
the unfoldingchaft patterns
beinggeneratedbetweenthe actionsof the buyersand the sellersin the
marketsI follow.
To trade profitably in real time only requiresyou to identify low risk
entry oppoftunity in my opinion. This is the bottom line between
successand failure.
Simpletradingoppoftunities
in the S&Pare often presented
dailywith the
releaseof US economicindicatorrepofts,FEDEMLRESERVE
decisions
on
interestrate policy,ConsumerSentimentlevelsor specificpriceearnings
repoftsof the majorcompanies
highup in the S&P500complex.
On top of this the intra-daymarketmovementis constantlyinfluenced
by
pressure
points
tradersusinggeometric
analysis
to buyandsellat perceived
thatarerelativeto GannandElliottWavetheory.
In times of indecision
the S&Pmarketwill go throughaccumulation
and
phases.Thesephasestraceout or form patternson your chart
distribution
pattern
that implyfuturedirectional
tendencies.
Eachandeveryconsolidation
that a chartof the marketpricemovement
formswill haveceftainreliable
professional
implications,
implications
that
traderswill act upon.
All it takes is some good or bad news to be releasedand this will set
off a new seriesof impulse buying or selling that movesthe market
to new DAILY highs or new lows. Thesesituations are our primary
sourceof trading oppoftunities.
Nevertheless
the S&Pmarketwill nevermovegreatdistances
in a straightline
psychological
up or down unlessthe fundamental
attitudesurrounding
or
currenteventsis quiteunusual.
TTW Course
lntroduction
Againyou haveto understand

trendsare alwaysinterruptedwith periods
where the exuberancein the marketflow slows down and WC
: have
corrections
to bringthe buyersandthe sellersbackintobalance.
Eachand every market correctionor suddenrevensalof trend due to
an exhaustion behreen the buyers or the sellers is in itself
generatingyet another new trading oppoftunity.
Learning to identify these oppoftunities is the basis of my TTW
Counse.Once you can learn to identify the low risk oppoftunity
levelsalong the way where you can make trading entries you will be
tradingto WIN.
I amalsoalwaystryingto evaluate
tradersversus
the positionof the technical
the impactof suddenunexpected
newsthatcanenterthe market.
I haveceasedto believethat one needsto be anythingmorethan a day
traderto makegoodconsistentprofitsin the market.Wellat leastI have
concluded
wayto trade.
thatwith 24 hourtradingthisis the leaststressful
Therecouldbe occasions
in differentmarketsthanI currentlytradethatoffer
you
tradeswhere
enterandholdfor longerperiodsof time.I don'tdisbelieve
thisbutevenwhenyoudo theystillconfrontyouwithsomesurprises.
is
OnethingI cantell you beforeyou beginto studytechnical
methodologies,
thatyou haveto havean appreciation
that affect
for the fundamental
aspects
the ebbandflowof the marketsthesedays.
News surueillance
is so fast now days that when somethingodd or
unexpected
happensthe marketplayersoften reactin a way that was not
predictable
viathe normaltechnical
beforehand
approaches.
It reallygetsyou to understand
why you needto havea fingeron the pulse
eachdayif youwishto be successful.
If you just want to breezein and out of the marketwithoutdoingany
preliminary
researchor watchingfor importantupcomingreportsyou are
placingyourselfin a positionof luck.Luckhasnothingto do with tradingto
WIN.
Successful
tradingis all abouttradeselection
at the pointof leastrisk,getting
out fast if it doesnot work immediately
or lettingyour profitsrun whilethe
marketshowsno signof reversing
direction.
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Daytradingis all abouttradingpredominately

in the directionof the shofterterm trend. This trend could be influencedby patternsand geometry
occurring
in differenttimeframes.It couldbe dueto l-minutebars,S-minute
bars,3O-minute
bars,60-minute
barsor dailychaftpatterns.
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TTW Course
Introduction
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Makingdecisions
to entera positionrequiresa currentopinionof wherethe
marketis at, right now. Not yesterday
or whereit will be at tomorrowbut
now.Moneyis won or loston the spotor in the next20 minutesmostof the
time.
The noviceneverseemsto understand
of tradingand as a
theseprincipals
resulttheyall endup losingmoneyinitiallyuntiltheygetthe message.
Themarketis not likeanythingelsein life,it goesbackwards
andforwardsall
trend.
thetimewithoutanyrespectto youropinionof the longer-term
To be profitableyou haveto learnhowto dealwith the marketon a day-todaybasis.
Notonlythat, you haveto learnhowto dealwith the marketon a weekto
week,monthto monthandyearto yearbasis.
In the largerpicturemarketsmovein seculartrendsandryclicaltrends,these
trendsareobviousafterthe fact.A seculartrendcanlastfor manyyearsbut
the cyclicaltrends,be they bull or beartrendsvary in length;The ryclical
trendscan be motivatedby all sortsof economicdata and governmental
influences.
Cyclical
trendscanbe brokendownintowhatI wouldcallseasonal
weather,interestrate
trends;thesecan be influenced
for all sortsof reasons,
policies,wars, threats of wars, companyearnings,employmenttrends,
consumerconfidence,bank lendingpolicies,naturaldisastersand even
terrorismacts.
In a seasonaltrend the market will move through phasesthat are
predominately
influenced
by the actionsof largetraders.Yousee,everyday
the traderscometo workwith an opinionof whattheyexpectthe marketto
that givethembuy
do.Theyhavesophisticated
systemsthey havedeveloped
or sell signalsand they act on them.This is wherethe technicalindicators
giveyoua guideto theirmediumtermactivity.
Oncea seasonaltrend developsand the mediumterm positionof large
tradersis knownthe marketmovement
by the actionsthat
is thengoverned
haveshorter-termconsiderations.
Theseare differenttypesof systemsthat
shofter-termtradershavedevelopedor learntto take advantage
of the dayto-daymarketmovement.It is whenyou get downto the nitty-grittyof the
day-to-day
thatyoucanappreciate
the biggerpicture.
To becomea successful
the overallpictureand
traderyou haveto appreciate
thensubdivide
trendsandthentrendsof
the unfoldingpatternsintoseasonal
be theytechnical
a lesserdegree.Theneachdaytradethe currentinfluences
or fundamental.
During the day-to-dayactivity the market will move from oversoldto
manytimesovera day.
overbought
andbackagain,sometimes
TTW Cowse
Introduction
Traderswill buy and sell basedon technicalindicators

and the priceranges
theyunderstand
to represent
suppoftor resistance.
The future directionof pricewill be dictatedby the balanceor imbalance
betweenthe whimsof the traders.Pricedirectionof any marketonlycomes
downto onething,i.e.,whois in the majority,the buyersor the sellers.
To become
a successful
traderyouwill haveto monitorthe buyersandsellers
eachday. If you know the pointswherethey will buy or sell or reverse
positionyou havethe EDGEto beatthemat their own game.Thisapproach
allowsyou to movewith the ebbandflow of the marketratherthanrestrict
youractionsto somesystemthatcant adjustquicklyenough.
Outlinefor this counsemanual:
In 2002I saidtherewouldbe no needfor me to write anymore,but that
published
hasn'texactlyturnedout to bethe truth.Althoughall my previously
workcontainsall the information
I think is necessary
to makea success
of
trading,I wasleftwitha slightlyunfulfilled
feeling.
I decidedto re-writethe TTW bookas a moreinformativecourseand then
whencombined
with my DYNAMIC
TIME& PRICE
ANALYSFbookstudents
wouldhavea complete
instruction
standalone
course.
This manualwill take you throughin stagesusingthe methodologies
in
tradingprinciple
the wayI do it.
Muchof the materialmaynot be newto you but it is the waythat I combine
it togetherthat makesit so poweful.
Thismanualwill instructyou howto preparefor the tradingdayandthento
staya stepaheadof whatis goingon asthe marketunfolds.
My hopeis that this finalcoursewill act as a reference
for interested
traders
for yearsandyearsahead.
At leastI will knowthat everyonewho hasthis bookwill at leasthaveevery
chanceof becoming
a professional
trader.
The approachI am going to take is to lead you through the basics
and then expandon them as we go on.
The firct thing you need to learn is how to control risk. After that
you can learn to be selective with your trading entries. Once you
have mastered these simple things you should study the time and
price material, the Gann material and the other criteria I have
published in DT&PAso you will know the outer workings of the
market place.
TTW Cowse
Introduction
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Tradinsto WIN Course- One dav at a time
It is very important for you to understandwhat can motivate other

traders if you wish to be successful,as the market has technicians
working on all different levels, i.e., they make decisionsbasedon
data over different time frames.
If you understandthe basic premiseof WAVESOF SIMII.ARDEGREE
you will be able to monitor what is predictablein the intra-day' the
daily and the weekly price movementof any market.
Study this material a little each day until you have receivedthe
messageI am sendingyou. It is in your own interest to do so.
YOU EMBARKON THIS

ONETHING I NEEDTO TELLYOU BEFORE
TOUR:
levelsin
All the technical
thingsI will teachyouthat helpyouto pickreversal
to
the marketareindications
of whatmighthappen,theyare not guaranteed
work.
At best,the bestsignals,maywork75o/o
of the time.Theyarealwayssuspect
provide
much
untilthey
Notso
on the intra-daybut in the larger
confirmation.
picture.
andgive
Butthe truthis thatwhentheydon'tworktheyarenon-confirmation
youthe go aheadto keeptradingwiththe direction
of the currentmove.
As longas you alwaysbearthis in mindyou will not havea problemtrading
with StopandReverse
Orders,I am an expeftat it.
If yourfirst
Lifein the fast laneis aboutusingknowledge
to makedecisions.
your
will.
choicedoesnotworkthenit is mostlikely
second
I ama believer
in thisphilosophy.
WILL:
SOMETHINGSWIIL NEVERAPPEAROBVIOUSBUTOTHERS
I reckonthat whenthe technicallevelsare moreobviousto the crowdthey
havea greaterpotentialto work.
You mustremember
this becauseit will be the differencebetweenbeinga
loseror a winner.
TTW Course
lntroduction
FALSEBREAKS:
Falsebreaksare alwaysa problembut you haveto rememberin life that
whenmarketsreacha levelwherethe technical
worldknowsspellssupport
players
andresistance
who
thereare
out there
dont knowand maketrades
thatwilltestthem.
- no longerthan5
If technicallevelsare testedandthey breaktemporarily
minutes thenanyreboundis the direction
to trade.
Thepatternsaftera falsebreakwill confirmthe reversal
in anycase.
Thisis impoftantfor youto learnas nothingin life is perfectin the electronic
worldandyou mustlearnto adapt.
38.2- 50 - 61.8 levels:
Theseare the levelsthat everyonerespects.
Youwill knowif they are solid
because
the marketwill not breakthemby morethan 2 ticks.If it doesand
reverses
alwaysbarein mindthat on the nexttest they will mostlikelyget
takenout.
you are in the morereliablethey
The higherthe degreeof wavemovement
are.
If theybreakyoucantargetthe nextlevelasyourbestoption.
THETWO.DAYCORRECTION
RULE:
Oneof my strongestrulesin tradingis that marketsin any prolonged
trend
shouldnot makeany correctionthat enduresfor morethan 2 daysif the
trendis to goingto resume.
Alwaysbearthis rulein mindwhenyouarein corrective
movesasthe second
dayalwaysprovides
tradingoppoftunity.
3.DAYBALANCE
POINTS:
Thethree-daybalancepointis the mid pointof the last3 daystradingrange.
Whenthe marketis aboveit, it is potentiallybullish.Whenbelowit, it is
potentially
bearish.
Thisis onlya rulein the shofter-term
of course.
TTW Course
Introduction
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3.DAY SWING HIGHS & LOWS:
The3-dayswinghighor Iowevenif it is froman intra-daychartis the fastest

wayto calculate
the on goingtrend.
If you get a false breakof the 3-dayswinghigh or low and the market
pattern.
youwill knowfromthe unfolding
reverses
Normally
if the 3-dayswinghighor lowis takenout it is a signof a reversal,
i.e.,if the marketis retreating
on the currentmove.
THESEARESOMESIMPLERULESTO STARTWITH:
If you followmy rulesandtradewith tight stoplossesyou canwin - if you
chooseto usewidestopsyouwill lose.
NEVERFORGETTHIS: Never leavean open positionon if it is in a loss

positionat the end of the day....
ALSO
Believe what you see and not what you think,
The only thing easier than making money is losing it. You must
trade by rules and disciplineto be successful.
TTW Course
Introduction
Section lt chapter
r:
CloseStops:
The first thing a trader needsto learnto becomeprofitableis to control
losses.
If thiswasthe onlythingI couldteachyouit wouldat leastgiveyoua
profitable.
50/50chanceof becoming
Givingthe marketroomto makeup its mindis not partof my vocabulary.
As
proven
far as I am concerned
my reasonfor takinganytrademustbe
right
immediately
or I shouldn'tbe in thatposition!
Marketsmovein thrustsbetweenimpliedsuppoftand resistance,
if we enter
positions
at the criticalpointthe marketwilleitheragreewith usor it won't.
Professional
traderswhetherthey are systemtraders,programtradersor
floor tradershavetechnicallevelsin mindto buy or sell off. The market
ceateslevelsas it movesalongwhichwill eitherfacilitatetradeor rejectit.
Themarketflowis all I am interested
in asa trader.
WhenI seethe levelsI am prepared
to buy or selloff I will givethe trade
severalchancesdependingon the degreeof price movementI think is
possible
at thetime.
It is betterto take L or 2 smalllossesand be sureyou are the rightway
aroundthanto sit andwatcha position
turnsouron you.
To staftwiththe marketcanonlydo 3 things:1. Goup.
2. Godown.
3. Gosideways.
If youare buyinga breakoutpatternthe marketmustmakea cleanbreakfor
yournewpositionto be profitable.
If the previous
wassay1100on
resistance
the E-mini,the breakoutpointwouldbe a tradeat 1100^4,as thisshouldbe
enoughto catchthe initialstopsof the peoplearoundthe wrongway.Asthey
get caughtout there will be moreordersnestedup aboveby the people
givingthe marketa little moreroom.Theseordersshouldfeed the initial
thrust into new territoryalmostimmediately
the breakouthappens.If the
breakoutfailsit is because
tradershavesellordersin abundance
nestedjust
abovethe breakoutpoint.In whichcasethe breakoutwill becomea false
breakandwill fail. Youwill knowthe breakoutis failingbecause
the market
doesnot movein your favouralmostimmediately.
So if that happensyou
shouldscratchthe positionassoonas it tradesbackbelow1100.
Thesamesituationapplieswhensellinga supportlevelon a breakout.
CloseStops
Section1: Chapter- I
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Tradingto WIN Cornse- One day at a time
Thereis no second-guessing
a breakouttradeas it will be provenrightor
wrongwithina matterof minutes- sometimes
seconds!
youto takethe
If youget a REVERSAL
BARon a falsebreakoutit is signalling
reversepositionfor a quickscalpbackthe otherway.If you do takea reverse
position
youapplya closestopof no morethan1^4 pointson thataswell.
Tradingto WIN is aboutgettinginto a positionthat will workwith the least
possible
riskto yourcapital.Oncethe positionis workingyou canthenthink
abouttrademanagement.
So let'sjust get thistacticfirmlyin yourmindbeforewe go anywhere
else.I
amtryingto createa foundation
of goodtradingprinciples
beforeI teachyou
the finerpointsof tradeselection.
If youarebuyingor sellinga breakoutpatternthe positionmustmovein your
favourimmediately
or within a minuteto confirmyour decisionwas the
correctone.Othertradersmustbe in agreement
with you or the tradewill
not workanyway.If it doesn'tthenVouabandonthe positionandstartfrom
you
fresh.Thereis no pointsittingaroundwhenthe marketis not confirming
are rightaboutwhatyou are doing.Hopewill not makeyou a profit!If you
wantto be a traderyou mustacceptthat you are eithergoingto be rightor
wrong straightaway - not in 30 minutestime. Forgetabout tomorrow
because
tomorrowis anotherballgame.
Whensellinginto strength(marketis goingup in a correction)
in a 3 day
established
the levelsthat you selectmustbe exacton ratioor a
downtrend
doubletop. Theselevelsmust not be exceededby more than 1 tick (2
maximum)
too meananything.Thiswayyoucansella doubletop or ? 50o/o,
evena 61.80lo
retracement
and placea stop1 or 1^4 just aboveyourentry
point.The 1^4 is probablybetterbecause
the sellscanonly be doneon the
BIDand not the OFFER
whichwill alwaysbe a 1 tick spreadat minimumin
place.
the first
Thecloseryou cankeepthe stopthe betteroff youwill be in
the longrun.
The samethingappliesin reversewhenyou are buyinga RETMCEMENT
in
an uptrendingmarket.
If you everhaveany doubtsin futurewhy you are not winningthen come
backandreadthesewordsoverandoveruntilyouget it.
You can only be a consistent
winnerif you controllosses.You mustnever
holda losingpositionunderanycircumstances.
Youmustlearnto taketrades
at the criticalpointsand acceptthey will be eitherright or wrongalmost
immediately.
A winneris a grinner- a loseris all but pasthistory.If you are in between
thenI havehopefor youin the future.
CloseStops
Sectionl: Chapter- I
[c] BryceGiknore2004
FORTOPS& BOTTOMS:
ENTRYTECHNTQUES
WhenSelling- If youdon't seethe CrowsSCRATCH
Stoolossor SAR.
5 MinuteBAR,S
.t.............................
lr
.-.......-..........-..ft
[
-- l point 6r'ids
Stoplossor SAR
When Buying - If you don't saa tha DovasSCRATCH
the CROWS or bOVES movayour STOP to
When the t'eversolshov,rs
breokevenimmadiqtaly.Onca thot is donethe cntry is riding for no
risk. It will either turn into o WININIERor you ora out ond stort ogoin'
The SARis a stop and reverseorder that you can use becauseif the
resistance
or the supportyou soldor boughtoff breaK the marketwill at
leastrun enoughfor you to retrieveyour originaloppottunitycosts.Most
timesyou may not wishto takethe SARbut it is alwaysworthconsidering
is an eachwaybet.
whenyouthinkthe opportunity
Nowthe realissueis in locatingthe levelto placeyoursellor buyordersand
onceyou havethat workedout you will be kickinggoalswith the bestof
them.
trader.
Onceyou refineyourentrypointsyou are goingto be a professional
I am goingto tell
Beforeyou can do that you will needto learneverything
youin thisbook.
DonttakewhatI saylightlyas if youdo youwill not befollowingwhatI have
to teachyou and you will becomea statistic- a statisticis my wordfor a
to bits.
wouldbetraderwhoblowshistradingaccount
Entering
tradesat the pointof decisionis the onlywayyou cancontrolrisk,
i.e.,unlessyou are in a runningmoveandjust jump on boardandplacea
tightstopaboveor belowthe last5 minutebar.
Nevergivethe marketmorethan2 pointsto proveyou rightor wrong,if you
endup withthe arseout of yourpants.
do youwill eventually
CloseStops
l0
Section l: Chapter- I
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[c] BryceGilrnore2004
ENTRYTECHNIQUESFOR BREAKOUTTRADES:
r StoFs
BR,EAKOUT
LEVELS
This is an exampleof a top patternthat was recentlydisplaying

a sign of
exhaustion
andoffereda chanceto be shortingit.
Therewas someto and fro in the middleof the priorrangethat causeda
coupleof headaches
but the end resultwas what counted.Noticehow the
strongerbreakswereat the levelswhichhadpriordoublebottoms.
The moreevidence
that you canfind that the supportlevelif brokenwill hit
youneedto gather.
othertrader'sstopsis the evidence
In any caseas we work alongyou will see how the logicalsuppoftsand
resistancelevelsthe market has to break through,to confirm further
impulses,
haveto beobviousto otherprofessional
traders.
Wewantto bewiththemandleavethe"geese"withtheirowndilemmas.
Onceyou can understand
how to read the patternand the logicallevels
yourcareeris beginning
traderswilleasilyrecognise
to forma foundation.
Thiswill beyourfirststepin becoming
a professional
trader.
But believeme nevergive the marketanymoreroomthan two points(B
ticks),on the E-minithat is only $100.If you breakmy rulesand cop a
beatingyouwill endup in so muchpainyouwill be betteroff to stoptrading
untilyour mindreturnsto normal.Lossesare paft of this business
but they
haveto be controlled
if youwantto stayahead.
CloseStops
11
Tradingto WIN Course- Oneday at a time
ENTRYTECHNIQUES
IN UPTRENDING
MARKETS:
I like to sell predominately
resultsseemto comequicker,but you
because
haveto be a buyerhalfof the timeandyou needto understand
the habiGof
the marketto get setwithoutriskingto much.
Breakouts
in up trendingmarketscando oneof threethings.
1 . They break out cleanly becausethere is a force of buyers
overwhelming
the sellers.
2. Theybreakout andcomebackto testthe breakouthalfthe time.
3 . They breakout and get hit on the headby sellerssittingup there
waitingto takethemon.
Soyou have3 possibilities
to consider
whenyou aretakinga buysignaland
youstillhaveto followthe mainrule- controlrisk.
In a strongmarketthe breakout
willcomeandneverlookback.In a mediocre
marketthe breakoutwill come,exceedthe markethighit is breakingout of
by a few pointsand then comebackto the breakoutleveland then regain
strength.If the retestof the breakoutcomesbackmorethan 2 ticksinside
the breakout
levelit couldbetellingyoutwothings.
1. I am nota buybuta sellasthiswasa falsebreak.
2. I am notsureaboutthisandit is timeto remainon the sidelines.
Youhaveto dealwith eachof thesesituations
asthe markethandsyou more
information.
Trendindicators
canhelpwithyourreadof the marketmood.
BUYING in or uptrendwith the 3 doy trand

This wos q SELL here
eorrectivehi
50t
Buys r
Stops r
iAorkei is comingof o support level
Aswe movealongthe logicbehindallof thiswillbeexplained

satisfactorily.
Close Stops
12
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Sectionl: Chapter-I
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THINGSYOU NEEDTO LEARNTO BEA PROFESSIONAL

TRADER:
1 . Closestops.
2 . Enteronlyat the pointof leastrisk.
3 . Studywhatthe marketpatternis tellingyou.
4. Learnthe habitsof the traderswhoknowwhattheyaredoing.
5 . Preparebeforeyou sit downto trade.
Youhaveto understand
that it doesnot matterwhatyouthinkthe marketwill
do, it will not go anywhereunlessthereis an imbalance
betweenthe buyers
andthe sellers.Onesideneedsto bewinningfor the marketto trend.
Theotherthingis that you canenterthe marketat anytimeyou get a signal
thatis valid.Thesesignals
appear5 or 10timesa day.
Novicesneverget to learnthat the marketis easybecausethey rush in
withoutstudyingthe marketflow.Manyjust listento brokersandtheydo not
haveon linedatato seewhatthe marketis doing.
Youhaveto havethe facilities
of the professional
traderto callyourselfone.
Mostof allyouhaveto act likeone.
The biggestcommonfault of losersis that theytakea positionandwill not
getout of it whenthe writingis on the wallthattheywerewrong.
Youwill alwaysknowwhenyou wererightandyou will alwaysknowthat if
you took a tradeand it didn'tdo what you thoughtit wouldyou are now
wrong.If it looK like it is not workingSCMTCHthe tradeand wait for a
betteropportunity.
To do anythingelseis stupidity.
Askyourself!WouldI stayin a highstakespokergameand bet on the next
carddrawnif I was holdinga 7 and an 8 - NOyou wouldjust throwthem
away.Yet if you hada pairof Acesin the holeyou wouldbet the livingshit
out ofthe pot.
Thefirst thingyou needto learnto be a professional
traderis to removeall
the stupidityfromyourgameplan.Youmusthavea goodreasonto takeany
trade.
Youcannotaffordto be lanl or for that matterthinkfor oneminuteyou know
whatthe marketwill do. Youmaythinkyou do but youwill still haveto wait
to findout if youwereright.
Oneotherpieceof advice- avoidforecasters
as all theywill do is causeyou
to holdlossesin the hopethe marketwill comebackandsaveyou.
Themarketwill neversaveyou- you haveto saveyourself.
CloseStops
13
Sectionl: Chapter-1
SeCtiOn 1l chapter2:
MarketMechanics:
The primary most importantasset for the professional
trader is his
understanding
of marketmechanics.
It cantake monthsfor the averagenovicetraderto understand
the street
sensethat prevailsin the markets.Mostnewcomers
neverget to appreciate
gone
the experience
because
theyare long
beforetheyrealisethattradingis
common
sense,nothingmore.
There are so many "mad professors"out there that attempt to invent
foolprooftradingsystemsit is unbelievable.
Theycuruefit pastdatato work
out the oddsof buyingand sellingwhen someproprietary
algorithmthey
havedreamtup repeatsthe "set up" that producedprofitabletradesin the
past.
Commodity
tradingsystemsand horseracingbettingsystemsfail because
of
volatility,the marketis neverrunningin a consistent
way monthin month
out.Sureit maydo it for 3 or 4 monthsandtheneverything
looK likeit is a
licenceto print money. When you put these systemsto the test the
"Eldorado"
anticipated
usuallyturnsintofoolsgold.
Systemoperator's
work on the pretencethat the marketwill "trend"around
the minimumof 30o/o
of the time.If it doestheycanculvethe datato their
algorithms
to projecta winningscenario.
Thetruth is you can"cuwefit" any
price series to a winning scenarioby manipulatingthe draw-down
parameters.
Systemdevelopers
sell their scenarioto the publicinsteadof tradingit
themselves.
Thepubliclovethis stuffmainlybecause
we havetradingmagazines
devoted
peoplejumpout of the bushes
to promoting
the easywayto riches Geezes;
to get hold of this stuff. Boy! I couldtell you storiesI haveheardabout
peopletradingsystems.
Mostof themarefunnybut sadstories.
I haveseensomesophisticated
systemslastfor 15yearsor morewith several
lean years in between,but in the end they all fall prey to the market
mechanics.
Or the peopleusingthemcan'tmaintainthe discipline
requiredto
just before
tradethe systemandstoptradingit. Reason
is continuous
losses,
the systemgetson a run.
It takes a very specialskill to trade a systemand be successful,
I'm not
sayingtherearen'tsystems
thatwork,onlythattheyarerare.
Market Mechanics
Sectionl: Chapter- 2
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systemwith the
How do I know?Well I actuallytradeda sophisticated
years.
but in the
discipline
It waswonderfulsometimes
requiredfor nearly4
endwhenI wasn'ttradingit, and my ex-paftner
was,it blewup likea land
mineduringthe 1987crash.
ThereasonI wasmoresuccessful
wasbecause
I usedto trademy systemon
the system,i.e.,I useda scalingsystemon the system.My partnercouldn't
standit, that'swhywe fell out.Onceaftera hugeprofitrun overa monthor
twothe systemwasin profit$70,000a unit,I had2 andmy paftnerhad2. At
lunchoneday I told him I wasclosingout, he saidyou cant do that,what
will the otherswe managethe systemfor thinkof us?I said,"OKI will tell
them', he saidno, he hada betterideahe wouldbuyout LVzof my units,I
agreedandhe paidme the money.Hecontinued
on with 372unitsfromthat
th
point,I hadonly a unit, nowhowstupidwashe to enterthe systemat that
level?
Anywaythat wasn'tthe end of it because
the systemkept makingmoneyfor
in
another2 weeks,aboutanother$20,000a unit.At that stagethe positions
I kepttellinghimto quit
6 differentcommodities
wereextremely
overbought.
andhe keptlaughingat me for missingout. It reallyput a hugestrainon the
relationship.
Thenthe tideturnedandthe systemstaftedlosing,it's priortrackrecordwas
neverto losemorethan50o/o
/ $25,000of its originalstakingplanof $50,000.
Eventually
over a short periodof 2 monthsit lost $55,000a unit before
fromwinninghis
turningthe corner.So he lost3% times$55K= $192.5K
$210K Net resultafterlosses+$17.5K,I hadwon $155Kandgivenback
In the 5 monthsor so my shareof commissions
$27.5K,my net +$127.5K.
backfromthe brokerswe weretradingthe systemfor wasalsoabout$35K.
The realproblems
the systemwith a newunitjust
beganwhenI re-entered
after it turnedthe cornerand then bailedagainwhen I got $20Kahead,
whichtook onlyabouta month.I did that severaltimesoverthe nextyear
whileI wasworkingon my WaveTradersofhruare
andthenquitthe systemto
trademy owndiscretionary
WhenI quit so did 80o/o
of the brokers
approach.
clients.
Thenthe systemhit a brickwallin the crashof 1987andlost$65Ka unitin 2
days.SoI knowall aboutsystems,
believeme.
Thecraziest
arethe
systemsI haveseenin my 20 oddyearsin this business
"Planetary
theydon't
Movement"
systems.Nowtheseguysare unbelievable,
evenhavea cluehowto tradeyet they manageto selltheir"pie in the slqy"
systems
to the gulliblepublic.Theymakeheapswithouteverriskinga penny
in the market.Someof the buy sellsignalscan be 4 yearsapaft.NowI ask
you howdoesthat systemknowif that marketwill be evenopenin 4 years
time?
MarketMechanics
MARKET
TRENDS
Markets
30o/o
of the time,overtime.
usuallytrendapproximately
Nowthat doesnot meanthey will trend regularly,only that the meanis
around30o/o.
Theycouldtrendfor 50o/o
of the time overa givenperiodand
go
then choppyfor twicethe time.
it doesnot care
The marketdoes not give you any guarantees,
whatyouropinionis; it listensto the flowof moneythat is all.
MARKET
MECHANICS
so that he
A professional
trader needsto understandmarketmechanics
knowshowto expectthe marketto flow.
All marketsgo throughperiodsof inactivityfollowedby periodsof mediumor
extremeactivityandthenmostlikelybackto inactivity.
Knowing the reasonsfor the activity is paramount to your successas
a trader.
In short-termperiodsof 2 to 4 daysa marketwill gravitatearounda balance
pointwhenit is in a stateof inactivityor mediumactivity.In extremeperiods
of activitya marketwill movein one directionor the otherwith very minor
corrections
duringthe sametime frame or eltendedtime frames.In a
protractedtrend the marketwill nevercorrectfor morethan a day or two
beforeadvancing
again,if it doescorrectfor morethan2 daysyou knowyou
pointof the trendat thattime.
havereached
the balance
to
Usually
the 2 or 3 daythrustperiodsof activityarefollowedby corrections
prior
level.Thisis usuallyin the
the
movement,
backto whatI calla balanced
ballparkof 50o/o(38-620/o)
of the advanceor decline,havingdonethat they
will attemptto test the priorhighor lowof the thrustandmoveon to a new
level.
Whenmarketsfail on a test of a breakoutthey normalcomebackto the
balancepoint again.If they don't and then break out they provetheir
strengthandaresafeto tradein the newthrust.If they comebackbelowthe
balancepointtheyaresaidto be in a weakpositionanda changein trendis
likely.
I.e.,theywill startthrustingfor newlevelsin the oppositedirection.Eachday
theybreakthe priordaysextremepointtheyaretrending.
Youcantakethis analogyandapplyit to all time periodsif you wantto, but
for the purposesof trading we only have to capturethe short-term
movements
to makemoney.
Market Mechanics
Section1: Chapter- 2
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RESIDENT
MARKET
STOPORDERS
All marketshavestandingorderssittingin the wings;they maybe to buyor
to sell at dependingupon whichway the marketis breakingout of the
previous
2-3-5-10
daytradingrange.
Thesestopsbelongto peopleeitherprotecting
a positionor initiatinga new
position.
Themarketseemsto haveknowledge
of wherethesestopsareandwill often
just
move enoughto takethemout andcausea smallbushfire untilthe stop
ordersare exhausted,
then the marketwill movebackto test the breakout
pointof the day
levelor evenbreakbackthroughit andreturnto the balance
prior
or the
day.
for
In timesof extremevolatilitywhena markethasrun hardin onedirection
severalor moredaysthe marketwill exhaustall the newbuyersor sellersto
the pointthat therewill be no oneleft to suppoftthe newpricelevel.When
this happens
the reactionis just as severeas the newthrust,in the opposite
point.
direction,
movesthe pricebackto the nearestbalance
TRENDS
DEVELOP
BECAUSE
Trendsdevelopbecause
thereare morebuyersthan sellersor moresellers
pointis
price
thanbuyers.And
will movein that directionuntilan exhaustion
reached.
Usuallythe balancepointwill be exceeded
untilthe marketwill not facilitate
will depend
trade,thenthe trendwill reverse.
The dimension
of the reversal
people
losing
moneyas
how
levels
staft
on
many
and
arecaughtat the new
the marketreverses.The moreof them the fasterand strongerwill be the
reversaland of coursethe balancepoint will be over-runin the opposite
direction
causing
the samethingto happenagainin reverse.
MARKET
FACILITATION
Is a fanry expression
betweenbuyers
to describe
the balanceor imbalance
price
andsellers?
Themarket
facilitates
tradeas buyersandsellersarewilling
to meeteachother.
Someonlinesystemseven havea marketfacilitationindexto guideyou
mechanically.
The theoryis that as the tick volumemovesup or downyou
or
can tell if the marketis facilitating
trade,i.e., is the volumeincreasing
the market
decreasing
on the currentpricemove.As the volumedeteriorates
priceis assumed
notto befacilitating
trade.
Normally
at anymarkethighor lowthe tickvolumewill reduceto nothing.
Market Mechanics
BALANCE
POINT
Whatis the balancepointI amtalkingabout?
Wellthe balancepoint is the pricethat will facilitatetrade,i.e., the price
wherebuyersandsellersareevenlymatched.
OPENINTEREST
OpenInteresttells you the changesin activityof the main playersin the
market.On any givenday therewill be moreactivityfrom daytradersthan
longerterm holdersbut changesin openinterestare reportable
andleavea
clueto the stronghandsandtheirobjectives.
THEOPENING
PRICE
Oftenreferredto asthe bestkeptsecretby professional
traders.
Theopeningpricesetsthe"tone"for the day.
a) 50o/o
of the timethe openingpricewill bethe highor lowfor the day.
b) Theopeningpricebecomes
the dailycomfoftzonefor traders.
the
c) Traderswill buy and sell off the price movementsurrounding
price.
opening
I will illustrate
in anothersection.
the tradespossible
usingthisinformation
AVEMGE DAILY RANGE
Mostmarketsin an averagestateof activitydevelopa tendenryto tradein an
averagerange. I.E.,Thedailyhigh/lowrangeof mostdayswill be the same
around50o/o
of the time.
TheS&P500
futuresfor instance
arearound18 points,or $900a contracton
the E-Minicontract.
Thetwo pointsto consider
arethese:a) Is the currentdailyrangeinsidethe averagerange?
b) Is the currentdailyrangeoutsidethe averagerange?
A professional
tradershouldbe awareof the averagedaily rangefor any
commoditycontracthe trades,this way you will not be puttingtradeson
whenyou are outsidethe envelopeunlessyou are sure of what you are
doing.
Theaveragedailyrangealsoindicates
to you whenthe marketis buildingup
energyfor a sharpmove.Themoredaysa markettradesin a tightrangewith
smalldailyrangesit is saidto becoiling.
Market Mechanics
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Basically
it meansit is compressing
like a spring.Whenit doesthis, stop
ordersaccumulate
on eitherside of the future breakoutpoints,oncethe
ordersgo markettheywill causea sharprunfor a time.
DAILYLEVELS:
OpeningPrice- High- Low& Close
Beforeyou contemplate
traderyou will alsoneedto
becoming
a professional
learnsomebasicfactsaboutthe marketplace.
The OPENINGPRICE:
The openingpriceis a leveldeterminedby the amountof ordersin the
systemthatwillfacilitatefair-trading.
Officialmarketmakersdeterminea level prior to the openingrotationof
stockswheretheywill bid andoffer individual
stocK.Theiractionsstartthe
by
ballrollingfor the day.Fromthereon the pricefluctuations
aredetermined
the supplyanddemandpressures
of the day.
Themarket trades at the pnicethat focilitotes tnodes

Thereis onlyonereasonpricegoesup or down:
The priceof a stockgoesup becauseyou havemorewillingbuyersthan
sellersandthe buyershaveto BIDUPthe priceto actuallyownit.
you havelesswillingbuyersthan
The priceof a stockgoesdownbecause
sellersandthe sellershaveto reducetheirOFFERS
theirpositions.
to liquidate
The marketplaceis a self-regulating
auctionwherethe demandsof the
buyersor sellersdetermine
trade.
the levelsthatwillfacilitate
MarketMechanics
19
The DAILYHIGH:
refuseto payhigherpricesThehighfor the day is the pricewhereBUYERS
the firstsignof the highfor the daywill be lowvolumeasthe highis reached.
of OFFERS
therewill be an abundance
As far as marketdepthis concerned
andveryfew BIDSto keepthe marketrising.Asthe buyersareall consumed
to find the next leveldownwhere
the sellershaveto reducetheir OFFERS
BUYERS
canbefound.
thereis no marketdepthof newBUYERS
Thefast movesdownoccurbecause
standing
whenthe sellerswantto liquidate.
i.Q.,it couldbe a
Thehighfor the daycouldoccurfor anynumberof reasons,
gather
in abundance
or it couldbe somenews
technicallevelwheresellers
releasewherethe buyersjust headfor the hillsor decideto liquidatetheir
longpositions
andbecomeurgentsellers.
As traderswe need to be alert and watch for the SIGNSto identifythe
reasons
for the reversal.
The DAILYLOW:
is the
Basically
of the dailyhigh- the onlydifference
this is just the opposite
SELLERS
dry up.
The SELLERS
couldhaveliquidatedall they want to for the day and are
positions
on the SHORT
waitingfor higherpricesor theymayhaveprofitable
just
profit.
at a
sideand
wantto covertheirpositions
Whatoneneedsto be alertto on anygiventradingdayis the marketMOOD.
Thereis boundto be someoutsideinfluenceeitherin the newsor some
fundamental
economicreportthat tradersare watchingout for that will
influence
theiractions.
The DAILYCLOSE:
The daily closingpriceis the placewherethe officialmarketmakersare
prepared
to meeteachotheron the BIDandOFFER.
Forthe S&P500we have500 stockstradingall day and the CASHINDH(
(SPX)of theirvalueis beingupdatedsecondby second.Thefuturesmarket
of the CASHINDEXdirection.Buyersand
tradeson the trader'sexpectations
reasons.
sellers
comeandgo alldayfor manynumerous
MarketMechanics
20
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SUMMARY
Nowif you can understand
whatI havetold you in this chapteryou are half
waythereto becoming
a successful
trader.
youstillhaveto knowhowto execute
I sayonlyhalfwaybecause
tradeswith
theminimum
of riskwhentheoppoftunity
arises.
RISKmanagement
is the singlemostimpoftantpaft of beinga successful
trader.I haveseengoodtradersmakemoneyweekin weekout for long
periods,andthenall of a suddentakea biasedviewof whatthe marketwill
do andholda positionagainstall oddsexpecting
it to comeback.I haveeven
beenguiltymy self,my saviourhasonlybeenthatI havea ruleneverto hold
a positionat the closeif the tradeis in a losingposition,no matterwhatthe
cost,I haveto "eat" it becauseif I don'tI will not sleepat night.Eventhe
nextday if it wouldhavecomebackI can livewith it because
the oddsare
you
50/50andI knowthe worstusuallyhappens
hoping.
I willtalk
when
staft
moreon thislater.
I take the view that if you entera trade,for whateverreason,it

will staft goingin your favourvery quickly- otherwiseyou are
wrongtakingthe tradeandshouldget out quickly.
All marketsdevelophabits and if you are astute enoughto
understand
thesehabitsyou will knowif yourtradeis workingor
not. If your trade is workingstay with it until it showssignsof
slowing.
You must learn to never hold a losingpositionif you want to
becomea successful
trader.Youwill hearme repeatingthis over
andoverthroughout
this manual.
Notes:
Market Mechanics
I
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Section 1l chapter
3:
Suppolt- Resistance& TREND:
It reallydependson how manyordersare nestedat these levelsas to

whethertheyactuallyturn out to become
Ievels.
SUPPORT
or RESISTANCE
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I havealreadystatedthat the onlyreasonthe marketgoesup or downis the

participation
resultof the buyer/seller
factor.
andwhois the overwhelming
Aswe movealongI will teachyouall the waysthat professional

tradershave
for selectingcertainpricelevelswherethey think the marketwill run into
resistance
or find suppoft.Someof the SIGNSthat the marketgivesare so
easyto predictin advanceit becomes
fromtimeto timejust to
embarrassing
knowof them.
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Support,resistanceand Trend are the 3 most importantissuesfor the

professional
trader.
SUPPORT:
Thisis the perceived
levelwherebuyerswill returnto the marketandsellers
willstopsellingandbeginto cover.
RESISTANCE:
Thisis the perceived
levelwherebuyerswill stopbuyingandtakeprofitsand
Sellers
willstepup theirsellingactivity.
SIGNS:
Whenthe marketpricereaches
levelsof perceived
it will
supportor resistance
demonstrate
signsas the buyingor sellingdriesup due to the increasein
activitybythe sidethat anticipates
the levelin advance.
Professional
Tradersgenerallyhaveseveralmethodsfor anticipating
suppoft
or resistance
levelsin advanceandwill nestordersin the marketbeforethe
price
market
reachestheselevels.
Thesimpleoneswe staftwithare:1. Double

Tops
2. DoubleBottoms
3. 50o/o
retracements
4. 1:1Alternate
waveexpansion
levels
5. 1:l Alternate
wavecorrection
levels
6. In uptrendingmarketsprevious
resistance
suppoft
becomes
7. In downtrendingmarketsprevious
supportbecomes
resistance
Support- Resistance& Trend
Sectionl: Chapter-3
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Tradineto WIN Course- One day at a time
for you to
Thesemarketpricelevelsaloneare enoughmarketknowledge
makea successful
careeras professional
traderif you wereto tradewith a
policy.
closestoplossriskmanagement
I oftenwonderto myselfas I watchthe marketeek its way betweenthese
points"whois buyingandsellingin between".
I cancome
Theonlyconclusion
to is that it is the trend followers,systemtraders,marketmakersor the
gamblingpublic.Because
any professional
traderworthhis"salt"wouldwait
untilthe criticallevelswerereached
beforeplacingtheirtrades.
The only way to guaranteesuccessin this businessis to only act when
everythingappearsto be in your favour.You shouldneverchasea trade
you missedthe train. I havewatchedsometraders,evendoneit
because
myself,losemoneytime andtimeagainbecause
theydid not actat the right
priceandchasedthe tradeinto a territorywheretheycouldnot applyproper
riskmanagement.
TREND:
Youhaveall heardthe saying,"Thetrendis yourfriend"!

Wellit is yourfriendbecause
overtime a trendwill expandfuftherallowing
youopportunities
or oversold.
to go with it or againstit whenit is overbought
SinceI knowthereareso manytradersouttherewhohaveno moretechnical
I
knowledge
of tradingotherthan to buy or sellagainstoscillatorreadings,
we
knowthat whenthe 3-daytrendis UPandthe intra-daytrendis oversold
will likelyget buying.Theoppositegoeswhenthe 3-daytrendis DOWNand
the marketis overbought
intra-day,
we will mostlikelyget selling.I cantake
tradesat the logicalpriceslevelsthat will attractbuyingor selling.Someof
thesetradesmay only last for a very short time but they can be very
profitable.
chaft
You mustalwaysmonitorthe trendon a S-minutechart,a 3O-minute
will give
and a dailychartlookingfor situations
wherethe trend indicators
profits.
systemoperators
signalsto eitherenteror take
It is very importantto understand
thesethingsbeforeI teachyou the finer
pointsof tradeselection;
you mustfirstunderstand
the basics.
If you understand
the basicsyou will developa streetsensefor how the
marketconfusespeopleand leavesthem caughtin a trap for professional
tradersto scalpthem.
After all the facts are, 90o/ocometo the partyto losetheir money,it is a
provenstatistic.We are hereto get it and the only way to do that is with
discipline
andknowledge.
Support- Resistance& Trend
Section1: Chapter-3
Section 1l chapter
4:
Three Bar Swing Chafts:

Thereare all sortsof TRENDINDICATORS
but the quickestindicatorto act
is
upon the 3 BARPRICE
SWINGCHART.
goingup in trendarebreaking
If markets
thatwerepreviously
backbelowthe
previous3 bar low they are suspectfor a possiblechangeof trend in that
degree.
Thesameappliesin reverse
to marketsgoingdown.
THE3-DAYSWING:
Thethree-dayswingchaftis the bestMEDIUM-TERM
indicatorof TREND
as
corrections
in strongtrendsshouldnot persistfor morethantwo dqyr.They
mightin the earlydaysof a newtrendbut whenyou get into a 3'owaveof
ELLIOTT
degreethe trendshouldbe wellestablished
andstickto my rules.If
you
theydon'tthen
shouldbe immediately
alertthatthe currentmarkettrend
is exhausted.
3 bay Swing
tf
ilfl
I
+ lf
TriggerPoint#
82061?
AZBEZ?
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WHERE
HASTHEMARKET
BEEN
IN THEPAST3 DAYS?
GOING
This exampleshowsthe low on an OutsideReversal
day breakingup for 5
days triesto selloff for 3 daysbreaksbackup for 4 dayscorrectsintothe
3'ddayandbreaksoutto the upside.It wasa confirmed
BUYat thattime.
3 Bar Swine Charts
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We haveseveralwaysto determine
the relevantdirectionas a guideto the
We needto knowif the marketposition
currentmarketstrengthor weakness.
is ABOVE
the BAI-ANCE
POINTof the 3-dayMNGE.
or BELOW
TERMtrend.
The 3 day Swingchartis an indicatorof the currentMEDIUM
Theswingis eitherUPor DOWNbasedon the recentPRICE
activity.
3-DAYSWINGCHARTS:
Theseare constructed
usingthe highsand lows of the past4 days.For
instanceif the currentpricetodaymovesbelowthe lowsof the past3 days
the swingis down- if the pricetodaymovesabovethe highsof the past3
daysthe swingis up. Eachsignalis a relevantappraisal
of the mediumterm
REVERSAL
of the
directionof the market. If the marketmakesan OUTSIDE
past2 daysrangethe trendhaschanged.
The 3-dayswingchartis the simplestway you can keepyour mindfocused
on the generalmarketdirection.
Onceyou knowthe generaldirectionof the marketyou canmoveontousing
toolsthatwilltellyouthe strengthor weakness
of the currentswing.
I havetriedto drumthissimpleapproach
intoeverystudentof minefor years
- they (the
and foundthat to somethe simplethingsare easilydiscarded.
idiots)simplyforget to look at the obviousSIGNSand attemptto make
Youneed
decisions
basedon otherthingstheythinkare moresophisticated.
to look up the word "sophisticate"
in the dictionary- it means- MAKE
- makeworldly-wise!
- a' la sophistication
ARTIFICIAL,
depriveof simplicity
yourlife!
makeit harderandcomplicate
Keepit simpleandit is easy- that is my message.
THE 3-DAYSWINGIS EITHERUP OR DOWN
It will holdformwiththe trendso it cannotbe ignored.If the commitment
of
tradersis not in the direction
of the trendit willtell youto beware.
The 3 HourSwingChart:
If you wantto filterthe 3-dayswingchaftyou canmovedownin timeto the
hourly3 bar swing- it's hardlyworthgoingdownto lessertime frames,for
this you canjust use a SLOWSTOCHASTIC
to determineif the short-term
movesareshowingoverbought
signals.
or oversold
3 Bar Swine Charts
Usingthe hourlyINTRA-DAY
dataoverthe sameperiodfrom the July24n,
2002 low shownon the chaft on page24 you can see how muchmore
information
to yourtradinganalysisand decisionmaking
becomesavailable
process.
ESBZU-68
3 Hourly Suringovr sf,niperiod as ths

ehort on pog24 from the July 24th LOW
r
r
B?/31
|
B8/B?
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3 Hour"lySuuing
!
f______Jl
B?/19
E7/25
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B8/13
llllllllll
88/19
Youwill noticethat whenyou narrowdownthe time frameit allowsyou to

gaina fasterappreciation
to the current
of the trendchanges
or adjustments
trendastheyoccur.
Themarketis alwaysgivingsignsfor the futurepossibilities.
1. It couldbe makinghigherhighsandhigherlowsthat indicateit wants
to keepgoingup.
2. It couldbe makinglowerhighsand lowerlowsthat indicatethat it
wantsto keepgoingdown.
3 . It couldbe makingfalsebreaKof supportandreversing
andindicating
renewedstrengthin the currenttrend.
4. It couldbe makingfalsebreaKof previous
levelsandfailing
resistance
to go on indicating
inherent
weakness.
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Youhaveto continually
readthe marketmoodfromthe patternof the trading
to stayin syncwiththe currentmarketmood.
To assistyourselfyou shouldcontinually
watchthe newsenteringthe market
andevaluate
the effectit is havingon the players.
The newsis the foremostindication

of wherethe marketmaybe headedin
the short-term,
makeno mistakeaboutthat.
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To tradewithoutwatching
the newsis a realfaultsometradersfall into.
3 Bar Swing Charts
Section
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1: chapter5:
Old Highs & Lows:

the habitsof
It is veryimportantfor yourtradingcareerthatyou understand
professional
tradersin regardsto oldhighsandlows.
Traderswill treat old high pointsas resistance
until they are brokenand
afterwards
theywill treatthemassupport.
Conversely
they will seeold lowsas supportuntilthey are brokenandthen
theywilltreatthemas resistance.
Between
the mix you will find oppoftunities
to bothbuy and sellthe market
witha limitedrisk.
to
Hereis just a simpleexampleof the process
I havemanymoreexamples
comeaswe proceed.
of trading
Neveftheless
thisis oneof the basicprinciples
thatyouneedto understand
beforewe go anyfurther.
Qcharts CSU
gEs.sB
ESBZU_EO
Old Highsond Lov,ts

"..11
,,l'ulr t
951.BB
LowerHiqhs
-
hhl/ry
.:!r,fl\t.....Ee.rsrsrr.e.e.....
s33.80
gts. EB
8g?.sg
8?3.BB
HigherLows
861.B0
843.88
BASICPATTERNANALYSIS
825.BB
8E?.BO
RasistoncabecomEssupport ond support becomesresisfonce
?89.60
ffil
B?/a4/ZAWZ
Ha iri
E7/ZZ
88/88
08/16
EE/27
0gl45
The occurrences
of this phenomena
are morelikelyon the intra-daychafts
varyingdownfrom 60 minuteto 5 minutethantheyareon a dailychaftbut
theydo occuron the dailychaftandmustalwaysbeviewedas possibilities.
The dailychaft is morelikelyto containslightfalsebreaksat majordouble
bottomsor doubletops.
Highs & Lows
[c] Bryce Gilmore 2004
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Section 1: chapter6:
The 50o/oBalancePoint Rule:

50o/o
of any marketrangeis an importantlevelto monitorwhenconsidering
the currentmarketpositionandtrend.
The50o/o
levelof the past2 and3-daytradingrangeis the oneI placemost
focuson.
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POINT
or EQUILIBRIUM
POINTof the marketactivityat anypaticulartime.
Mystandard
rulesare:-
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1. Whenthe currentlytradedpriceis abovethe 2/3 dayBAI-ANCE

POINT
it is in a STRONG
POSffiON.
2. Whenthe currentlytraded price is BELOWthe 2/3 day BAIANCE
POINTthe marketis potentially
in a WEAKPOSffiON.
In most strong UP trending market moves the price retracements
(corrections)
shouldnot comebackbelowthe 50o/olevelof the prior3-day
range.If they do thenthe degreeof wavein progresshasmovedto a higher
degreewavemovement.If the marketdoesnot correctmorethan 38.2o/o
of
the 3-dayrangeit is in a far strongerpositionof trend.
ficharts CSU
85831{-5
s4a.Eg
CurrentTrendis in a StrongPosition
S3?.BE
934. BE
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gz8.68
9Z5.BB
szz.EE
of 3 dcy Ronge
g1g.BB
glE. BB
E5/ZZ/?;993
65/?6
The 50% BalancePoint Rule
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Hain
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Hereis an exampleof the marketoverthe pastfew daysas I beganwriting

thischapter.
On the 3'd day of the current move up the marketwas encountering
resistance
It hadto tradehigher
at the 61.8levelof a largerrangecorrection.
to havethe 3-dayswingchaftrollto bullish.
ESBS|{-10
[charts CSU
95.1.08
S5B.BE
lfiarkat is obovatha BALtlrlCE

s34. BB
I|3B.BA
926.BB
sz?.Bs
918.BB
914.BA
65/28/?;B/B.3
h{airr
B5/L4
A5l15
Onecouldarguethat the 620/oretracement

wasthe overhead
resistance
and
the rally had the potentialto fail. Well that was alreadya possibilitybut
beforeit wasgoingto becomea realitythe marketwouldhaveto breakback
belowthe 50o/o
levelof the past3 days.
0charts f,SU
g4E.0a
ESB3lt-5
g3?. BB
The /lttorketis still in o

sTR,ONPOSITION
This LEVELis now RESISTANCE
934. BB
931.86
926.BB
szs.0B
szz.gB
his LEVELis now

SUPPORT
A break belowthe 50 would spell

a changein trend
919.08
glE. BB
913.BB
g5/23/zBE3
l'fair.r
ffi/ZB
The 50% Balance Point Rule
29
no
Alwaysremember
that the 50% levelis the signof strengthor weakness
matterwhatdegreeof timeframeyouarelookingat.
Whatfollowedwasan insidedaywhichretraced38.2of the 3 dayrangeand
foundsupport.
Nowtherewasa holidayfor Memorial
Dayon the Mondayfollowingthis last
going
chartandthe nexttradingdaywas
to beTuesday27ffiMay.
Echarts f,SU
954. BB
ESBSH-18
S5B.BB
s46. BB
s4z.aB
s38.8A
s34.BB
938.BB
SZE.BB
szz. E6
27thOpens4
beginsto rnlly
91CI.
BB
s14.BA
Bi5/27/?:BiB3
l{a in
E5/13
Es/ZL
9/5/23
E5/27
Themarketopenedandtriedto testthe previous

lowwhichwasthe
sessions
logicalsupportand then rallied- the rally neverlookedbackall day until
positionsquaring
tookplacegoingintothe close.
WE CANLEARNA LOTfrom the 50o/oBALANCE

POINTRULE:
You can evenformulatea tradingplanaroundit as the 50o/olevelof any
rangeis the mostwatchedtechnical
levelprofessional
tradersarefocusedon.
Theywillbuyandselloff it allthetime.
Asyou progress
withthis manualyouwill seethe numberof examples
I have
givenwherethe marketeitherstoppeddeadin its trackson a 50 or it broke
throughand then the 50 level becomesthe supportin an uptrendor
resistance
in a downtrend.
30
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[c] Bryce Gihnore2004
If you are lookingfor a suppoftto holdat a 50 level it is goingto be a

strongertechnicallevelif something
elsesuchas a lxl linesup with it, the
goes
in a downtrend.
Youwill see what I meanas we
same
for resistance
movealong.
The thingto rememberalwaysis that if the markettakesout the 50 easily
thenthe nextsolidpointof suppoftor resistance
shouldbethe 61.8
Thetrendwill alwaysbecomeclearto youwhenthe 50 eitherholdsor breaks
you will knowthat every
and then you can tradewith confidence
because
professional
other
traderhasseenthe samethingandwill acton it.
The majorityof professional
tradersare onlylookingat the 50 andthenthe
61.8or the 38.2. Theseare not goingto explainthe marketgeometry
all the
time but oncethey are not workingtraderswill revertbackto old topsand
to
bottomsand other lessimportanttoolssuchas trend linesor indicators
establish
an opinion.
My pointto you is that the 50 givesyou a clearinsightinto the trend in
progress
it is as impoftantas a hammer
andyou mustlearnto useit because
is to a carpenter
asfar aswe areconcerned.
Todayafter re-editingthis chapterthis is what the marketdid and it is a

perfectexample
of allthe thingsI amtryingto teachyou.
0charts f,SU
1848. A0
ESO3Z-30
1s44.46
1848.ES
The morket openedon its high for fhe day modeo

movedown and fhen went bock to the opening
highond failed, The 50 ond the l:1 were support
and w er e penetrated on two aftempts before the
1836.86
10.32.69
ilgzfr.w
LEZ4.Bg
LAZA.AA
1616.BB
1A1u.BB
r/q,
1488.AB
gg/24/26fd3
B9/LI
69:34
ISZ7.g6
1:g,?J.75
31
16Z4.Z5
1B,z.4.?5 gg/24
Section
[c] BryceGihnore2004
1: chapter7:
The 1:1 OverbalancingRule:

the mostimpoftanttradingruleI have
The 1:1 overbalancing
ruleis possibly
wherethe marketwill go in the shortterm.I
whenit comesto determining
chaftfor intra-dayswingsbut it canalsobe a
useit primarily
on the S-minute
greattoolin largertimeframes.
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The 1st rule is: -
marketimpulsemovements
wavesof simihrdegreein progressive
Corrective
preceding
greater
waveof similardegreeif
corrective
thanthe
shouldnot be
the trendis goingto remainintactwithinthatdegree.
So let's start with the smallerwave degreeexamplefirst; this type of

progression
is morelikelyon a dailyS-minutechartwhena newtrendgets
could be around3-4 pointson an E-Mini
into progress.The corrections
move.
continuation
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Trsnd is intqct while cort'ections do noi becomcgreoler thon before
Oncea move of some substancebeginsit alwaysstafts from a market

that hasbeenin forcefor a series
reversal
of somelargerdegreemovement
of waves.If it didn't then the marketwould have been going sideways
withoutanydirectional
tendencies.
thisruleis thatthe market
whenyouareapplying
Thefirstthingto remember
with someconviction,
in
the
intended
direction
mustlook like it is heading
i.e., if the marketis goingdownit mustlook impulsiveand then the next
andgivesyou the
comesbackto a 1:1 with the lst hits resistance
correction
confirmation
that it cannotrallyany higher.This is a signto re-enterthe
alsoappliesto a marketmoveheadingup.
existingtrenddown.Thereverse
Rule
The l:l Overbalancing
?)
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WAVESof LOWER& HIGHERDEGREE:

<.-NEWTRENDDOWN BE6IN5 HER.E
(- lst CorrectionAB
<- Higher &gren l:t

equafsl-? lron3
<- tst iargel 1:1ot [fl
this is the larger of
ab or cd
Marketwavesunfold1* aswavesof smallerdegreeandthentheyextrapolate

intowavesof higherdegreeasthe smallerdegreewavescombine
to formthe
wavesof higherdegree.
The 1:1 rule can be usedfor determining
supportor resistance
levelsin all
degreesof marketwaves.Youmustdetermineif the markethasmovedfrom
a lowerdegreeintoa higherdegreeto usethistoolcorrectly.
The l:1 Overbalancing

Rule
Sectionl: Chapter- 7'
[c] Bryce Giknore2004
COMPLE(MNGE DEGREES:
In this examplewhenthe marketreversedtrend at (pointB) the correct1:1

calculation
for the overbalancing
rule becomes
XA from B. Oncethis degree
hasbeenexceeded
ZYfrom B.
the next1:1 becomes
I only ever look backwards
TWO DEGREE
LEVEISwhen I am calculating
markettargetson any giventradingday. If you staft trying to work out to
manytargeb you will just confusethe issue.Unlessthe currentmarketis
withinrangeof makingit to a 1:1I am not interested
in it.
PROJECTING
AN IMPULSEWAVETARGETPRICEUSING
THE1:1 RULE:
The 1:l Overbalancing

Rule
Section1: Chapter- 7'
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The benefit of the 1:1 projection tool is that it can give you a profit
targettoaimfor. If the marketreaches
the 1:1targetandcontinues
on then
it is tellingyouthatthe currenttrendin progress
is strong.
I don'tconsiderreversingpositionwhenthe marketarrivesat a 1:1 impulse

projection
unlessthe targetpricecoincides
withsomething
elseimportant.
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Forinstance
whena marketis advancing
froma lowpricein a retracement
of
previous
a
rangeof largerdegreea 1:1 pCIectionmayterminateon a 38.2,
50 or 61.8of the rangeit is retracing.
Thiscouldbe a goodreasonto reverse
positionat the targetprice.
In contrastif the newthrustdoesnot reachthe 1:1targetandreverses

trend
it is tellingyouthe trendis weak.
beforehand
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Situationslike these are especiallyimpoftantto you becausethe other

technicians
in the marketwill seethemandbe prepared
to attackthe market
at thetime.
Youwill haveto remember
as I movealongthat manyof the technical
toolsI
am teachingyouarewellknownto the top traders- whenI saytop tradersI
meanthe guyswho trade 1000'sof contractsa week.The publichaveno
chance
at allwhenit is saidanddone.
The longeryou watchthe unfoldingmarketeachday you will realisethat
most of the things I am teachingyou becomeself fulfillingdue to the
professional
tradersparticipation.
To becomea successful
trader is not just a matterof knowingtechnical
analysis
it is a matterof knowingwhateveryone
elseis up to. Understanding
the potentialstrengthof technicalsupportor resistancelevelson any
pafticular
daycomesdownto howthe tradersarereactingat thoselevels.
Rule
FAILURE:
1:1 CORRECTION
the littlethingsthat canprovideSIGNSof whatis likelyto come
It is amazing
asthe dayprogresses.
has
Thisis a situationthat couldoccuron a regularbasis.The 1:1 correction
you believing
the marketwill take out the currentdayshighbut something
the mindsof the playersand the marketcan'tdo it. A breakback
changes
throughthe 1:1lowis a SELLSIGN.
FAILURE:
1: I PROJECTION
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Everylittle thing that happenson the day is impoftantto obseruein this
in the next
MOVE
an UNDERBAI-ANCING
Youcouldcallthisexample
business.
progression.
Thebreakout
of the highfailsandthe marketreturnsto the prior
andthenbreaksfor a SELL.
support.Thisonlyholdstemporally
Rule
Sectionl: Chapter-7'
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WHATCONSTITUTES
A LEGffiMATE1:1 CALCUI-ATION:
in an existingtrendin wavesof similar
1 . The 1:1 mustbe a correction
degree.
in an existingtrendin wavesof similar
2 . The 1:1 mustbe an expansion
degree.
In the examplebelowyou will seethat I dont considerexample[2] as a
legitimate
Thereasonis the marketwasgoingup priorto the
1:1 calculation.
BC correctionand the 1:1 being calculatedis supposedto represent
off is
resistance
for a correction
levelwhenthe ABwaveit is beingmeasured
expansionary.
Thetwo dont mixin my book.
The rcosonexctrple [2] is not o legitimotc 1:l colculotion

is becouseif is NOT in contsxt of the current trend " 1:1
B is higher thon X ond BC is grcatcr thm AB
ES63U-18
,1-- "teffi::"i;"Nofii=""
This is o legitiinote
[3] is CORRECT
Thisview of minemay not makesenseto someof you and I knowthat it

In my opinionD couldterminate
certainlyhasa few of my students
confused.
A 1:1 is onlyoneof
relationships.
on anyratioof ABin contextof the XABCD
possibilities.
the
If you stilldon'tunderstand
the logicjust take my wordfor it anddon'tuse
1:1calculations
as shownin example
[2] as it onlyaddsanothercomplication
whatdoesn'twork
to youranalysis
andour bestpolicyis to alwayseliminate
for us.
Now I will showyou somethingsin the lesserdegreewave activitythat

above.
in the legup that is projected
as [3] in the example
occurred
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At the time this happened

in the marketsomeof my studentswerea little
in the samedegreeandwhatactually
confused
which
waves
remained
as to
constituted
a validpriceprojection
usingthe 1:1 rules.

Rule
37
'
a prior
All you haveto remember
overbalances
is that as soonas a correction
correctionthe wavedegreemovesup a level.You can start anotherlesser
the higherdegreewave
degree1:1waveseriesbutyou needto alsocalculate
1:l'saswell.
+13''6
These are the optinnsfrom the

-5 correctionand hold good
-_-_-----t
unlessthe marketcorrecfs
morethan 5 pointsIo exceed
the swingwe qre mecsuring
frum,
rr
Neul
Frojections
After this high the
Ll correcfionhas a
mo<imum
amplitude
of 5 to maintainthe
samewove degree
in the sequence.
+13^6 *e
Now the -5 overbalqncsfhc prior

-4 corraction rahatora lhe next 1:1
options?
|
lllry
|
|
|
|
in the
in progress
Thisis whatthrewthe spannerin the worK. Thecorrection
-5
-5^4
(twoticksmore).
chartaboveinvalidated
the by declining
Thecorrectwayto handlethissituationis this:
+15^4
l-csser1:1
L A R 6 E Rb E 6 R ,E E
WAVETO A,lEASURE
-5^4
Just os longoe the new corraetion
exccsdadthe prior correclionstha
DEGREElbl THE WAVEShasto
ba roised for gcometricreasons.
Just go with the FLOWone step at a time and don't confusethe issue
anymorethanyou haveto. Stickto the rules- someare easierto seethan
othersbuttheseexamples
arethe wayI do it.
Rule
38
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Section 1: chapter8:
The 2 Day CorrectionRule:

Oneof the mostimpoftantmentaltrendfiltersI canteachyou is the TWO
DAYCORRECTION
RULE.
In a trendingmarketcorrections
to the maintrendseldomlastfor longerthan
2 days.Theycanalsobe onedayonlycorrections
if theyare reactions
to an
explosive
dailymove.
is that untila reversal
Sothe thingto remember
to the maintrendcontinues
for over3 daysthe originaltrendmustbe considered
asstillintact.
Evenif the 3-day swing chaft rolls from long to shoft or short to long
the 2-day correction rule over-ridesit.
If we lookat the corrections
in the S&Prun up fromthe March31slowto the
June17hhighyou canseewhatI am talkingabout.Thistrendremained
up
for 54tradingdayswith onlyone3-daycorrection
in the earlystages.
S&P586
High 1414.fiB
Loru
?8S.58
Hge, 26.39
w p- ' ] J z i
.:_-2
{- CORR,ECTIONS
OF LE55THAhI
3 b*vs
B3BZ13
ffi4325
Thebullishtrendhadclearlyhaltedwhenwe hadmorethan3 daysdown.

Sincethenuntilnowthe markethasbeenbackwards
andforwardsin a large
tradingrange.
Maybeit is consolidating
for a freshbreakto new highgroundor elseit is
grindingitselfout for a fall.I'm not sureyet but it recovered
in 2 daysfroma
for it.
hugeoutsidereversal
Augustwhichsayssomething
dayon the 22no
The2 Day CorrectionRule
39
Section 1: chaptere:
Short Term Trend Indicatorsl

tr*ervat
fTd--l
-r lffiffiF-l
f alssi.onsl
Eave all the right

SIGNALSfOTA SELT
old Resistance
00
Thc Slow Stochostic od Thc Dirsctionol /lAovancnt Indcx

lirchsdic(14(1),3)
ti .4..
tl
00.00
A,,vc'\:verbought
||,,__t
#V
0@
\
ADX above both
DI's
0 11 '12 t3
-:[l Frllav
14
15
10 11 12
06-m i,bffkv
13
14
'rs
olhulk'*
tradesthat
Therearetwo indicators
I alwaysmonitorasa filterto compliment
going
swing.
to be counterto the trendof the 3-day
are
you
If you are contemplating
a tradeagainstthe short-termtrend,because
takingplace,you shouldverifythe
haveidentifieda geometricexhaustion
potentialusingthesetwo indicators.
havebeenworking
if the indicators
A shorttradehasmorechanceof success
in Overboughtterritory.
havebeenworking
if the indicators
A longtradehasmorechanceof success
in Oversoldterritory.
sellthat set itselfup
Todaythe besttradeof the day was a counter-trend
pefectly. A line of logicalsupportwas formed at the 975 level. The
in S1C7.It wasa foregone
rulewas in playas demonstrated
Overbalancing
would
be nestedunderthe 975
conclusion
that the daytradersstopsto sell
had
level.The potentialdownwas goingto be goodas the old resistance
you
canseefromthe
the newsupportandthatwasdownat 966.As
become
to.
illustration
that is wherethe marketdeclined
signals,I take
for tradingcounter-trend
Youshouldalwayshavegoodreasons
mustbe right.
themallthetimebuttheconditions
Short Term Trend
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Whenyou take a lookat this particulartradecloseup it wasreallya gift setup that shouldneverhavebeenoverlooked.
,e [---------
-l r*avalE--l
r as*i.*
-3^2-
l[,r/
Ih+fl,-o
''l
ftffH *",nn:g:r,'L'
4
ll .r*
One fhing fo renrenrbcr ad fhd is irespcctive ol ie Gc.onelty at

979'4t}e P/4TTER]'|wos indicoting WEAKNIESS- thc CROWS
were sqrolking orri lo{d befor.c the BREIK ol 975
The PATTERNS
the marketmakescouldbe comparedto instrumentsin an
airplanein thattheywamyouof the dangeror oppoftunity
that liesahead.
Youshouldstudysomeof the SIGNSI havenotedon this chaftthat led meto
SELLthe breakof 975whenthe oscillators
werein agreement.
Whenall the signalscometogetherTAKETHETMDE:

,o @-ll
I*a'el6-*-l
r-Arsm.
(Et)r&
1t:15:m
o.m
0.m
0.m
0.m
{1_4
&l
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I rur a 5lorr, Slochostic on o 5 rninule clrcl* os a rule - if helps
ShortTerm Trend
4l
Sectionl:Chapter-9
Trading to WIN Course- One day at a time
The 1* rallyof the dayto B terminatedon the 50o/olevelup 8 pointsfromthe

sellersin the markettoday.
low indicating
that therewereplentyof technical
point
After the 6
correctionthat followedthe marketgainedstrengthand
levelthat wasalsoon the 1:1 up
ralliedbackup towardsthe current61.80lo
(8x8).
levelthe
the 1:1 (Bx8)andthe 61.8retracement
As the marketapproached
into
OVERBOUGHT
Stochasticon my S-minutechart was headingwell
on the mentalpositionof the daytraders.
territoryaddingextrainformation
IT WASA PERFECT
SELLhereI thoughtat the time- I canplacea limitorder
order2 ticksabovethe 1:1
to sell2 ticksbelowthe 61.8andplacea stoploss
points.
at the timeI figured.
It wasverystraightforward
for a riskof L^2
The reasonI use a little room on a limit order is to makesureyou get
YoucanonlySELLthe BIDso if the hightickfinisheson an OFFER
executed.
youwill neverget executed
if youcut it to fine.
PRICE
TheBigPfT TRADEDCONTRACT
Price 963.53
Date 06ru3,m
Time l1:50:00
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Close 972.50
Csr% -0.2
# Bars16
I
Incidentally
the PITtradedcontractmadean exact1:1 (8x8)on the 61.8to
traders
my point.Theremusthavebeenplentyof professional
demonstrate
readyto acton thissignalwhenit camein. It wasas clearasthe trafficlights
on everysecondstreetcorner.
In any case my messge here is to keep your eye on your

Stochastic
as you get near stronggeometricpointsthat havea
for an intra-dayreversalin trend, it pays
reasonable
expectation
dividends.
Youwon'tbethe onlyonewatchingthem100'sof traderswill be.
ShortTerm Trend
42
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SeCtiOn 1: chapter1o:
ReversalBars:
Oneof the mostimpoftantthingsa daytraderneedsto payattentionto is the
priceactivity,i.e.,the high/lowrangeandthe directionof the price
S-minute
activity.
Eachnewchaftbaris tellinga storydepending
uponwhatwentbefore.
The bestway I find to visuallyfollowthe currentmarketactivityis by using
JAPANESE
CANDLESTICK
chafts.The UPBARShavehollowbodiesand the
downbarshavedarkor colouredbodies.Moston-linedata providers
allow
youto setyourowncolours.I useWHITEbarsfor the UPbarsandREDbars
for the DOWNbars.
The examples
in this bookwill showthe DOWNbarsas BLACK.
The bodyof
the bar denotesthe openand the closeand the narrowlinesindicatethe
extremes
between
the highandthe low.
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TWO BLACK CROWS - 5 Minute Chaft REVERSALPATTERN:
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Thisis the mostimpoftantbarformationto be on the lookoutfor. In the case

of an up trendingmovethe marketwill makea newhighandthe barwill be
whiteafterthe newhighthe bodyof the barwillturn black.
If youwerewatchingthis bar unfoldyouwouldfirst seeit as all whiteas the

newhighwasbeingmade.Bythe timethe marketmovedon to the nextbar
it hadturnedto a blackbodydenotinga possible
reversal
in the priceactivity.
The bar followingthe reversalcouldnot regaintrend and was also black
bodied.Thisdenotesa reversalandtimeto actto protectyourposition.
Two
blackcrowsaftera newhigharethe first indication
reversal
short-term
thata
of trendis in progress.
ReversalBars
Section1: Chapter-10
BARPATTERN:
THEOUTSIDEREVERSAL
Thisis the strongestsignalfor a temporaryreversalon a s-minutechartor
with this bar
majorreversalif it occurson a dayonlychart- the difference
baris both
andthe simplereversalbaris thatthe pricerangein the reversal
preceding
of the bar is lower
bar andthe CLOSE
higherand lowerthanthe
thanthe lowof the priorbar.
Outside
Reversol
Bar
Oncethe low of the priorbarto the highis brokenit is timeto act,don'tsit

Bar
on yourhandsto wait andto see,you alreadyknowan OutsideReversal
is forming.
are10/1on.
If it doesthenthe oddsof a fuftherdecline
WHITE BARSV,SBLACKBARS:
Visuallythe mix betweenthe numberof Whitebarsversusthe numberof
Blackbarskeeptellingyouthe stateof the trend.
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in a bulltrend,
Two 5 minuteblackbarsin a row usuallysignala correction
two white barsin a row generallytell you the correctionis over.You can
reverse
the process
in a beartrend.
ReversalBars
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GRAVESTONE
DOJI:
Thisbarcouldoccuron its ownor it couldconfirma reversalpattern.In this
pattern.
example
Dojifolloweda standard
reversal
the Gravestone
the high
At first the marketlookedlikeit wasreversing
andthen it attacked
of the sellers
again,exceeded
it andthenfailed.Thisshowedthe conviction
at the timeandthe factthattherewereno buyersaroundto takethe market
higher.
6ravestoneDoji
I
II
+
61,8%Retrocement
Tl
l+l
{\nil i+
iil*r
fromthe
Evenif youdid not seeit whenit happened
the 6I.80/oretracement
"set
firstdeclineprovided
for a goodchaftreader.
up"situation
a
Oncethe markethas demonstrated
a reversalof the short-termtrendyou
normallyalwaysget a secondopportunity,either at a 50o/oor a 61.8%
retracement.
Youcansellintothe strengthwith limitedrisk.
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DOJI BARS:
Thereareseveraltypesof DOIIPATTERNS
of themall
butthe maincharacter
is that theyOPENandCLOSE
the barat the samelevel.Theoryis that they
areindicating
indecision
between
the buyersandthe sellers.
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Gruueslronc
ReversalBars
Doji
Hanging*ion
HAMMERS:
Hammers
are similarin a way to the Gravestone
or the HangingManDojithe onlydifference
is theyhavea headlikea hammer.
Neveftheless
theycanbethe firstsignof exhaustion
to the currentthrust.
It is nicewhenyou seea HAMMER
on a falsebreakof a MOB,i.e.,whenthe
marketpricepenetrates
a MOBlevelby a coupleof TICKSandthenreverses
leavinga HAMMER
BARor a barwith a longreversalleg.Evena HAMMER
on
any new low or high in the intra-dayS-minutechart is a SIGNthat the
hammer
impulse
haspotentially
stalled.
Wheneveryou reachthe vicinityof a pre-calculated
MOB(Makeor Break
Level)you are lookingfor SIGNSof resistance
or supportfor a reversalto
occur.
iangle
Morkel forces fail to close the gop
Honncr rJ
15 ninuies
iltnl
/r HOilitGF
l4ofrrcrthc OPEN
boublaTop
HommerBars
You are not goingto see everysmallreversalconformto standardreversal
bar theorybut you will see at least50o/oof reversals
terminatedon BARS
similarto the onesI havementioned
here.
TheseBARpatternsare an indicatorof the currentto the minutetrader
interest- neverforget no matterwhat your overallopinionof the market
directionis it is onlythe traderswhotakeit fromonelevelto another.
Significant
intra-day
SIGNS
for the professional
daytraderare:1.
2.
3.
4.
5.
46
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I
Double
Tops
DoubleBottoms
OutsideReversal
Bars
Gravestone
ManDoji's
or Hanging
Hammers
ReversalBars
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Tradineto WIN Course- One dav at a time
Section
1: chapter11:
ReversalPatterns:
Identiffingthe potential
to yoursuccess
asa trader.
of patternsis paramount
Topsor bottomscan form numerous
typesof patternsthat leadto a daily
reversal
of trend.
II.ITRA-bAY REVERSALPATTER.NIs
5 minute bors
t\Aorkeitnokesa boseevsr on
or longer.
:_hr
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'i+fil
wiih reiesl
fricc Pon9in eonsolidntiotrsmoll
Theseare commonand normallyoccurwhenthe top or bottomis not on a

priceretracement
recognisable
levelto a priorlargerdegreerange.
in the
In the caseof a bottomit first looK like a continuation
RECTANGLE
makingbut the bottomsof the rectangle
do not comebackto the originallow
and in fact what happensis a bullishrectangleforms.This infersthat the
marketis consolidating
or forminga basefromwhichit canmakean advance
backup. This top formationcouldnot get backto the first highto form a
rectangle
that
andthe two blackcrowsbeforethe breakof suppoftindicated
the breakout
couldsucceed.
Connotaven reoch lsi high!
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EXHAUSTIONTOF
ReversalPatterns
INTM-DAYTOPOR BOTTOM
Followedby a 50 or 61.8 RETMCEMENT:
The weaknessin the marketat a new high is evidentby the precise
retracement,
therein force.
asthe sellershavecongregated
l'lev.rHI6H ->
RetrEeement
5O or 61.8
Breok ->>
5 minute bars
II{TR,A-bAYREVERSAL
INTM-DAYDOUBLE
TOPORBOTTOM
Followed
by a BREAK
OUT:
Doubletopsanddoublebottomswill havemorepotentialfor profitif theyare
a reversal
backin the direction
of the dailytrend.
RVERSNL
BACKIN THEbIRECTION
OFTHE 3 DAY 5WI}'J6TRENID
ReversalPatterns
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TOPPING
PATTERNS:
TOPFtI'LG
F,ATTERFls
The commonthemeof a toppingpatternis that it will makethe top then

retracebackto a recognisable
lineof support.It will thenattemptto get back
into trendandfail.The failurepointis the placeto sellbecause
by the time
traders
the marketfailsnegativeopinionwill be in the mindsof professional
andthe movewillbefuelledbytheirpafticipation.
5 minutes
Singlc Dcys Troding
In caseswherethe markettriesto breakto a newhighandcan'tcontinueon,

lowbeforethe newhigh.
the lineof supportbecomes
the lastcorrection
In all casesyou cannotbe sureif the marketwill makea re-testof a break
out so you musttakethe tradeon the 1$ break. If by chanceyou get a retestandthe trendlookslikeit haschanged
to downyoucanhammerit at the
i.e.,was
terminated,
time. Of coursethiswill dependon wherethe breakout
point.
the newlowbeforethe re-testa knownsupport
ReversalPatterns
TOPPINGPATTERNS:
lrghs
<<<<<{<<<<
Should trot bE more
thon 1:1
..1t,
,nfl I
ft
.lJul
V
usethe1:lruleto sioyv,ith l*ofthl

il:i:::::e
Thenoviceusuallyhasa problemwiththissituation.
Whenthe marketbreaks
downonlyto returnbackas thoughit is goingto be a re-testbut it comes
backabovethe baseline.So longas the advance
backdoesnot overbalance
a priorcorrection
sincethe highwasmadethenthe trendis stilldown.
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Naw High ->
Lowar HI6H
Braok back through

retrocemcnt highs!
<- Sell Foilure
higher low ->
THIS ONECANBEA EE,AL

TESTER:
Everynow and againstrangethingshappenthat do not conformto your

expectations.
Asa traderyou haveto acceptdayslikethiswhentheyhappen.
Thisdaythe marketsoldoff earlyaftermakinga newhighthen it formeda
doubletop 3 ticK abovea 61.8,the nextlegdownto the higherlowdid not
extendas onewouldhaveexpectedanda rallybackbeganwhichbrokeout
of the doubletops. Onewouldhavethoughtwe wereheadingfor a newhigh
at thetime!
The signalto SELLcomeswhenthe marketbreaksbackthroughthe double
topsasthis is the SIGNof a breakoutFAILURE.
ReversalPatterns
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il
TOPPING
PATTERNS:
rA4poRTi{NT
LEVEL------.
.. 1.... .
OverloppingWovas
2
NevisuFport
FJ TLURE
ERENK
l:t into HI6H

3 Drivas to o Hf6H
<<-Sirong Upv.rordsmoveprior:
Mostprofessional
tradersare awareof this phenomenon,
as it is a signof
short-termexhaustion
in trend.Youcan obseruethis patternin the INTMDAYpriceactionbetterthananywhere
elseso it becomes
a SIGNfor you to
watchout for when the marketrefusesto gain HARDLY
any manymore
incheseachtimeit breaksoutto newlevels.
3-Drivesinto an exhaustionphase reversalshould have OVERLAPPING
WAVESin my opinionto showthe exhaustion
process.
Onceyouget the washoutthe marketcouldrecoverfullyon the dayor it may
continue
intoa two-daydecline.
956.BB
953. AB
95A.9S
3 DRIVESto cn EXHAUSTfON
Corractions
over-bolancing
94?. AB
944.6A
941.BE
s38. 86
OVERLAPS
s35.A0
!|3z.sa
9ZS.A0
<- Thrustfollor,ued
by Stognation
sz6.Ba
Thispatternis morelikelyto occurat newhighsin a bullishtrendbut it can

still occur in an upwardcorrectionto a prior decline.The HffiAUSTION
process
becomes
obviousafterthe correction
to the 2ndhigh.
l1
ReversalPattems
5l
Section1: Chapter- l l
Trading
thesepatterns:
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As you learnto readthe patterns- takingtradesat the rightplacebecomes

easy.
of the buyers
Themarketpriceis alwaysworkingto the strengthor weakness
or sellerspreparedto committo the currenttrend - nothingmore and
breaksBUY.
nothingless.WhensuppoftbreaksSELL;whenresistance
If the market is going up you buy it; if it is going down you

sell it. That is all you have to remember once you can
recognisethe patterns.
Impressin your mindthat the chartpatternsare tellingyou a storyof the
and
goingon betweenthe buyersandsellersandtheirstrengths
relationship
to a hit by the otherside each
weaknesses.
Whenone sideis vulnerable
by oneside.It
sidewill knowit and basically
what happensis a capitulation
mightonlybefor 5 or 10 pointsbut if you havea 10 lot tradeon thatcanadd
upto a goodpayday.
Onceyoulearnto readthe patternsyoucancallyourselfa trader.
patternis the first thing you need to learnto becomea
Understanding
to your
successful
tradereverythingelse I am teachingyou is secondary
continuing
I couldtradeoff patternalonewithoutknowinganything
success.
else.Thepatternis the marketsfootprint.
THINGSTO REMEMBER:
SOMEIMPORTANT
Whenthe marketgoesup in a hurryit cancomebackdownin a hurryand
viceversa.
Whenthe marketis movingin tight rangesthen expectthe tight rangesto
continue
stanceor standaside.
andtakeon a scalping
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Alwaysconsider
the marketvolatilitybeforeyou starthangingintoa position
andgoingfor the HOMERUNhit.
Themarketis notdissimilar
ballmostof the time.Therisesand
to a bouncing
reallyspooksonesideor the
fallsare accentuated
whenthe NEWSFACTOR
other.
ReversalPatterns
Section1: Chapter-ll
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Tradingto WIN Course* One day at a time
Section
1: chapter12:
ContinuationPatterns:
Identiffingthe SIGNS
that infera continuation
of trendis enoughon its own
to makeyoumoney.
Themarketpatternwill unfoldin sucha waythat it infersthe currenttrendis
stillintact.
Whenyourecognize
the signsyoucanenterthe marketwitha closestoploss
eachtimeit movesintonewterritory.
.ffi
BreakobovcoH high
Suppofton the 38.2retracement

is a signthat the trendis strongandwhile
the 38.2remains
LOWSit is
to makeHIGHER
intactandthe marketcontinues
indicating
the direction
is intact.
In this examplethe waveup afterthe 38.2correctedat a 50 minordegree
retracement
by
to the movedown.Thefollowingpushbackdownterminated
makinga HIGHER
LOW.
The 1* SIGNafterthe 38.2 retracement
camewhenthe
of the continuation
marketbrokeabovethe minor50 retrace.Thedepthof the retraceafterthe
Forthe
50 retracenow becomes
the benchmark
for any fufthercorrections.
trendto remainintact,in the samedegree,anysubsequent
corrections
to the
upsidemovement
shouldnot exceedthe lengthof this 1* correction.
Afterthis 1-1 alternatewavecorrection,
whichwasalsoa 38.2retracefrom
the doublebottomthe marketwentsideways
for 75 minutes.
ContinuationPatterns
1{r 5^4
: HIaHER IOTI/
ab=
13.58 cd=
6.?5
cdlab=
6.580
[C] Bryce6ilmore
Trend remainsinfaci becorsetha next

correction doesnot bxcaadtha value of
tha lst corraciion. .
ab=
5.50 cil=
5.5S
cdlab=
1.BBE
The unfoldingpatternproduced
a tripletop - this occursthroughthe actions
of the daytraderssellingthe priorhighs.Youcantell that theireffoftswere
notgettinganyfollowthroughbythe shallowdepth.
Afterthe 3'dtop the marketreceivedsupportat the levelof the reversalafter
the 2notop. Confirmation
of the continuation
camewhenthe marketbroke
outthroughthe topsof the rectangle
that hadbeenformed.
The ultimateend to this rallywill be determined
by geometryin the larger
picture.
greaterthan5^4 pointsit is timeto lookfor selling
Whenwe get a correction
oppoftunities.
The first warningwill be a correction
that is greaterthanthe
point
latest4^4
correction.
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Continuation
Potterns
lPlrice
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SectionI: Clnpter - 12
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RESTAN6LE
5^4
l/l/hifst the correetions do rrrl excad
ths 5^4 banchmarkthc trand is intact
IPlrice
ab=
5.58 cd=
4.58
cd/ab= 4.818
Confirmation
of a reversalto this uptrendwill be the marketpricecrossing
backoverall the breakoutlevelswe havemadeon the way up as well as
exceeding
the original38.2correction
of 13^4 in the largerdegree.
Ourguidelines
are clear- if we followthemthe marketwill leavethe SIGNS
to guideus.
So let's recapwhat we should have learnt so far in this chapter:

1. CORRECfiONS
shouldnot get largerin an ongoingtrend of similar
degree.
2. 38.2o/oretracements
are an indicationthat the market is in a
continuing
trend.
3. RECIANGLES
area signof a fufthercontinuation.
pattern.
to be in a continuation
4. Buythe BREAIif the trendappears
5. Buyany retestsof the BREAK
OUTSwith closestopsin a continuation
pattern.
PATTERN
is intactas longasthe marketdoesnot
6. TheCONINUATION
prior
levels.
BreaK should be clean in a
BREAKOUT
overlap
pattern.
continuation
pricetargets.
to establish
7. Wecanusegeometry
Continuotion
Potterns
[C]BryceGilmore
Breoksrlfrorning
High-rt
1:1
ondmrlier high
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Hereis an exampleof a continuation
patternthat developed
after a sharp
correction
beganon the releaseof a 10:00amreport.The reportwasn'tthat
badit just camein as unchanged
whentherewasan expected
improvement.
Afterthe fireworKsubsided
the 1* rallywasretraced61.8andthe 61.8was
madeon a 5 minuteHammeror Dojibar.A breakoutup thensucceeded
into
the zonewherethe markethadpreviously
brokendownfrom.Thefollowing
correction
wasidenticalin lengthto the 61.8correction
registering
a 1:1 with
it. The nextrallyhighpenetrated
the openingrangebeforemakinga 1:1 (in
blue)balanced
correction
of largerdegree.Thenextadvance
whenmeasured
off its correctionlow to 1:1 (in purple) came out as a double top.
Theoretically
this was a Sell point in my bookbut it did not work and the
marketbrokeup andthroughthe morninghighsignalling
a CONTINUATION
anda BUY.
Themoralto this is if youworkthe guidelines
I am showingyouthenyouwill
knowif the technicalpositionis continuing
to be strongor weak.Theworse
casescenario
you
on the day was
hadto buy the breakoutof the morning
high whenit came.But therewere severalothertradesbeforethat which
stoodout usingmy methods.
BEAR TREND CONTINUATION PATTERNS:

The sameprinciplesapplyto bear movesthe only differenceis that the
declines
willbeswifter.
As the declinecontinuesthe correctionsshould not exceedthe prior
- a doublebottomfollowedby a correction
corrections
greaterthan a prior
correction
is a signof at leasta temporary
reversal
in trend.Oncethe market
beginsto overlapprior correctionhighsthe trend has changedor it is
pattern.
returning
to a congestion
56
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LARGERECTANGLES:
Fromtime to time you will noticethat the marketgetscaughtin a BOXlike
patternmakinga seriesof topsandbottomsthatareequal.Thisis knownas
a rectangle
andin charting
termsimplies
a continuation.
Continuation meansthat whicheverdirectionthe marketenteredthe
rectangle
in the first placeit will exitit in the samedirection.
Qcharts 8SU
rraz.Ea--
Rectongles- IldtPLy CONTfNUATION
109s.aB
1884.80
u81.BB
1B?8.BB
ESB'H-E
DoublcBo*'hon
Foiluu
Continuation
down->
1875' BE
lE?Z.g6
1869.80
r----___lltlxx+
E4/25
B,4/ZE
84/28
g4/28
g4/26
A /ZE
Oncethe rectanglebreaksfor the first time you can expecta retestof the
break.
The retestleg shouldnot retraceanymorethan38.2olo
the length,of in this
example,D to the failuresupportlevelandthen the continuation
shouldbe
ceftain.
On the nextbreakof the failuresupportlevelthe breakshouldbe cleanand
keepgoing.
- it is
Oncethe breakoutoccursin the first placeit is implyinga continuation
just a matterof time.
Onceyou canidentifytechnlcalbuyingor sellingoff specificlevetsthe whole
approach
to makingyour nexttradebecomes
easy.You alreadyknowthat
whentheselevelsfail the traderson the wrongside haveto take evasive
action,andhelppushthe marketin yourpreferred
direction.
Thisis the samefor all consolidation
patterns.
CONTINUATIONBARS:
Thestrongest
singlesignalfor a continuation
of trendis the outsidereversal
barin the directionof the priortrend.
Thesesignals
willapplyto alltimeframes.
S&P5BB
date AZEBZZ
hi
966.88
trlrl
ilr
[gcleTrader
CONTINUATICIFISI6NALS
lu
date
Hain
?F7.58
EZlB18
BUA?I?
BZE8ES
AZB833
BZB513
BE1BB3
BZIBZ.T
In both these examplesthe market had either overheadresistanceor

underlying
suppoftbasisthe previousnearbyhighsor lowsin the movesto
date.
The outsidebarswere a sign of powerand suggested
that the breakouts
wouldsucceed.
youSIGNS.
Themarketis alwayssending
Thefirst exampleon the UPshowsthe marketreversing
earlyon the 3'dday
downfrom a doubletop. It actuallyturnedthe 3 day swinginitiallybut this
signalwas negatedby the highercloseat the end of the day as the 3 day
swingremained
up.
The secondexampleon the DOWNalsopenetrated
the 3 day high but this
signalwasnegatedas a swingchangebecause
the marketclosedoutsidethe
3 day rangeandstillon the DOWN.Thisoutsidebar heldabovethe nearby
breakout
zoneon the daywhichwasnot surprising
asthe breakoutlowwasa
major50 of the wavesup to the August22ndhigh966.The next day the
marketbrokethroughthe 50 andon it wentdown.
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Section
1: chapter13:
GeneralPatternTools:
LINES IN THE SAND:
The E-Minicanfrom time to time drawlinesin the sandovera 2 or 3-day
period.Linesin the sandcan alsoform over manydays. Firstthe line is
drawnas a resistance
levelthen,sooneror laterthe marketbreaksthroughit
andthen keepsreturningto that level,the levelhas now becomesuppoft.
Whathappens
at first is that traderskeepsellingoff the levelandaftenruards
they keepbuyingoff it. The linein the sandbecomes
the balancepointand
anybreakeithersideof it signals
a buyor a sell.
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Linas in tha Sand
HIGHERHIGHSWith HIGHERLOWS:
Whenyou look at a chaft you shouldsee immediately
if the currentchaft
patterncontainshigherhighswith higherlows,if so thenvisuallythe TREND
is UPandshouldbe considered
up untilsuchtime as it startsbreakingback
throughthe swinglows.Oldswinghighswill offerinitialsupport.
LOWERHIGHSwith LOWERLOWS:
Thesamethingin reverseto the above,Lowerhighswith lowerlowsindicate
a strongtrenddownis in progress
anduntilthe marketbeginsbreakingback
throughprevious
swinghighsthe trendremainsdown.Old swinglowswill
offerinitialresistance.
Thereis muchto be learntsimplybyvisually
examining
thechaft.
GeneralPatternTools
TRENDLINES:
your
Wheneverything
elseis not clearyou shouldalwaysreveftto enclosing
currentpatterninsidetrendlines.
A trendlineis drawnup or downusingpriceextremes.
Irrf
*1,
'fl{
t*tt*,0,*;il#
Er*akr
. SEll
$ell Cunfirm
I hr bsft opparhrnilies come wtsn tha trEnd lilre ir srrpporting 6 TrEnk rtruLirrrs"
If you are unsureof the pricerelationships

andyou everneedto baseyour
youcanusethe trendlineapproach.
analysis
of trendon simpleparameters
TRENDTINESact as a broad guide to the general market direction,
they also help to keep your mind thinking about which direction
offerc the best trading oppoftunity.
It always pays to rememberTRENDLINESwere made to be broken.
They are most likely to break when they are suppofting a weak
market structure such as in this example,
A populartheoryamongst
tradersis thatoftenwhena trendlineis brokenthe
marketwill returnto the levelof the initialbreak.I havefoundthisto be an
oldwivestail.
Sometraderswill buy or sell on a test of the obvioustrend line and place
their stoplosssomepointsawayon the othersideof the trend line.If the
trendlinebreaKtheywill takea reversepositionandthenusethe trendline
as a guideto marketstrengthor weakness.
Sometimes
the marketwill come
backto test the breakof trend line similarf to the way a marketbreaksa
highor low andthen comesbackfor a retestof the breakbeforeresuming
the trendit hasjust begun.
It is handyto knowthesethingsbut I onlytradeoff trendslineswhenthe
marketis showingobvioussignsof exhaustion.
GeneralPatternTools
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TRIANGLES:
SymmetricalTriangleor CoilingPattern:
The symmetrical
triangleis a patternformedin a trend wherethe market
goessideways
for sometimemakinglowerhighsandhigherlows.
Anotherdescription
we havefor this phaseis COILING,that is the marketis
buildingup energyto go somewhere.
The longera marketspendsCOILING
the ensuing
the more unpredictable
movewill be.The reasonis that all the pafticipants,
bothlongandshoft,are
gettingneruousaboutthe futuredirectionand preparing
to bailout if their
positiongoesthe wrongwayon them.
You have to ALWAYSremember that the reason markets move one
way or the other is becauseone side is capitulating.Trianglesform
when buyersand sellercare in a state of balance.
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goigfs-
il*ll
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points
Breokout
Coi I ing llltarkef Pattern
Edwards
andMageewouldsaythatthis patterninfersa breakout
will cometo
the upside.My experience
tells me that you couldexpectthe marketto go
eitherway.
Onceenoughtime haspassedfromthe originalthrust,whichoccurred
before
the congestion
began,any momentum
the markethadonewayor the other
hasbeendissipated.
Betterto beout andwaitfor a confirmation
breakout.
There are variousdescriptions
for trianglesand each has a different
implication.
Personally
I thinkthat whentrianglesbeginto formtheycanbe
misinterpreted
and just continueas enduringrangecongestion.
Triangles
are more reliablein fast moving markeb.
GeneralPatternTools
TRIANGLES:
ASCENDING& DESCENDING
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= Flattop withascending
Ascending
bottoms.
If the ascending
triangleoccursin a fast movingmarketthe higherlowsare
an indication
of the breakoutpotential.
formof identification
Anymoveexitinga triangleshouldhavesomeseparate
triangle
and the descending
to confirmmarketdirection,i.e., the ascending
havethe doubletop or the doublebottombreakasa formof confirmation.
Thedescending
trianglehasa flat bottomwith lowertops.
The lowertops implyweakness
so you wouldsellon a breakof the double
If the marketwereto go
bottom,whenthe marketconfirmsa continuation.
up you wouldbuy only whenit getsout of the areawhereit couldstill be
forminga rectangle.
fr'
T+
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GeneralPatternTools
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SectiOn 1: chapter14:
Gaps, Gap Reversal Days, Average Daily

Range
GAPS:
Yearsagoin the dayswherewe hadrestricted
tradinghours,i.e.,whenthe
markets
wereclosedovernight
the gaptheoryprobablyhadmorerelevance.
A GAPoccurswherethe marketopensthe nextdayoutsidethe rangeof the
previous
day.
Therecouldbe a numberof reasons
but the majoronewasthat somenews
hadenteredthe marketin the afterhoursandcausedtradersto believethe
marketwouldbe influenced
to go up or downviolentlyon the comingtrading
day.
Justbeforethe dailyopeningof the marketthe marketmakerswouldmakea
call indicatingwherethey were preparedto buy or sell, generallythe call
wouldreflectthe buyingor sellingordersthey heldin handpriorto the open
outcry.
s&Ps8a
date
hi
This wos fomousin tha 5&P pit bock on tha

333.88 r+o[*tl.
doysEfter tha CRASH
Ztnd Oct 1987tv.ro
-"f
low.ThEmsrkei opcned59^& dovmfrom
a++r
' tl.
the prior doysclosa.Andoll the floor'
up thansold
I trodcrs boughtit took it back
ii off ogainffd then qt tha endof thc doy
Accereration6Ap -rrrT
I ii had recoverEdback inio ihc prior rdngc
8?1BBZ
, * t t t r ? l go r r l
l*ol
GscleTrader
Io
ricrte fi?lEZB
l'fain
<- Exhousfion
S,4P
lllsrkat opcnsuay balowprior doy
1s1.EB
8?E9ZB
t
8?1BBg
tl
87L8?'2,
r
g?1164
8?111?
8?13B3
Thestorybehindit wasthat someIargefundmanager

hadplacedan orderto
liquidate
on the OPENas he was $100million
all his fundsS&Ppositions
underwater.
Gaps,Gap Reversals,Avg Range
Sectionl: Chapter-14
Theorderclerksentthe orderto the floorpriorto the openbut no numberof

contractswas mentioned.
This all happened1 minutebeforethe market
opened.
Theoperatoraskedhowmanyandthe replywas,"sellas manyasyoucan!"
Thosein the "know"on onesideof the pit werecallingthe marketdown50
andon the othersideof the pit thosewhodidn'tknowof the sellorderswere
callingit unchanged.
Within30 secondsto one minutethe buyerson one side of the pit had
cleanedout the sellersandtookthe risingbid acrossto the othersideof the
floorandthenbackagainastheytookprofits.
As the storygoes,as told to me by a Eurodollar
trader,therewere21 new
millionaires
madein the first2 minutesof tradingthatday.
GAPSTODAY:
Gapstodayvary in significance
due to manyfuturesmarketstrading24
hours.In fact if you chaftedthe 24 hourdatatherewouldmostlikelybe no
gaps.Welltherestillcouldbe in somemarketsas economic
or production
or
croprepofts,are
released
at the marketopening.
The realproblemwith the after hoursmarketsis that everythingis doneon
lowvolume.Whichmeansthat a minorityopinionof wherethe marketwill go
canbe overruledveryquicklyoncethe daysessionopensandmoretraders
assume
a differentopinion.
(thesearethe guysthat tradeoff the flooreachday
Thethingwith LOCALS
providingliquidityto the market)is thattheyhavea tendencyto takeon the
orderscomingfrom the retailcustomers
because
they think they can move
the marketthe opposite
way.
Thesituationin the S&Pis uniqueto the S&Pin as muchas manyrepoftsare
releasedat B:30amET an hour beforeWall Streetopens.The European
marketsare openand they havea tendenryto reflectwhat they expectthe
USmarketsto do on the day.Theearlymorningtradersusingthe electronic
GLOBH(trading mediumcan run the market up or down based on
expectations
of what they think will happenwhenthe mainoutcrymarket
opens.Valuations
canmovewayout of syncwithwhattradersliketo call"fair
value".FAIRVALUE
is basedon the physically
tradedstocK index.
FUTURES
MARKETS
can trade at a premiumor a discountto the CASH
MARKET.
Futuresmarketswill trade at a premiumto the cashwhen the
expectationis for the marketto go UP.The reverseif they expectit to go
DOWN.Duringthe dayit is important
thatyou monitorthe SPREAD.
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The SPREAD
be it a premiumor a discounton the futuresto the cashwill
provideanotherclue as to the future expectations
of traderspushingthe
marketin onedirectionor the other.
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t
Nowbackto GAPS:
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Thereasonis that largefundswill oftenSELLfuturesbeforetheydumptheir

of stockwill
stockon the marketas they knowthat dumpinglargequantities
forcepricesdown.Theythen selltheir stockand buy the futurescontracts
backaftertheyhaveit done.
Whenthe marketGAPSfrom the previousday there is a beliefamongst
thingand
technical
tradersthat GAPShaveto be filled.It is a psychological
timeandtimeagain.
thatis all.Butyouwillseeit happen
So what we get from this is that the levelthat fills a GAPcan also be a
pointto buyor selloff. I'm not bigon sellingor buyingthe levelthat
decision
level,Linein the Sandor a
retracement
fills a GAPunlessit is a recognised
it paysto think aheadwhen gapsappearon your
1:1 level.Nevertheless
chafts.
ThebestexampleI couldgiveyouis onelikethis.
S&P5BA
5E/95
date B3B5B5
hi
933.58
]i+
EgcleTrader
6ri?
'
| Tr
l-
SmnllGoP/'-.ll
['
FillstheGAFand6AP5
rI r outthe next doy
t\ltorketfinds support
on the AP braakout
J
I
1o
rlate
Hain
?8fi.58
8383i"Z
B3E3B?
838318
B3B3Zfi
B3B4B9
B384ZZ
B3B5B5
of the waytradersacton
Nowthisis not a surethingbut it is a goodexample
theory.
in
the
GAP
massbecause
of theirbelief
On a day-to-daybasisusingintra-daydatathe GAPtheoryhasto havea
placein yourthinkingbecause
it eithertellsyouwhetherthereis strengthor
is displayed
on an
weakness
at that level.As eachnew pieceof information
intra-day
chaftyou needto readthe signs.
Thisis a 60 minutecharttakenoverthe periodwhere the GAPon the prior

dailychartwaswaitingto befilled.
Qcharts CSU
sBs.A6
GAPREVERSALS
8SS.BB
8S3.BB
887.08
881.04
I
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875.BB
889.BE
863.BB
057.BB
s51.BS
845.BB
s3g.BE
fla in
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E3/2I
E3/28
B3/ZA
64/gZ
8,4/87
9,4/IB
VARIOUS
TYPESOF GAPS:
TYPESOF 9,4P5
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Gaps,GapReversals,
Avg Range
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DAY:
GAPREVERSAL
AND AN OUTSIDEREVERSAL
sfiF58S
Higlr
LLtq
Egrr
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This tignol i* oflvoyc going to be c 5I6i,! of c major

chorge rn tr-crd.
Thc nargc for rhc dcl wc
EJB531
or+r d+ublc fhc *rcmgc
mnge ,
S2ffit:I
Youarenevergoingto seea reversal

in trendsignalbetterthanoneof these.
you
When takeintoconsideration
the magnitude
of the daysrangecompared
with the averagedaily rangeyou can see the magnitudeof the swingin
sentiment
thattookplaceon the day.
Onthisdaythe marketwason a newall time lowfromthe March2000high
andthe lowfor the daywasexactlya 50o/o
declinein pricefromthe all time
high.This is a commonGannsupportlevel.Technical
buyersweresitting
thereprepared
to buyandtheydidat the 50o/o
to the high.
discount
s&P5A0
High
Lor,r
Fge
366.BB
773.A9
193.BA
S
F
<-- eAPREVERS/{L
b/qv
& OUTSIDER,EVERSAL
n
E
A
D
T
n
R
l
E
z
l(
6Z,6719 EZBTZE
BaBSBZ BZBEBS 028816
A Gapopeningoutside reversalday is the strongesttechnical

reversalpattern.
Gaps,GapReversals,
Avg Range
67
DAYS:
GAPREVERSAL
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to the S&P500on Fridaythe 6h June

Thisis an exampleof what happened
2003.
HiB3.t-15
[charts CSU
1611. BO
1008^4
1085. BB
s|!|.00
sst.B0
s87.AB
981.BB
s?5.00
s6s.m
963.BO
S5?.BB
9s1.AB
ffi/ffirw
g8?.?5
986.0B
SB?.?5
86/85
The market made a GAP OPENINGeven in the face of increasing

UNEMPLOYMENT
NUMBERSreleased an hour before the open.
wasthatthiscouldhave
Unemployment
hadrisento 6.10lo
andthe consensus
beenexpectedat this stageof the forecastrecovery.
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TIHE CYCLE
rfil
AZTSLA
TB] AZIZAZ
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rlags
53
degs
53.8
ueeks
?.6
Uears 8.1,17
before.reversing,
The rallycontinuedup to the 1008^4level(7 times1214)
points
1008^4was45
up fromthe 963^4doublebottomof the 3'oJune.The
ls impulsedownfilledthe GAPand foundsupportat the previousbreakout
of similardegree
high but t9^2 down overbalanced
the prior corrections
position.
up of 9 points
indicating
The
rally
back
the marketwas in a weak
could not get past the openingprice and started down again finally
terminating
the downmovefor the dayon the 50o/olevelof the lastwaveof
similardegree.The rebsonfor the reversalcouldhavebeendueto the time
ryclespresenton the day- manyinformedtradersknewof them.
ClaleTrader
S+P 5ffi Ef,SH
PRIJJEf,T
IOH
tcl
83B3tZ
tT1
838686
drgs
BE
degs
83.S
u e e k s 1 2 -3
gears 8.233
:tAOO/t.61&
This is o SWINO CHART

I keep of imporiort swings
from ihe baginningof tha
BENRAltARKET
Scroll
tiuirr$ =
6 Jun &3
.....
68
t
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fA?.8S
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wotth his "salt" was

One thing to rememberis that everyELLIOTTICIAN
for a
in newsletters
awareof thesetime ryclesand they wereforecasting
downturnto a heatedmarketat thistime.
I am not makingany forecastsmyselfbut to havean all roundviewof the
trader.
to the professional
markettechniques
that movemarketsis important
as
DAYshouldneverbe underestimated
Theimportance
of a GAPREVERSAL
DAY.
REVERSAL
it sometimes
asan OUTSIDE
holdsthe sameimplications
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Aswe moveon fromthis marketpositionall we haveto do is followthe daily

or non-conformation
signalsfor guidance.
Eachdaywe will get confirmation
thata highof somesigniflcance
hasformed.
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I'll run you throughthe important

thingsI will be lookingat comeMonday
justto showyou.
ES63r{-5
Qcharts CSU
1818.SB
ffia?.oa
1:E,g4.B8
1881.gB
ss8.68
sss.EB
If tha 50 lsvel 986 holds in

eorly trcding ilt\ondoythen
the morket hos two lesistqrce
points obova ii of 989^2
ord 994^4 a 38.? relroce of
Fridoy's ronge ond the 1:1
lil : P95
sgz.Ba
98TI.BB
s86. gB
Sffi.BB
988.08
86/ffi/ZEE3
l'lain
a66,/s4
B6/ffi
65/95
ffi/EE
m/86
65/86
To negatethe implications
DAYthe marketwouldhave
of the GAPREVERSAL
the
of the TIMECYCLES
to tradeabove998^2.To negatethe implication
marketwouldhaveto tradeabove1008^4.
The nextlevelsdownthat couldact as supportshouldthe 50o/oretracement
comeout firstthing Monday
are : 1 . TheLINEIN THESANDlevelat 979.
2. The1:1of the l9^2leg downat979
of similardegree,this
3 . Thenequalwavesdownwiththe priorcorrection
is 3B^4downandliesat 970.
4. Thethreedaylowis alsoat970^2
Gaps,GapReversals,
Avg Range
69
Youcanseetheselevelson the 15 minutechartI presented

on page68. If
you prepareproperlyeachday you will neverbe in for any surprises
if the
marketdoesdo something
unexpected.
0charts
CSU
Current f,ange
Z,2.58
prior
rdnges
45.88 B.sBE
15.88 1,488
33.?5 8.867
18.58 1.364
51.84 B..t4t
38.58 8.584
31.56 6.714
2r.25 1.85S
3S.SB 0.5??
I
t
NExt Wove boek
of similar daE'aa
-38.5
r.E6/ffirzaT3
Hain
84/39
I
A5/ffi
BS/LS
I
B5{ZZ
I
g1/fr
ir'-1"'
BE/EE
Hereis a chartof the recentsignificant

swingsthe markethasmadeon the
recentrun up. This marketwould haveto declineover 38.5 pointsand
overbalance
the lastwaveof similardegreeto confirma significant
top.
Usingmy methodsyou will alwaysmaintaina flexiblepicturein yourmindof
whatthe markethasto do to confirmwhatthe currenttrendis andin which
youshouldbetrading.
direction
This is the BULLISH HICTUREtha

morket is pointingto the FUNDS
CgcleTrader
Itff ZBg = 886.
Io
date
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?67.58
8z78ln
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l'lain
Froman analyst'spointof viewthis marketwas considerably

at
overbought
currentlevels.But it is still clearlyin an uptrend.In the biggerpicture955
wouldneedto comeoutto forceyouto adoptan overallbearishscenario.
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AVERAGE
DAILYRANGE:
4 l'tn1
984.23
lfi hrlz
s 5 1 .g s
33.14
s&P5A0
High
Lorrr
Rge
1608.58
?BB.5B
zza.Ba
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AVERAgEDAILY RAN6E
Todoy's
Ronge
zz.4B
B3B31Z
A3B3Z8
830415
ffiA581
B3B51S
430686
TheAverageDailyRangeovera campaign
cangiveyou an insightintowhat
to expecton anygiventradingday.On dayswherethe markettradesinside
the averagedailyrangethe speculator
andthe
interestis usuallydiminished
place.
marketis lookingfor energyto go some
If you keepa monitoron the averagedailyrangeyou will knowif the trading
environment
is actingin a stableor erraticmanner.Whenthereis actionthe
rangeswill expandandoffergreateropportunity
to the daytrader,thisin turn
will attractgreaterspeculator
interest.It followsthat on largerangedaysthe
volumes
will increase
sovolumeis yourclueto whethertodayis goingto be a
largerangedayor not.
The hourlyvolumefor the day in the 1$ hourof tradingis mostlyalwaysthe
greatestduringeachtradingday so the clueis to monitorthe volumefrom
afterthe 1* hour.Whenyou get higherthannormalvolumesin the 2ndand
3'dhoursof tradingit is likelythatthe volumefor the daywill be greaterthan
averageandthat the AverageDailyRangewill be exceeded
on that day.This
will giveyouthe clueto whatthe afternoon
sessionmayofferas if thereare
moretraderstakingpositions
earlyin the daythenthe morechancemanyof
themarelikelyto be pressured
Thisis
onewayor the otherin the afternoon.
justsomething
to thinkabout.
you can
The moreyou thinkaboutwhatyou aredoingthenthe moreSIGNS
find to assistyou in your decisions.The problemwith mosttradersis that
theyforgetmanythingsthat couldbe important
andonlysee
to theiranalysis
them after the event.You haveto keepgoingoverthe thingsyou do day
yourself.
afterdayto keepimproving
Everyday you shouldreviewwhat you havedoneon the day, studythe
chaftsto seewhatyou missedandlearnfromit. Eachdayyoucanget better!
Gaps,GapReversals,Avg Range
VOLUME
CHANGES:
,otlffi--ll
ru"a 16**l
I- Arsessims
Low ss7.s0
-:;
Cbse 1005.50
. Ir,
.,*?+
i:*
i;J"-guts6r+nr+ilj'11t+t+ur*+u'
Vot t:+,etO
-ll
Doily
Ronges
Doily AverogcRongefrom itlolch 12:15.50
9.75
t7.75
13.75
TodayI figuredon the GAPREVERSAL

beforeit wasconfirmedbecauseI had
all the information
At first it lookedlikean Acceleration
Gap,
at my fingertips.
but afterthe 10:00ambarwasdownandthenthe Dojibarcameon the next
bar it was time for a rethink. Thenyou can seethe healryvolumeon the
11:00amdownbaryou wouldhaveknownthat the earlybuyerswerebeing
cut to bits.The 11:30ambar madeverylittleimpression
on the previousbar
andon abouthalfthe volume.Sellersattackedagainlookingto fill the GAP
andtheysucceeded
in doingit. Therewasanotherthingthe declineintothe
youcan
1:00pmbarexceeded
the 38.2o/o
retracement
andwhenthishappens
nearlybetthat levelwill fail90o/o
of the timewhenit getsthe nexttest.
If you prepareproperlyand knowwhatthe othertechnicalandfundamental
tradersare thinkingyou havea betterthan 60% chanceto makemoneyon
the day.Thecasinooddsareonlystackedabout51oloin favourof the Casino
andtheycanmakemillionsfromlazypunters.
Onething you must keepin mindaboutthe marketis that it is a LIVING
THING.It movesin one directionor the otheronly becauseone side has
moreinfluence
thanthe other.
Beinga Fridaythere could have been other influencesfrom the buyers
weakening
as the weekhad beenan up weekand manytraderslike to go
homeearlyon Friday's.If they havehad a goodweekthey may closeout
theirprofitablepositions
andgo flat overthe weekend,
Mondaytheywill start
from fresh.You needto understand
the traitsof professional
tradersif you
wantto becomeone.
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Tradingto WIN Course- Oneday at atime
Tuesdayl0e, June 2OO3:

Mondaythe marketopeneddown and groundits way down to a low of
972/'2.This left the threeday low intactat 970,so the threeday low for
at 983^2 up 11from
todaywas972^2. Theinitialmorningmoveterminated
point
yesterday's
the 9
correctionfrom Friday.
low,this moveoverbalanced
to 976^4 fillingthe
The new moveup was followedby a 61.8 retracement
GAP,this correctionwas 6^6. Then a retestof the days high was made
the priorcorrection
followedby a correction
of 6^2 whichdid not overbalance
to the61.8.
now. The3-day
All signsare pointingupwardsuntilthe 6^6 is overbalanced
swingis stillbullishaftertoday'strading.
ElliottWaveexpertissueda
As I expectedRobertMinerthe self-proclaimed
newsletter
over the weekenddeclaringthe Fridayhigh as the highfor the
next6toSweeks.
Qcharts f,SU
1815. BB
ESB3i{-5
ffill.48
1BB?.BA
lrlo confirmoiion this is a pcrmoncntTOP
1883. AB
sgs.Ba
sgs.EE
ssl.8B
g8?.04
990^2
s9'2
s83.BB
9?S.AB
9?5.80
HIGHERLOWS
s?l.88
l'lain
and as the 970

The markettodaymadea goodrecoveryLATEAFTERNOON
failure(38^4 downand the previouswaveof similardegree)area is still
intactthereis no confirmation
thatthe highis anythingpermanent.
Nowthe 50 andthe linein the sandis the onlythingbetweenhereanda new
high.
ONEDAYATA TIME
If you just movealongeachday followingyour rulesthe marketwill keep
givingyouSIGNS
of whatit is likelyto do next.
Tradingto WIN Course- Onedayat a time
Alwaysmonitorthe longer-term
trendindicators,
as thesewill tell you what
the longer-term
systems
arelookingat.
S&P5BB
High
Lou
Rge
3 bcy Swing - UP
1S68.56
?88.58
zza.aa
T
R
E
lt
I
T
B
R
D
E
TigZag
4 t{ff1
985.58
18 HffZ
955. 5?
34. BB
i{orket hosto break

97O to confirm a chonga
in t'r;erid.
Closetodoy 986.7
STOCH
lAB
75
%tl
ft11
n
v
z
z5
t{
Thischapterappears
to be gettingout of stepwith its themebut I preferto
illustrate
the thingsI do as I go along.Thiswayyou will learnthe contextof
you.
howI useallthe techniques
I amteaching
Themajorlessonhereis that I don'tknowwhatthe marketwill do, I canonly
guess.But I do havewaysto tell what it hasto do to changethe attitudeof
the majorplayers.I can developa tradingstrategyaroundthe SIGNSI am
you.Thatis all I needto doto makemoney.
teaching
Forecasting
will not makeyou any money,you needto knowhowto tradeto
makemoney.Youneedto knowwhatthe playersarethinkingandwhatthey
are likelyto do to makemoney.No amountof hopewill do it you haveto
workat it andfollowrules.
If the marketis goingup you buyit, if the marketis goingdownyou sellit. It
is assimpleasthat.
this weekandas theycome
Thereare a lot economic
reportsto be released
to handtheywill exeftnewinfluences
on this market.It couldgo eitherway
in my opinion.A coupleof daysbackI thoughtit hadthe chanceof going
it is goingdown.
down,nowI am notsosure,it hasn'tconfirmed
ButI do haveseveralthingsup my sleeve,as I knowif it breaK970 it will
havechanged
if it doesn'tthenthe trendup is still intact.Eachday
direction,
I candealwiththe micromovesastheyoccurandgo homefreein the mind
is everything
in this business
as
andstartfreshagainthe nextday.Flexibility
soonas you try andforceyouropinionon the marketit will kickyou in the
teeth.
Gaps,GapReversals,
Avg Range
74
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Tuesday17h June 2OO3:

I havebeenawayfor a weekandthis is what hashappened.
The970level
held,therewasa selloff backto a 61.8Thursday
andFriday(another2 day
correction)
but Mondaythe markettook off runningagain.The 3-daylow
remained
intactsothe swingremained
up.
Scharts ESU
1815.BB
1811.86
1BB?.BB
1883.86
Ncv,rHigh 1014^6
ESBSU_15
32
Controct
Rollover
1zth
g9g.BB
sss.0B
sgl. BB
g8?.BA
s83.BB
S?S.BB
:
Fridov'
1 3 r h ' : 1 6 r hi t Z t t t
s?5.08
E6,/L?/aEA3
|1ain
Todaywe madea newhighbut the rangefor the daywasverynarrow,9.75

points.The patterntodayformedan Ascending
is
Triangleso the implication
for higherlevels.This is beingconfirmedby the lengthof the two-day
advance
at 32 pointsversusthe previous
advance
of 30.5points.
To datefrom the marchlow of 788.5we are up 226.25to this new high.
OpenInteresthasbeenbuildingat a rapidrateandis nowat its highestlevel
in two years.All dailytrend indicators
are readingextremelyOVERBOUGHT.
The talk aroundtown is that the FUNDSare buyingso they can show
participation
intothe endof the quafter,aftersucha dismalpeformance
over
the pastthreeyearstheydarenot missout now,
All-in-all
the sceneis set for this rallyto cometo an end.Wearegettingvery
cfoseto an impoftant61.8retracement
of the January2002- October2002
range,thisliesat 1021for the S&PSPX(cashindex).
Thereis a FEDEMLRESERVE
meetingcomingnextweekandthe speculation
is that they coulddrop the fed fundsrate by 0.5o/o.
The rate is currently
L.25o/o
so we are livingin interesting
times.The realestatemarketis as over
cookedas I have ever seen it, it is hard to imaginethat the trend is
sustainable.
Gaps,GapReversals,Avg Range
Tradineto WIN Course- Oneday at a time
ilate
hi
AZETB?
11?6.S?
Cgclelrailer
sPX - 5&P500
lo
date
T
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ffZ1818
I'lain
B1BSZB
Wednesday18s June 2OO3:

triangle
Tradingtodaybeganon a jittery note and negatedthe ascending
DOUBLE
theory.The futuresmanaged
to strugglebackto makea TWO-DAY
TOPbeforeweakness
setin again.
1015.56
TOP
TWO-D/4YDOUBLE
1614.00
1012.58
1411.BE
1BBg.58
1088.06
1866.5S
10s5.as
5I6N of WEiKNESS
1BB3.59
B,6,/I8/Z0E,3
gE/t?
l{a i rr
llll
6E/t7
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Bj6/I?
86/1S
0/6,/18
E6/lB
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After I saw the openingt2 minutesI realisedthe marketwas mostlikely

goingto be choppyagaintodayso I wentto bed.
On reviewthe only clearcut tradetodayI sawwasthe SELLat the double

makingthe typeof
top,the restof the daywasmarredwith constantoverlaps
tradingI do very difficult.The past two days rangesare indicativeof a
confused
market.Therangetodaywas11.5points.
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Qcharts CSU
1815.BB
1011.68
taoi?.96
1863.SB
st|I|.as
995.64
s91.00
98?.08
s83.BB
s?g.BB
This mErkci is raolly storting lo get

boggeddown - thE trend is in doubtl
975.68
E6/1B/?g/g3
Hnirr
BE/lI
66/13
The only tradesI wouldcontemplate

at the momentwouldbe a BUYif it
brokeout throughthe two-daydoubletop or a SELLif it breakstoday'slow,
whichhasnowbecome
the 2-daylow.
The pasttwo daysrangeshavebeen9.75 and 11.5pointsso what will be
happening
is that STOPorderswill be buildingup just outsidethis 2-day
range.The averagedailyrangefrom the Marchlow has beenaround15.5
pointsandthe 3-daySWINGhasbeenup for 20 consecutive
tradingdays.
right now and the
to showsignsof exhaustion
This campaignis beginning
gone
fast
too soon.
thatthe movehas
too
MEDIAis toutingcomments
llave Trader
lst Monih ContinuousFuturEs
IlffItY
tsl ffiA3lz
tzl 83661?
1.618 b
rlltu. . . .
Galendar
This coufd provc io be axlramely

imporiont - confirmqtionis requirad.
s?
Ilegrees
94-4
Ilisplag
6?
HEEI{S
1 3 .S
YEARS
8.262
PEICE...
RffI{GE
zzd.3B
CHAHGE
za.?Bft
Bat ios
1.000
rld\[hltttil
IPIrice
ab= 1B?.ZB cil=
173.38 cillab=
1.61?
up to speedI discovered
Nowthat I havehada bit of timeto get my analysis
high.Thisis importantstuffin ElliottWaveterms,
thisgeometryat Tuesday's
professionals
longto seeit.
it won'ttakethe
SectiOn 1l cnapter15:
OpenInterest in FuturesMarkets:
The first rule to learn about Openfnterest is that it can only rise as
additionalsellersenter the market.
Somewill arguethat OI risesbecausenew buyersare enteringthe market
but this is a FAISEBELIEFbecausebuyerscannotinstigatenew positions
unlesssomeone
sellsto them.Buyersonlyhavetwo choicesandthat is they
eitherbuy from a new selleror they buy from an existingbuyerwho had
alreadyowneda longpositionandis quittingit.
In the lattercasethe newbuyeronlyassumes
the existingpositionandopen
interestdoes not rise. The sayingis SellersCOVERpositionsand Buyers
positions,
LIQUIDATE
dont everforgetit.
The secondrule to learn is that when OpenInterest is decliningthe
existingsellersare closingout positionsand are not being replaced
by new sellers,
Largefluctuations
in the OpenInterest(sumtotalof all contractsoutstanding)
give you a clue to the positionsof the Fundsversusthe positionsof the
Commercials
or the generalpublic.
The top tableshowsthe OI for the ESE-Minicontracts
andthe lowertable
showsthe OI for the SPpit tradedcontracts.The pit contractis 5 timesthe
quantityof the E-Minicontract.Thissnapshot
wastakenthroughthe rollover
periodfromthe Junecontractsto the September
contracts.
l.Lun{3
isep-03
112
57
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iUEC-UJ
Itvtar-ol
lJun-U4
iseo{q
Dec-04
Total
lDelta
OpenInterest
78
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A cursorylook at the tableswouldindicateincreasing

Sellersenteringand
accommodating
the exuberant
Buyersasthe trendup hascontinued.
S&F5BB
High
Ipu
*ge
4 t{Rl
1885.85
18 r4RZ
5 7 9 .6 Z
e5.43
Tha botle betwocn Buyors & Sellers
1615.88
?88.58
a7-39
Uolunre
t9?o?'8
I
n
E
H
D
T
R
R
D
E
R
0per
Interest
?s8?84
I'Iornrolly on a contrqct rollovar OI

dacreues os Sellcrs codr qrt positiotrs
on ihe finql settlsnent price of the
rtlqrkat is
up on high
volumeond
increosing
OI
z
ll
838618 1SB?.?B 1815.88
1BB4.S
It wouldappearright now that the willingSellersare holdingon the wrong

side of the marketdirection.But there could be anotherreasonfor this
unusualsteepincreasein sellersand that is they may be playingout an
optionsplay.Theycouldhaveboughton the moneycallsat a cheappremium
for insurance
andplayedfor the marketto go downby selling.In anycasewe
This
will find out soonenoughas we aregoingintotriplewitchingtomorrow.
is whenthe lune contractexpiresandsodo the Juneoptions.
Price 0-0O
Dde tFfl $83
Opa10(ts40
Hgh 1011 50
Low tt!07,91
q@
1011.4O
Csr % 0O
I Ears 23
Vol
1 2lA
lttir'rro,rrt-C
T
rTl
Thrs is the new SEPTEiIIBER coniroct

cctivily - lhe rcceni week is fhe pcriod
where oclive troding begire r.niil the
outgoing JU|.IE comtroct expips.
Thethingthat looK oddto me (seethe tables)is that this pastweekthe OI

in the September
PitContract
hasrisenrapidly.
OpenInterest
Thefiguresfor todayareyet to be seenas they are repofteda day in arrears

on the chart.The ESE-MiniJunecontracthasretaineda largerthannormal
OI indicating
theymaybe hedgingoptionspositions.
In anycasethe thingwe needto knowafterthe expiryof the optionsandthe
Junecontractsis how muchopeninteresthasremainedcurrentin the new
September
contracts.
Withthe S&P500andthe E-Minithereis verylittletradingactivityoutsideof
the currentlytraded ld month contract.This marketis not like a grain
contractsuchas Soybeans
wherelong-termhedgingor speculation
occurson
prices
futurecrop
versusthe supplies
heldin hand.
The realityis that as longas you storeyour beansand keepthemdry they
are still one and the samething,yet you couldstorestockcertificates
and
they mightnot amountto anythingin the future.So why hedgethem?You
usethemasa toolto buyor selloff basisthe currentstrengthof trend.There
is a completely
differentmentalityrequired.
I often wonderwhy the averagepersoncannotunderstandthe differences
betweenstockmanipulators
andnormalcommercial
businesses.
The stockmarketmanipulators
haveit easyreallywhenyou considerthe
waystheycantry andmanipulate
the marketsusingonlypaper.
Thecluereallyis to try andunderstand
technically
whattheycouldbe up to.
Fundsand Commercials
Both couldbe
both trade systematic
approaches.
tradingin the samedirection
or theycouldbeopposed
to eachother.
The way we determinethis is throughthe weeklycommitment
of traders
repofts.
The CFTCrequireslargetradersto repoftfuturespositionson a weeklybasis.
Tradersarecategorised
as FUNDS,
COMMERCIAE
or non-repofting.
The FUNDS
or the COMMERCIAIS
arethe oneswiththe grunt,the littleguys
are not very impoftantbecausethey are the oneswho losemostof their
moneyovertime.Wellunlesstheylearnthe business
andknowhowto acton
the knowledge
Problemis mostof themdon'tknowenough
that is available.
aboutthe market,I cantell you first handbecause
I meetso manypeople
joined
who have attendedseminarsor
the Club144room of mine that
wouldn'tknowwhatdayit wasin termsof the marketposition.
OpenIntereston its own may not tell you whatthe marketis goingto do
todayor tomorrow,butwhenyoucombine
the factswithall the othertoolsat
yourdisposal
it all begins
to addup.
you have to follow a
You should never forget that to be a professional
professional
plan.
Openlnterest
Sectiont: Chapter- 15
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Thursday19e June 2OO3:

Todaythe marketofferedmanytradingoppoftunities
but beforeI explain
them,hereis a biggerpictureof howthe perceived
suppoftsactedas signal
pointson the day. The marketis now backto wherewe staftedout on
Monday
Believe
whatyousee!
andlookinglikeit is in a weakposition.
Qcharts CSU
1815.08
IBLL.gg
tw?.8a
1m3.00
slg.0B
st5.BB
s1.BA
s?.46
s83.AS
c7s.Ba
!r75.46
E6,/LS.ZAB3
l"la ir"l
E6,/AS
A6/LL
86/16
ffi/Lz
ffi/L$
Studythis chartbelowas it containsmanyexamples

of whereyou cantake
you
tradesthe wayI havebeenteaching to date.
-l t,ter*ut
l---l
,"rlffi
f- Ailssbns i
'rEe l uw.ul
)de 06fi9fi3
'im
09:30:00
)pen 10@50
{qh 100S50
.ow 100750
]E
100875
lsr % -0.7
I Bars -1 6
lol
13,022
THIS IS Wt IKING LIKE A 5WIS5 WATCH

TODAY.
00
1 008 86 r70 7%
180715r51
8%
Buy 10o3^4
2 DoyLow1003
ubt
lffiEEil
Taroet
| 1:1and 61.8 |
Achieved
Supports
/YtoJor
oErl
Buy )En
ore mode to be bnoken
, r"r.."-::\F-
,,,,,,lrlrrlr
rnl,rrrlilllllllJllilrlh
llllt',,r,
I
1100't
rlrrlrl,l
As the marketmovesalong you just have to keep re-adjustingto the

you
presented
opportunities
basedon my rules.Youdon'tneedto be Einstein
just followthe SIGNS.As longas you stopyourselfout quicklywhenthey
don'tworkyou will makemoneyoverthe long-term.
The onlyway you will
positions
loseis if youcontinue
to holdlosing
andletthemgetoutof hand.
Open Interest
8l
(ES& SP)COT(Commitment
LastweeksCOMBINED
of Traders)
CONTMCTS
reporthadthe Fundsand Commercials
net shortat similarfigureswith the
(smalltraders)holdingthe otherside.
non-repoftable
Total 5&P500 NET positions (5P&ES contrncts axprossadas 5P)
150000
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100000
50fir0
-Non-Commercial Net
-Qsrnrngysisl l{gl
Net
-580t10
-100000
Reportdctc: l0th Ju* 20t13

-150000
*"{'$-"$"$.}4"S#f"lS.}'$"$.kF$tF{"'$*:"e
Date
meaningnewsellersandnew
Goingintothisweekthe OI wasstillincreasing
interestis comingfrom.
buyers.Theideais to findout wherethe increasing
The net positions
andthe
of the threegroups- TheFunds,the Commercials
positions
Non-Reporting
are impoftantto monitorwhenyou seethe market
reaching
or OVERSOLD
condition
basisotherindicators.
an OVERBOUGHT
The big pit contractchangesthis weekare interesting
but we alsoneedto
in
examine
i.e.,
the
ES
the
the combined
contracts,
and SP total.
s6p soo srocr{ rrrDEXFUTUP.BSolrlY posrTro$S
FIT TRAbEb CONTFACTONLY

.LS OF t]6.rr?,f03
-l
NO$N.BPON.TABLE
POSITIO}IS
-;;;;--;;;;;-;;;il;;;i-;;;--,--;;;;;-l--;;;;--;--;il;-i--;;;;-,-;;;;;I
UO}I-COIIIIBgCIIL
{ 5 6 0 5 0 0 r ! i l D E XX S 2 S 0 . O 0 }
CO}IIIITIIEIITS
s5,?83
9e.34r
eI,O?1
CIIAIItrESFS,O![06/10/03
s . o o s 1 2 5 . 5 5 ?|
TOTAL
lc0r{HBRcrsr | |
OPEI.I $'ITBRE$T:
519.S8?
{CH}I,IGEM
50r..14r
596,T4r
0PBII IIITEREST:
9,255
614.?53
19A .1AI
EOA.040r84.02S
?9.8641
??,r8o
8r.e39
2.684
-1.3?S
In the wcck fill Tuesdoythc FUNDS infl.,eoscdnct shori positions by 20.56? qnd thc
ommercialsmouedinto o net long positiorr but not hy much conridering the numher
of contnccls thcy arc holding os o group. The non reportoblc positians fo'tour lhe
long sidc. So it is thc FUND5 uee$qsthe COJdTI4ERCIAI-S
ond the PI,BLIC.
OpenInterest
82
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E-IINN
SdP 5OO STOCR TIIDEX - CHIC.E.GO }IBRCAITTILE
FUTI'nES OULY DoSITIOUS .tS OF 06,rr?,/03
No!I-Co!$IEECr.*.[
($so x s6p soo ilrDExt
a7086
35364
36.658
LOrrE I
Volues redueed fo I fiffh

386.279
661,114
TUTAL
I
COUTIITIIBIITS
L35.429
L76.A2Z
EXCIIf,IIGE
479.366
$HOnT I
r.outr
OFEI,I flIITEREST:
| SIIOD.T
94S,ZO3
189,040
8?r1.594
466.43?
?O.609
-32.L6?
20.9ZO
61e56 LaZZaa 95673 17491S 93367 14le1
CH.LII68S FROII 06,/10/09

3Z,ZS3'I
{CH}!I6E I}I I}PBII IIITEREST:
-L?2O77
?,918
ZS.St?
35.92O
t1?.893
64,415
11.333
Clo=ingSHORTS
POSITIO}IS
IncreosingSHORTS
rtcducing longs
increosing Shortr
When you exomine the ES eortrotE it is the tleverca of the PIT contraetE so lrou
nced to combine both rcports to get o sleqr pieture .
Weekly Funds Funds Commercials Commercials

Public
Chanqes Lonos Shorts Lonos
Shorts
Lonqs
SP
s00s 25567 62920
464L7
2684
-26415 7L84
-6432
ES(1/5m) 595
23578
-848
-3748
Net
70t04
s600
6999s
Net
No
Net
Analysis Buvers
basicchanqe
Sellers
Public
Shorts
-L375
4L84
2809
Thetotalopenintereston the 17frlune 2003combining

the ESwiththe SPin
termsof the biggercontractthe SPwasrepoftedas a gigantic987,820open
contracts.
Thismeansthereare493,910longsand493,910sholG.
The Previous
weekthe totalopeninterestregistered
in at 901,606meaning
we hadan increase
in the weekof 86,2L4contracts.Halfarebuyersandhalf
aresellers.
Theaddedvaluefor the weelqat the closeof business
on the 17h
June,for the contracts
on eachsideis $250x 1010x 43,t07or $10,884,5L7k
(11 Billion).Moreimpoftantly
thoughis that the openinteresthasrisen10o/o
in a week.
FromMay20h(totalOI was663,892)
the OI hasrisenby 323,928
or 49o/o.
Thispaceof increase
in OI is unsustainable
in a risingmarket,as eventually
we haveto run out of buyers.Whenwe do andthe sellershavetheirwaythe
marketwill fall underits ownweight.Therewill be no buyersleft to saveit!
(Publicin the ES)takingprofitsandalso
Therearea few smartnon-reporters
gettingintopositionfor a turn rightnow!
Thecracb are showingup in the dailypatternsrightnow,that is why I am
currently
lookingfor shofttradingopportunities
allthe time.
OpenInterest
Total 5&P5OONET positions (5P&ES confrocts axprassedas 5P)

15m00
10m00
5m00
trlarch Lorr ->>
Nlgt
Nlsn-Qsrnrnsysi2l
-commercial Net
Net
-5IlB00
Report Dcte: l7fhJrnc
2OO3
The basicNETpositionremainsmuch the samethis week but if you look at

the patternat the Marchlow you will get the idea of what to expect.On the
declineinto the Marchlow the NET publicwere liquidatinglongs,the NET
commercials
were coveringshortswhile the NETFundswere sellinginto the
decline.
S&F5BB
High
Lou
Rge
t|3s. AB
?88.58
146.58
OpenInterest rising in o folling mqrket
B3ATL4
B3ALZg
ASAZtr
a3EZZ6
B3A3LZ
Eventhough the NETpositionsof the PUBLICand the COMMERCIALS

were
rapidlychanginggoing into the low the overallOI was still risingwith the
trend.
Open Interest
84
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Conneriialc
-10m00
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Afterthe Marchlow andthe sharprallythe shortswerecornered

andhadto
cover.They staftedto buckle4 daysbeforethe high forcingpriceshigher
(theyhadto buyto get out remember)
andevenwiththe dropfromthe high
andthe closureof the Marchcontract
to cover.
theycontinued
S&PsBA
High
Lou
Hge
985.A0
7S8.5S
116.54
Folling Opan Inierasi on a Rising Morket
<--Thisl day drop wqsq euhuloiive

resuh from AtorchControetexpiry
ondolsoShort covering.
Several
observations
I havemadeoverthe yearsarethese:1. Whenthe net Commercial
against
andFundpositions
arein agreement
positions
the non-repofting
therecouldbe violentmovesahead.The
publicare not as organised
of the
or as professional
as the operations
Fundsor the Commercials
andin any showof forcethe Fundsandlor
theCommercials
willwin.
2. Whenthe Fundsarein oppositenet positions
there
to the Commercials
is a battleof systemsin place.Thesewill be resolvedin time but it
paysto monitorthe changes
as pricesmovealong.The reasonis that
if onesideattacksor capitulates
at
the trendcan reverseor accelerate
a rapidpace.
positionsare likelyto end up losingthe
3. The publicor non-repofting
due to the abilityof
battlebetweenthe Fundsand/orCommercials
thesegroupsto fundtheirpositions
almostindefinitely.
4. In agricultural
commodity
contracts
the Commercials
aremorelikelyto
controlthe marketovertime.The reasonis that they controlthe carry
overstocK.
5. With eachcommoditycomplexyou needto studythe fundamentals
and comeup with a sensibleview as to whichsideis actingwithin
reason.
Onceyou havea view of what seemslogical,especially
basisthe current
trend,it will be simpleenoughto comeup with an analysisof whetherthe
marketwillfavouran up or downdirection.
OpenInterest
85
If you lookat the currentpositionof the S&P,right now you wouldhaveto

concludethat the markethasalreadyturneddownor will do so sometime
immediately
in the future.The 2 daytrendhasreversed
andthe 3 daylooks
asgoodasdown.
0charts CSU
u15.AA
ESA3U-1A
1S1Z.0g
1009.04
1886.BA
1Bm.AB
1098.aB
s9?.9A
gg4.0a
sg1.86
988_AA
985.88
B6,/11
g6/14
66/16
06/18
B6/tg
ffi/a
Youneedto understand
that as soonasonesidedecidesto takeprofitsor cut
existinglosingpositions
on masstheywill propelthe pricein the direction
of a
buyingor sellingimbalance.
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OpenInterestanalysisis a commonsenseanalysisprocedure
that you need
to go throughat leastoncea week.Maybethe resultof whathappens
in this
currentS&Psituationwill highlightit. Wewill see,but whenyou combine
the
1.618geometry
on the 17frJunesee51:C14:P77
we havea compelling
case
for an intermediate
degreehighto be in place.
Wealsohavea situationwherethe marketadvancehasrun for 3 monthson

speculation
recovery,but thereis still no realevidence
of an economic
that
justified
the recentbullrallyis
to the eltent that it hastravelledrecently.
t
t
Theonlythingyoucouldsayis that we mayhaveturnedthe economic

corner
andthingswill improveovertime. OI saysthe majorityof professionals
don't
believewe arein a newbullmarketyet - theythinkwe arein a hugetrading
rangemarketandwe areapproaching
the topsideof it rightnow.
Whichever
the case,if we take it one day at a time and useall the toolsof
analysisavailable
to us,the marketwill tell us what it is goingto do next.At
worstwe couldbewrongfor 2 days.
If we stickto onesimplerule- BUYwhenyou seethe marketgoingup and
SELLwhenyouseeit goingdown- youcan'tgo wrong.
Openlnterest
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SectiOn lt cnapter16:
News Events I Repoft Days I Economic

Fundamentals:
FUNDAMENTAL
VALUATIONS:
Beforeyou can understand
the effectthe NEWShas on the marketplayers
youhaveto understand
the underlying
reasons
why.Thefollowingis a simple
explanation,
but morethanenoughto giveyoua clearpicture.
Many brokeragehouses,investmentfunds, both corporateand private,
employa valuation
approach
to investing
in the stockmarket.
1. In normaltimesinvestment
housesexpectgrowthin stocksbecause
the companies
comprising
the INDEXare profitableentities.If they
weren't they wouldn't be in the top 500 stockswhen you are
evaluating
the S&P500.
2. Profitable
companies
are expectedto continuegrowingand thereby
increase
Theseincreasing
valuations
earnings.
wouldincrease
earnings
(value
basedon the existingcapitalization
of all shareslistedon the
exchange)
andthe rateat whichtheypaydividends.
3. Analystsfrom all levelsof the investmentadvisoryfraternityissue
EARNINGS
ESTIMATES
for the quarterandthe yearandrateindividual
stocKasa BUY HOLD- SELLin simpleterms,
4. The individual
listedcompanies
to the
alsoreporttheirown estimates
streetfor eachquafterandyear.
The FUNDAMENTAL
reasonstockpricesriseor fall is primarif basedon the
investorperception
of future companyprofitsand dividendsand how the
returncompares
to the current10yearBONDrateof return.
ECONOMIC
CYCLES:
Economic
cyclesare knownto be eitherstableor they riseinto boomsand
declineintobusts.
Consumersentiment,employmentrates,capacityutilization(capabilityto
meetdemand),inventories,
interestrates,consumer
value
creditavailability,
of the $, exportandimpoftimbalances
area generalwaywe canunderstand
if the economic
note.
rycleis on a positiveor negative
The consequences
of the economic
cyclewill havean impacton earningsin
variousmarketsectorsas productpriceseitherriseor fall basedon demand.
NewsEvents,EconomicReports
87
COMPANYDIVIDENDS:
The investormay or may not knowwhat motivatesthe profitability

of the
get in
companyhe investsin but he doesunderstand
return
he
will
the
dividends
if the company
is in a position
to keeppayingthem.
If the dividendratefallsbelowexpectations
an investoris likelyto consider
movinghis investmentelsewhere this is knownas sectorrotationin the
investment
world.
SPECULATION:
Speculation
in the stockmarketis basedon the assessments
of massesof
investor's
in regardsto perceptions
on the fateof futureearnings.
Therecanalsobe the perception
by investorsthat somestockswill havehuge
potentialin the long-term;or a perception
will have
that somecompanies
poorfutures.Theseperceptions
arethe causefor buyingandsellingstocks.
Not all investorsare that astuteso they will buy and holdevenwhenthe
investment
sours.Butprofessional
investment
houseswill"manage"portfolios
in a waywherethey movefrom sectorto sectorastheythinktheycanspread
theirriskandtry andget betterreturnsthanthe overallindexwouldprovide.
Strangely
veryfew investment
housesbeatthe overallreturnof the INDH(.
Neveftheless
theseare the conceptsas to why the marketmovesUPand
DOWN.The marketmoveson accountof the actualpafticipation
of the
playersandtheiroverallperceptions
of value.
Psychologically
the marketmovesas a wholebasedon why investorsare
buyingor sellingstocks- a simplenewsreleasecansetthe ballrolling.
Moneymovesin andout of the marketfromstocksto Bondsandto cash.At
ceftaintimesBondswill becomehot andthe sharemarketwill becomeweak
becausethe Bond marketoffers better returnsat the time. Other times
moneywill flow backwards
andforwardsfrom the stockmarketto cashand
backagainpoweredbythe actionsof shorttermtraders.
LONG-TERM
INVESTORS:
Long-terminvestorssuchasWarrenBuffethavea policyof buyinginto stocks
of companies
that havea goodcashflow,a goodprodu@a solidassetbase
good
and
management.
Playerslike Buffetseldombecomespeculative
and
buycompanies
with unknownhistories.
If the companies
stockpricebecomes
overvalued
in histermshesellsup andmoveselsewhere.
Hispolicyworks!
News Events,EconomicReports
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[c] Bryce Gitmore2004
A simpleinterviewwith a personlike WarrenBuffetcouldinciteinvestor

buyingor sellingdepending
on whathehassaid!
THINGSTHATCOULDMOVETHEMARKET:
IndicatorReleases.
1 . Government
Economic
2. Largecompanies
earnings
reporting
releases.
value
the
3 . Changes
in the
of
US$.
4. FEDManipulation
of interestrates.
earnings.
5 . Newsof a naturethatcouldaffectfuturecompany
It paysto watchthe NEWS!Evenfor the short-terminfluencesomeof these
eventsmayhaveon the market.
THENEWS:
The newsprovidesyou a meansof evaluatinghow the next eventbeing
repoftedmightlikelyaffectthe dailymarket.
Mosttimesif thereis any significant
by some
reportdue it will be preceded
speculation
asto its likelyeffecton the stockmarket.Thefuturesmarketmay
havealreadydiscounted
or inbuiltinto its pricethe likelyeffectof the repoft
on the marketbeforeits release.
Oncethe newsis in the marketthe futures
willthenadjustto the news.
Weekof June23 - June27
83.8
s5.0
85.0
Jun24 10:00Consumer
Confidence
Jun24 14:15FOMCMeeting Tucsdoy- no reports Mondoy
(1st ofZ-day)
-2.3%
1.0%
Jun25 BE:30Durable
Orders M a y
1.0%
5.80M 5.84M
Jun25 10:00Existing
Home M a y
5.90M
Sales
1000K
1830K 1028K
Jun25 10:00NewHome
May
Sales
Jun25 14:15FOMCMeeting
Bnd of2-day)
a1
1.9%
1.9%
Jun26 08:30GDP-Final
1.9%
G1
2.5n/o
2.5o/o 2.5To
Jun2E DB:30Chain
Deflator-Final
42'IK
Jun26 08:30lnitialClaims 86f21
425K
NA
35
35
Jun26 10:00Help-Wanted May
lndex
Jun26 14:80FOMCMinutes
89
Nearlyeveryday there is somereportor anotherthat hits the marketby

surpriseor confirmsthe latestpricedirection.Mostlytheyareeitherreleased
at 8:30amor 10:00am
NewYorktime.10:00am
is a criticaltimeto watchon
thisweek.
anytradingday.Aboveis an example
of the reportsto be released
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Throughout
to certain
this manualyouwill seewhereI havemadereferences
precipitated
newsreleases
heavybuyingor sellingon the day.
or eventsthat
Tradingto WIN Course- One day at atime
Generally
the impactof individualnewsreleases
on the marketwill be shoft
lived,but it can be enoughto causelargetradableintra-dayswingsin the
futuresmarket.It is not unusualfor the futuresmarketsto leadthe cash
index up or down outsideof the exchangetraded hours basedon a
perception
traderswill buyor liquidate
certainsectorswhenthe
that physical
dailysession
opens.
BLOOMBERG:
I watchBloomberg
eachday whilstin my officeas they coverall the NEWS
releasesof importance.
They conductinteruiewswith leadingauthorities,
CEO's,Economists,
MarketStrategists,and InvestmentAdvisors.All these
thingscreatea moodaroundthe dailymarket.
Reading
impoftantfor a daytrader.
the moodaroundthe marketis extremely
OftenBloomberg
will interviewtradersfromthe floorof the S&Ppit andask
them what they expectof the marketduringthe day. You can see by what
they say what is on their mindsthat day.You haveto alsoremember
that
just
guys
someof these
aretrading100'sof millionsof dollars on an opinion
andon somesmalltechnicalknowledge.
Thebigtradersarealwaysawareof
the oversoldand overboughtaspectsof the market- they knowwherethe
buyingor sellingpressureis beinggenerated.
I haveseenbig tradinghouse
trader'sjust standon a priceandtakeon all comersat timeswhentheythink
the markettrend shouldreverse.Oncethey exhaustall the buyersor the
seller'sordersin the market,the pricewill movein their direction.Whenit
getsto wheretheythinkit shouldgo theycoveror liquidate
the play.
I said at the beginningof this manualthat tradingis a thinkingman's
occupation.Wellit is reallya highstakespokergamewith a difference.
In
this pokergameyougetto readthe cardsbeingdealtto you beforeyou place
your bets.You can chooseto bet or check- if everythingis in your favour
you bet, otherwiseyou stayout. Youshouldjust wait untilyou seea hand
that lookslike4 Acesandthentakethe bet.
Knowing
the mostprobable
workto stay
directionof the marketpricerequires
on top of it. Knowingwhat the marketpriceis likelyto do in the next 30
minutesis a licenseto printmoney.It all beginswith knowingthe strengthor
weakness
of the playerson the day.Forthis you needto be informed,you
alsoneedto knowthe currentmarkettechnical
levels.
suppoftandresistance
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Youneedto understand
the habitsof the players.Whenyou haveall these
to stad
the rightoppoftunity
thingstogetherit is just a matterof selecting
pickingthe moneytree.
Don'ttradeunlessyou areinformedis the bestadviceI cangiveyou.WhenI
tradeI amTradingto WIN - notfor anyotherreason.
Monday23'dJune 2003:
Todaywe havejust passedthroughthe Solstice,
this cannormallybe a date
What
the GANNdevoteeswouldexpectto see a changein trend possible.
theyexpectout of this oneI couldn'treallyguess.Butit is a dateeachyear
to watchin all markets.
Mylastchafton page86 wasa goodindication
of whatto expecttoday.
You see if you had beenstudyingthe openinterestand the 3-dayswing
youwouldknowthata correction
to this
levelsandthe Overbought
oscillators
uptrendwas OVERDUE.
And it was showingall the signs that a new
downtrend
wasin the process.
Whythe hellwouldyou buy it wheneverythingpointsto easymoneyon a
decline?
whenthe marketis tellingyouit wasgoingdown.
Especially
work in
Whenyou guysseethe reasonswhy psychology
andfundamentals
youwill havemadeit.
withthetechnical
Monday
it openedon its highandproceeded
to fallover.EasyMoney!
ficharts f,SU
1015. BB
ESB3U-15
1811. BB
lEB?, BB
1A83.gg
9SS.BB
995.0S
<-Opcn
<- Siillcrs
s111.Bg
s8?. BS
983. BB
g?9. BB
s?5.68
BE/1?/ZBff,3
flein
UUrU
TRENIDCHl4Fl6E15 516NALLEb
'
I wasa sellerfromthe openandtook8 pointsout immediately.

ThenI hada
^4
couplemorescalps
beforeI quit.
for a 1^2 andanother1^2 anda
Tuesday24thJune 2003:
Insidedayrange9.5 points.
All I want to point out abouttoday is the effect the repoft releasedat
10:00amhad on the players.The marketopenthe day with a rally.The
previous
largestcorrection
sincelastweeK highhadbeen11.5pointsup.At
10:00amwhen the reportwas releasedthe marketwas up 11.25from
yesterdays
low (on a 1:1 reversalsignal).The repoftwas not as goodas
expectedand it addedcredenceto the technicalsell that the professional
traderswerewaitingfor.
ESO3U-5
: . ConsumerConfidcnce Report roleosed
, : at lO:OOon - comsin qi 83.5 under the
Qcharts ISU
s:tl.58
9S0.ffi
tol'cost trgur.
sB8. s8
s87. gg
,1O:O0orn
985.5D
984. S0
982.56
981. BB
9?S.sB
s?8.00
976.59
gE/24/ffi93
Lcrus
llll
E6E/23
1g:Bg
5&4.80
985.?5
S84.SB
984.?5
ffi/24
The major announcementof the week is the FOMCInterest Rate

announcement
is thattheywill dropthe
at 14:15pmWednesday.
Speculation
rateeither0.25or 0.5olo the rateis currentlyL.25o/o.
Howthiswill affectthe
guess
marketis anyone's
about
fromChairman
Greenspan
but the comments
the stateof the economyaresureto havean effectonewayor the other.
Thereis speculation
that the FEDRATEwill eventuallygo downto ZERO
beforethisrycleof ratecutsis overanddonewith but that seemsunlikelyto
me.
The highestFEDratein this cyclewas 6.50/o
in May2000.Sincethenthey
progressively
havebeen
cuttingit in an attemptto fire up the economy.
Unemployment
hasrisenfrom4o/oto 6% in the past2 yearsas businesses
work on cuttingcosts. The problemwith theserate cuts is that they have
createda debtbubbleas refinancing
hasbeenrife in the recent
of mortgages
2 yearsand they havealsocreateda RealEstatebubbleneverseenbefore.
Thecommentwasmadeto me todaythat a onebathroomhousein SanLuis
Obispothatwasworth$150k8 yearsagois nowsellingfor $500k.
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rate
The FEDis alsopumpingmoneyintothe economyat an unprecedented
some30%
whichis alsoweighing
on the valueof the US$as it hasdeclined
in valueacrossa basketof G7currencies.
lffl atiOn
prw indet
chngu ir thecwffi
5.ft
$7
8S
89
90
91
92
9]
94
9t
YtaFi
96
97
90
99
00
0l
Of
Scl*t; {Lst! d Lii4r tltriir*
Rate
Unemployment
toq6
a7
8A
S9
90
91
SDulqi gqry,!d Lntn'Srti'iht
92
t3
94
9E
YE'IF:
96
97
98
O0
01
0)
is similarto
Mythoughtson the paththe FEDis takingto rampthe economy
the difference
whattheytriedin Japanandthat hasnotworked.Neveftheless
different,so it
betweenthe US and the Japanesementalityis completely
mightwork.Whether
it doesor notis notgoingto botherme.
futuresmarketsis that you
The beautyof this business
of tradingleveraged
canbuywhenpricesare goingup andsellwhenpricesaregoingdown.All
you needis an officeat homeand the communication
my
tools.Basically
proof.I don'toweany moneyto the bank,everything
I
business
is recession
haveI ownoutright,whichis a goodfeelingwhenyou realisethe stateof the
on my house,
worldright now.I haverecentlydonea completerenovation
newkitchen,bathrooms
etc.,I boughta newcar lastyearandI havea new
boatsoI amsetfor lifeno matterwhathappens.
Youcando the sameif you learnto tradethe way I am teachingyou.Keep
your eyesandearsopenand followthe dailytrend.It is not difficultit just
theywill not do the
takestime anddedication.
So manypeoplefail because
dailyworkor theywill not takethe timeto get a holisticviewof the markets
theytrade.
Tradingto WIN Cowse- Oneday at a time
Wednesday25s June 2003:

Thebigday! FOMC
announcement
wasdueat 14:15pm
ET.
Wellit staftedoff witha rallyintothe 38.2of the rangedownfromlastweeks
high.This rally terminatedon a 1:1 up move. The rally hit the rocksat
11:00am
moveabovethe 990^2high.
andcouldn't
Qcharts CSU
ffi15.96
1911. BB
High iodoy terminolsd on

thc 38.2 relroccnncnl ond
o 1:1equal wovesupl
1887. BB
1803.00
sss.B0
gss.06
991.88
987.08
The high iodoy bcfore ihe

FEb /4N|NOU|{CEn\ENT
983. AE
9?S. E0
s?5.08
o6/?5r'zaaa
l'fa i n
ffi/1;l
06/18
At first the marketshruggedoff the DurableGoodsOrdersreportearly

morningit wasa badfigureasit camein at -0.3oloon a consensus
of +to/o.
From11:00amuntil about25 minutesbeforethe FEDannouncement
the
markethoveredaroundon extremelylow volume,I had soldit a coupleof
timesbut had beenstoppedout, then I caughtthe first thrustdownbefore
the repoft.Priorto thatI hadevenboughtit intothe 1:1for a quickscalp.
Themarketgyratedon the reportannouncement
but that is normalas people
squareup theirpositions
andre-settheirobjectives.
In the first 5 minutesfromthe reportreleasethe markethaddived5 points
and then recovered
settingup anothersell.This was a ripperthe market
divednearly9 pointsin a hurry I wason that for 7.25points.
Afterwards
the marketreturnedto the LINEIN THESANDfromyesterdayand
this morningandsoldoff. I missedall this because
I hadbeenawakefor 20
hoursandwastradingon adrenaline
but it wasrunninglow andI hadto go
to bed.
Neveftheless
it wasa very profitableday. I made7 trades- the first 4 were
not that flashbut the worsepositionI got into was beingdowna net 1.75
pointson the first two trades.
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I recovered
to +2.5 net on the next2 trades.ThenI lost1.5on a sellin the
no volumezone. Managedto catch3.5 out of the sell off prior to-the
selloff.
announcement
andthentook7.25out of the postannouncement
If I hadhavebeenfreshI daresayI wouldhavesoldthe 986testat the line
I
in the sandbecauseI wasconvinced
it wasa sell basedon the evidence.
toldall my guysin theTTWroompriorto it in anycase.
Qcharts ESU
SII3.BB
gg1. B0
No Voluma
Zone
s8g. o6
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ttu
s8?.00
s85.B0
FO,i\CReportrelaosed
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FedRoredropsO.25?'l
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ro
1?l'
$
<-- Honging /lllonDoji
tops from doy bcfora
s83.BB
<- Atlorket rolls

Ovar
981.66
More Weokness
s?!t.sB
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Todoys RAftlGE
s?5.aB
A doy to remembar but now rotes qre ot l?i thc

s?3.68
g6,/25/zon3
s83.25
Lous
14:15
98?.54
988.25
BiE{ZS
S?.25
Whenthe fat ladysingsyouhaveto bethereto makea move.

The information
in this chapteris as impoftantas any otherchapterin this
manualbecause
of the news.
it mustimpress
on youthe impoftance
I couldn'ttradewithoutmy newsservicesbecauseI wouldfeel like a blind
manwithouta stick.
of
WhenI combinemy tight stoplosspolicywith the technicalknowledge
I am on
wheretradersplacetheirstopsandthe valueof the newsreleases
top of it mostof the time.
Thereis absolutelyno needto forecastwhat the marketwill do usingmy
tradingapproach.
traderswill
All it is necessary
to knoware the levelswherethe professional
market
moves
along.The
act.Theselevelskeepchanging
all the timeas the
levelsor asa
signsareclearlyobviousmostof the timeas eitherretracement
the logicalbuy
1:1 geometryin the wavesof similardegree.Asyou approach
you
will
be
demonstrating
or sell levelsthe newswill help
or the market
All you haveto do
indications
or oversoldconditions.
of intra-dayoverbought
is go withthe flow.
95
Section
1: chapter17:
FailSafeTradeEntryTechniques:
ENTRYTECHNIQUES:
Mybestentrytechniques
to entera tradeare:
1.
2.
3.
4.
Buya breakout
of priorresistance.
Sella breakout
of priorsupport.
Sellintostrengthwhena bearcorrection
looksexhausted.
Buyintoweakness
whena bullcorrection
looksexhausted.
In all casesa tight stoplosspolicymustbe implemented.

Youwill be rightor
wrongaboutthe levelyou selected
in no timeat all.Thereis no needto risk
morethan6 ticksif you canexecuteyourorderwithin3 ticK of the decision
pointyouselected
to takethe trade.
EXITTECHNIQUES:
1.
2.
3.
4.
Exiton a pre-setstoplossif the tradedoesnot workimmediately.

Exiton a breakeven
stopif the positioninitiallygoesintoprofit.
ExitwhenI feelthe marketmomentum
hassloweddown.
Or exit on a trailingstop I movealongas the trade becomesmore
profitable.
Beforeyou get into a tradeyou haveto havean escapeplan,that is the

reasonyou shouldonly trade liquidmarkets.Marketswithoutliquiditycan
trapyou.Thatis why I nevertradeoptionsthesedays.
PROBABILMESON EACHTMDE ENTRYBEINGSUCCESSFUL:

Whetheryou givethe marketroomor placea closestoplossthe probabilities
of success
are still onlyaround40160.Thereare occasions
wherethe odds
lookbetterbecause
of the fundamentals
trend.
or the market'sestablished
Theseextraspecialoccasions
cometo be recognised
by experience
andfeel
for whatthe marketis doing.
When you combinechaft formations(patternanalysis)with fundamental
youareon yourwayto beinga professional
obseruations
trader.
TradeEntry Techniques
96
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Entera breakoutof current resistanceor suppoft:

The 1* entrytechniquea noviceor beginning
tradermustlearnis to find a
placein the marketflow wherehe can controlRISK.The professionals
are
awarethat thesetypesof entrieshavethe greatestchanceof success.
The breakoutentrymethodis the simplestof all disciplined
entrymethodsto
learnand practice.This is wherea marketbreaK out of a knowntrading
rangeintoa newzoneof activity.
TR{DE WITH THE TRENDON BREAKS
BUY EREAKOUTS
UsE CI.OsEINITIAL STOPSANb i{OlJE IT,I fr TRAILIN PRCIFITSTOP
The practicaltheoryis that marketsfind levelsof supportor resistance

where
tradersbuyandselloff whenthingsarein equilibrium.
Theselevelsareeasily
identified
on a l-minute,S-minute,
3O-minute,
60-minute
anddailychart.
Theunderlying
benefitof theselevelsis that"stops"buildup in the marketon
the othersideof theselevels.So that whenthe marketpenetrates
them,if
they are there in abundance,
the marketflow will facilitatetrade and the
marketc;tnmoveintonewlevelsawayfromthe existingtradingrange.
TR,ADTN6
BREAKOUTS
AND R,ETEsTs
OF BR.EAKOUT5
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?- Retest
StoplossPlocementr
TradeEntryTechniques
[c] BryceGilnore 2004
If the marketadvances
cleanlythroughthe breakoutpointit couldpossibly
suffera re-thinkthrougha lossof propulsion
andfadeitselfbackto the break
level.Thisis calleda re-testof the breakout
andis anotheropportunity
to buy
or sellwith limitedrisk.
If there is no abundance
of "stops"then the marketwill makea '.false
breakouf'and retreatbackinto the priortradingrange.In whichcaseyou
don'twantto holdthe breakoutpositionyou mayhavetaken.
Prettysimplestuff but extremelyeffectiveas a tradingtool.
If you get a falsebreakoutandget stoppedout thenwatchcarefullybecause
the lowersupportwill bethe priorbreakoutpoint.
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FALSEBR.EAKOUTS
LIS = Line in Sand

StoplossPlocemeni
Tl Prtce comsbock through fhc line in the sord

ord overbolorces prior corrections before the
BUY Breokout VOU SELL
The breakoutentry methodworksmorereliablywhenyou are tradingwith

the dominanttrend,i.e., the dailytrend.But intra-dayon a S-minutechaft
youwillfindit an effectiveentrytooleitherwiththe trendor countertrend.
If you keepyour stopsas tight as possible,
like no morethan 3 ticksinside
the breakoutsignalyou cant losemuchandall you havedoneis payfor the
oppoftunity.
pointsarethe primarybasisof my tradingplan.what I am looking
Breakout
for all the timeis a placewherethe trendwill continueto makeadvances
and
a safeplaceto enterwhereI cancontrolthe risk.
If you can masterthis methodof tradingyou can-makea living in the
speculative
marketswithoutdoinganythingelse.All you haveto be awareof
is the forcesapplicable
on the day.
The bestpatternset up for breakout entriesis in a runningmarketin the
direction
of the maintrend.If the setup is thereyoutakethe trade,
98
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chaft,it could
Myideaof tradingis to tradewiththe dailytrendon a S-minute
off the openingpricewill
be countertrendthat day but the dailymovement
tell you in anycase.Position
tradersshouldonlytradewiththe medium-term
trenddailyindicators.
Daytradingsessionbreakouts
versusDailychaftbreakouts:
Normally
it is onlypossible
to tradewithclosestopsduringthe daysession.
Breakouts
on a daily chart can be violenteventsor like climbingout of
quicKand.Bythat I meanthe marketwill comebackandhit yourstopbefore
proceeding
you planned.
Thisis the reasonwhyanyoneother
in the direction
Mostbelieve
thana daytraderwouldusesuchclosestopsas I recommend.
thatyou needto givethe marketroom.I dont I believethat,youarerightor
wrongimmediately
andthenyou re-groupandhaveanothergo.
To avoid all the disappointments
encounteredby those peopletrading
breakoutsystemson DAILYCHARTS
one needsto managethe tradeentryby
workingwith a 5 and60 minutechart.All the t'armchairHarry's"losemoney
Mostsystemsrequirethem
because
theycan'tmanagetheirtradescorrectly.
to give the market "lots of room". I have seen so many instancesof
profitable
andthenultimately
automated
systemstakinga position,becoming
you had
phenomenon
you
this
endingin a loss.If
havealreadyexperienced
betterreadon andlearnhowto avoidthis.
Wedon'twantto givethe marketanyroom,we wantto be rightimmediately
or we wantto be out! Sowe mustfind tradeentrypointsthat relateto the
currentintra-daymoodof the market,if we get a runnerwe can hold it.
Position
tradersshouldlearnto finessetheirentrypointsusingthe S-minute
patterns
thiswayyoucansaveyourselfa lot of pain.
5-minute
chaft:
TheS-minute
all of the time.Thedailychaft
chartcreatesentryoppoftunities
doessoveryinfrequently.
60-minute
chart:
The60-minute
of all as it shows
chartdefinesthe breakoutlevelsthe clearest
tunedinto.
the dailytrendsandthe levelsthe tradersarementally
TheDailyChart:
Provides
for changeof mediumtermtrendmostof the time.
the parameters
It is not wofth muchto a day traderotherthanto tell him whatthe restof
theworldmaybethinking.
The double or triple highs or lows breakouts:

There'san old sayingin this business
that any old top or bottomcannotbe
going
testedmorethan4 timesif it is
to provideresistance
or support.Once
it is on its 4u'test then the chancesit will breaknexttime are way in the
favourof a break.If it doesnot breakandthenconfirmsa directional
change
thenthe reversewayis the wayto go.
Youwon'tget to manyof theseon a dailychartbut theyoccurtimeandtime
againon a S-minute
chaftandoffergreatopportunity
to profit.
BREAKOUTTR.AbES
Formotionsyou v,rillseeon occcsions
If the trend before the congestion is clear then the BREAKOUT

shouldsucceed,
You couldsee a seriesof tops or bottomsthat were formedover a two or
three day period.Theseare the best breakoutoppoftunityyou will get
because
the markethas giveneveryonea chanceto movetheir stopsinto
placeaboveor belowwherethe breakout
wouldoccur.
Whenthe breakoutcomesall the peoplearoundthe wrongway"run for the
hillssoto speak".
Don'twait for a re-testof the breakoutin circumstances
like theseabove
because
it will nevercome.The trend has beenconfirmedon the breakout
andeverysmarttraderwill knowit.
Theseareopportunities
sometradersjust wait for andwhentheycomethey
"load
will
the boat".Thatis theywill tradehugepositions
andthe imbalance
of ordersgoingwith the trendareso greattheywill eat up any resistance
so
fastyouwon'thavetimeto blink.
Youshouldthinkaboutyourtradingplanin situations
likethesebecause
they
giveyoua chance
to doubleor triplethe sizeyou normally
tradeandgo for a
killing.
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Selling into Strength or Buying into weakness!
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Marketstrengthis an upwardmovement;Marketweaknessis a downward

movement.So it followsthat STRENGTH
in a bear trend is a correction,
WEAKNESS
in a bulltrendis a bullmarketcorrection.
SELLFOINTS
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BEARTRENb
You must always favour the direction of the prior larger degree
trcnd.
Whenyou seeformations
unfoldinglikethesethe marketis tryinglikehellto
go up in a beartrend or go down in a bull trend. It helpsif the line of
resistance
or supportis locatedon a knownretracement
levelbecauseit gives
youthe chanceto placeyourstoploss
just aboveor belowthat knownlevel.
Thereasonis that at timesliketheseyou are likelyto get a FAISEBREAK
just
aboveor belowthe congestion
beforethe reversalactuallystartsto takehold.
A falsebreakin circumstances
liketheseis what is knownas a failedsignal
anda failedsignalis the strongest
signalyouwilleverget.
Onceyou seea confirmation
of a falsebreakyou can instantlydoubleyour
positionif you wish.The reasonis that as soonas the localsseeit theywill
just bombardthe marketwith ordersandaccelerate
the reversal,basically
it
is a no brainertrade.
you needto seethe blackcrowsif sellingor the whitedovesif
Justremember
youarebuying.
Marketpatternsare a measureof the psychological
forcesat work in the
market.Theyshowthe thoughtsof the buyersor sellersin the market.When
onesideis up againstthe wallthe superior
sidewillstickit to them.
Youhaveto learnto thinklikea traderif youwantto becomeone.
l0l
I don'twantto makethis sectionovercomplicated

but the generalideais to
find levelsthat haveeitherbeenresistance
or suppoftbeforeandusethemto
initiatetradesoff with limitedrisk.
The pointis that thereare othersmafttraderswho will be lookingat doing
the samethingandas youall movetogetherthe chances
areyouwillturnor
accelerate
the marketby yourjoint actions.
UNDERSTANDING
OR WEAKNESS:
GENEMLTRENDSTRENGTH
TheDepthof the marketcorrections.
It is all a matterof patternbeforeyou determineto buyor sellthe strengthor
weakness
havingregardto yourperception
of the majortrend.
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If the currentcorrectionis only a reactionand leavessomespacebetween
the previousimpulselevelin the seriesit is morelikelythat the strengthor
weakness
at the timewill fail.
The marketcouldalso retraceall the way back to the baseof the prior
correctionswing level and fail. t n r s r s also knownas retestingthe prior
breakout.
In mostcasesthe failureto take out old supportwill halt the moveand a
continuation
of the priormajortrendwillfollow.
Thediagramshowsonlythe bearcasebut if you reversethe patternsthe bull
casewouldapply.
To become
an all roundtraderyoumustlearnto identifywiththesepatterns.
Thesepatternswill giveyouan opportunity
to makemoney!
Thesepatternsareyourfirst indication
that the currentstrengthor weakness
is aboutto fail.Proofcomeslater.
102
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BEWAREOF PATTERNS
THAT HAVETHE POTENTIALTO SIGNALA
CHANGEOF TREND:
If the currentcorrectionis overlapping
a previousswinghighor low in the
seriesof the currenttrend; then the trend cannotbe definedas strong,it
maybea consolidation
or a reversalof trend.You must bewarenot to take
anythingfor granted.
*lor*ct ftloves
aborc sccondory
Swing low
Scll Point
on o foilurr
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POTENTIALCHANEs OF TRENDPATTERNS
I likereminding
myselfof thissituationbecause
the marketcouldbe changing
yourselfbeyondanydoubtthat a continuation
trendandyou haveconvinced
wifl follow,i.e.,the marketwillresume
the priormajortrend.
Anytimeyou havethatfeelingbeware!
Overthe yearsI haveexperienced
trend reversals
that seemedillogicalto
me: whentakinginto accountthe localnewseventsand thosearoundme.
Butthe trenddidchangeandconfirmed
itselflater.
Thepatternof the markettradingrangeseachdaymonitorthe moneyflow in
the market,the marketis alwaysright(youcanarguethat oneall you like,I
don'tcarewhatyoucomeup with).
Thethingis thatwhenyouget overlaps
in wavestructures
the tradersarenot
scaredof the past.You mustaskyourselfthe reasonwhy?The only reason
canbe that they havea newagendafor somereasonmaybeunbeknown
to
you.
Themarketpatternis the firstsignof change.Staywiththe patternno matter
whatyourpersonal
feelingsare. Therewards
willfollowasthe yearspassby.
TOPS:
ACCUMU1ATION
BOTTOMS
& DISTRIBUTION
TOP & BOTTOfi
TATTERNg
ACCUi,TULATION
BOTTOllts
DISTRIBUTION
Thesesituationscome along on a regularbasisin the intra-daymarket

activity.
Accumulation
is a resultof buyersquietlytakingon the sellersat a ceftain
leveluntilthe sellersgiveup andmorebuyerscomeontothe scene.
Distribution
sell into the buyerswho think
is wherethe sellersprogressively
going
Finally
is
higher.
the
buyers
dry up and the marketfalls
the market
over.
formon lowvolumedaysuntil
Patterns
likethesetopsandbottomsgenerally
the marketbreaKout andstaftshittingallthe residentstops.
TREND:
RE-ENTERING
AN EXISTING
The safestway to re-enteran existingtrend is to use the OVERBAI-ANCE
RULE:
RE-ENITER.INoANI EXISTINS TRENID
If ths TREND is to continua the next
correciion will not exceedthe ornplitude
of this one
Stoplossobove t:l
Allow for a 1:1

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That is oncean initialcorrectionhasformedandthe trenddirectionhasbeen

amplitudeas a triggerpointto
confirmedyou can usethe initialcorrection
enterfor a continuation.
youare
is quitelargeit alsohelpsif the correction
If the correction
amplitude
re-entering
to the existingimpulse.
on is a priceretracement
Buton a S-minute
chartin the ESE-Minithesetypesof entriescanbe made
whenthe corrections
areas smallas 3 points.
becausein a
Beforeyou do enter like this checkthe S-minuteStochastic
In an uptrendit should
downtrend
it shouldbe comingbackto Overbought.
becomingbackto Oversold.
SO FAR:
I haveshownyou somesimplewaysto selecttrades,I haveothersthat you
concepts
andI
will find hardto believe,but they are basedon mathematical
themto you.
needto explainthemin full detailandthendemonstrate
Neveftheless
what I haveshownyou in the first sectionof this tradingcourse
trader.
is morethanenoughto turnyouintoa professional
All you needto do is developthe streetsenseto go with the methodologies,
if you can'tdo that you will usemy methodsat the wrongtimeand
because
youwill losemoney.I haveno controloveryourpersonal
actions.
Opportunity
tradersoftentradecountertrendwhenthe situationdemands,
you haveto get backin stepwith the marketonce
yet to be supersuccessful
Onlya few talentedtradersrealizethis,
thoseopportunities
are exhausted.
mostotherskeeptradingcountertrend all the time and missthe runstoo
often.I havebeenguiltyof this manytimesbut I keeptellingmyselfto watch
overcomingmy ownproblem.
the marketmoreclosely,I am continually
changein
Whatyou mustrealizeis thatyou muststayflexibleto the slightest
to
have
my
method.
You
cannot
afford
a fixed
marketsentimentto trade
formulait will beenough.
view.If youcant do thisthenstickto the breakout
Nevertheless
thesetwo thingsyou mustunderstand.
to the maintrendthat last
1. Trendingmovesseldommakecorrections
chart.
longerthan1-3days.That'sa lot of barson a S-minute
2. Correctionsseldommakea retraceof the prior primarymovement
llorlndlly50o/o
is the orderof the
or 38.2o/o
that is greaterthan61.8o/oi
waveof priorsimilardegree.
dayor 1:1withthe lastalternate
105
Trading to WIN Course- Oneday at a time
SeCtiOn 1l cnapter18:
Daily RangePatterns:
Everyday is a newdayand it is possible
anythingcouldhappen.We should
staftthe day knowingwherethe significant
38.2,50 and61.8levelsare.We
shouldalsoknowthe levelsof any significant
1:1'sandthe significant
MOB
levels.
If the marketbreaK any of theselevelsand negatestheir impoftance
we
shouldimmediately
updateourchaftfor the onesthatchange.
OnethingI shouldalertyou to is the patternof volumeduringthe day. The
normalpatternof volumeduringthe day will be highestin the 1* hourand
the last hourof the day. Fromaroundmiddayuntil 1:30pmFf the volume
generallyslowsdownunlessthe marketis runninghardin one directionor
the other.Whenthe volumedropsthe marketis inclinedto trade in tight
ranges.
TYTICAL VOLUA'TE
FLOW DNILY
9:30-1O:3O
12:OO- Z:OOpm
A VOLUME
sruKE
on c high or low in a low volume
pcriod could be levalsol 516l'.1
Whenthe volumeis lowyouwill occasionally

seeVOLUME
SPIKES
astheyare
morepronounced
on your chaft. Basically
they meana lot of transactions
took placeat that level.Determining
whatthey meanis anotherthingas the
standard
lineof thinkingis thatmarkets
riseor fallon highvolume.
Neveftheless
in low volumeperiodsa VOLUME
SPIKEcan meanthe exact
if it coincides
oppositeespecially
with a knownreferencelevelon the day.
Couldbe manyreasonswhy but you needto work them out on the day.
Remember
I havealwayssaidthisis a thinkingman'sbusiness.
106
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OPEl.lPRINT
Daily RangePatterns
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Anotherthingto remember
aboutlowvolumeperiodsis that PROFESSIONAL
TRADERS
in big quantitiessuch as 250 or more
who make transactions
contractsat a time cannot executemore than 250 contractsin one
transaction
to
on the E-Miniat a time.Sothey havecomeup with schemes
get
try andkeepthe marketin the areatheywishto buyor sellat untilthey
set.
Forinstance
if theywerebuyersat a certainleveltheycanget someone
else
to placehugeresidentordersto sellat a slightlyhigherlevel.The average
DEPTH
traderif he is a buyerseesthe SIZEjust abovein the MARKET
and
figuresthe marketcannotget throughit so he holdshis buyorderback.The
manipulators
buy up everythingat the levelsbelowand whenthey are set
they havethe residentsell orderscancelledleavinga clear path for the
marketto go up.The reversecanapplyequallyat placeswheretheywantto
establish
sellpositions.
Sowhenyou seemassive
SIZEin the marketdepthandthenall of a sudden
just
youwill knowwhatis goingon.
it
disappears
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Thissoft of thinghasbeengoingon, on the pit floorforeveranda day.Guys

like LouisBorsellino
who hadthe reputationas the largesttraderin the pit
hassaidopenlythat somedayswhenhe wastryingto establish
a positionin
one directionhe wouldhaveanotherbrokerdo the buyingfor him whilehe
in the opposite
stoodon the flooreitherofferingor biddinglesserquantities
direction.As soonas his positionwas set he wouldthen try and pushthe
marketin that directionby unloading
the positions
he hadpersonally
bought
to holdit backwhilehe wasgettingset.
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Thereis nothingillegalaboutdoingthis.Wellnot unlessyouget caught.

is that therecouldbe a lot of arbitragegoingon
Anotherthingto remember
betweenthe pit and the electronicat times. You can see from the
between
Commitment
of Tradersrepoftsthat thereis so oftenan imbalance
MostweeK the reporthas Large
the Pit contractandthe E-MiniElectronic.
positions
for tradersin the E-Minithe oppositeway roundto the
Reportable
theirtransaction
costs
PITfigures.Just remember
theycando this because
withthe average
trader.
areso smallcompared
Nowyoumightsayaftermetellingyouall thisthatthe marketis rigged!
- I preferto think of it as normal
Callit riggedor call it normalbusiness
practice.
of andas longasyoudo you
business
I knowwhattheyarecapable
canlearnto dealwith it.
Humannatureis nevergoingto change,if someone
canfindan edgetheyare
goingto exploitit. Unlessyou knowall thesethingsbeforeyou put yourhard
earnedmoneyon the line you are only goingto be a lambstandingin a
paddock
yard.
waitingto betakento the slaughter
Daily RangePatterns
t07
t2:@ - Z:OOpm
Price
Oate
fre
Open
r-fth
Low
Cbs
Csr %
t Etrs
vd
9S:2
08122183
0930:00
1t)11 50
1012-6
1m9.75
101025
{2
-483
13ln
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This doy ws a 6AP OUTSIDE REVERS/4L
DAY ondcvan
rhoughth rnorkct wos down oll doy thc nrorkct wart q.rici
belweq 1?:@ qrd Z:OOpm- look ot thc eorly volurrc.
t
periodthe marketwent into the doldrumsand
Duringthe 12:00-2:00pm
pattern.Wheneveryonereturnedfromtheir
formeda continuation
rectangle
lunchbreaktheysoldit downfufther.
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OPENINg PR.INT
If the volumewere buyers

obsorbirEfhe scllers
Thcy oll boiled out here -->>

24 POIl.lT RANFE this doy
Thc rnorket wos in o continuing downtrcnd
r!\uchcon be lcarnt if you sludy volrrrc
t
Justin caseyou arewondering
whereI am goingwiththisyou will find out
whenI haveshownyou enoughdailyrangepatternsto allowyouto arriveat
the correctconclusions.
justobserve
Butfor the moment
thesimplethingsI am highlighting
asI go.
Daily RangePatterns
108
Section1: Chapter- l8
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WhatI wantto teachyou is to observewhatthe marketis doingfromwhenit

opensuntil it closeswithouteventhinkingaboutwhat happened
the day
yesterday
before.Sometimes
the influences
fromwhat happened
canthrow
youoffthe beatentrackasthe dayprogresses.
The morningsessionis usuallya carryoverfrom what the marketdid
yesterday
andhowit reactsto the morningnews.
period
Asthe patternof the dayunfoldsit hasto negotiate
the 12:00-2:00pm
and mostlikelythe dailystrengthor weakness
will becomeobviousas the
marketheadsinto the afternoonsession.Well that is what I am always
hopingfor but it doesnot alwayshappen.
This wos o correclivc
doy in o dournlrad
To tell you r{re truth f couldn'i moke hcad nor toil of this doy
OpeningPrint
12:OO- Z:@pn
Eoch tirne ii rollicd I fhor4ht ii would *ll
oll ad kccp going doum

.__Scneogoin rcllics
ond ccr't go ou.
Thisdaytherewas no positiveretracement
levelat the low for the dayto go
off andthe marketwassideways
intothe 12:00otlock zoneandthencame
to lifefor someunknownreason.I thoughtit wasa candidate
to collapse
but
it neverdid untilthe nextday.Thenextdayis shownon the chaftprevious
to
this.
NowI will proposea situationto you regardingthe OPENING
PRINT.It is
commonknowledge
amongstprofessional
PRINT
tradersthat the OPENING
areais moreoftenthan not the highor low for the day (betterthan50o/o
of
the time).
Sohowdo we usethat information?
Wellyou couldjust jump in at the openingof the marketin the directionof
the 3-daytrendandbuyor sellwitha S-pointstopon the positionlikea lot of
traderswill do. A betterway is to HOOKthe tradein the directionof the 3daytrend.That meansif it goescountertrendin the first few minutesyou
join the tradeas it hooksbackthroughthe openingpricein the directionof
the 3-daytrend.Thisis a populartradeandoftenthe othertraderswill helpit
workfor you.
Daily RangePatterns
109
This was a very interestingday becausethe marketwas openingfrom a

holidayweekendandit wasjust belowthe highsof a two andonehalfmonth
tradingrange.The ISMIndexreportcamein at 10:00amslightlybetterthan
expected.Severalthingswere in the favourof a breakoutbecausethe DJIA
andthe NASDAQ
Indiceshadalreadybeentradingin newgroundandleading
the overallmarket.
The Commitment
of tradersreportfrom lastweekhadthe Commercials
and
the Fundsholdingan increasing
NETSHORTpositionagainstthe prevailing
trend,they had basicallybeenincreasing
shoftsall last week.So the day
beganas it hadbeendoingnearlyeveryday lastweekby,selling
downin the
first hourof tradingas theytookmoreshortsonboardandthen rallyingonce
they took the pressureoff. Now after today I think they will have to
reappraise
their strategy,w couldsee the marketbeginrallyingfrom the
openastheyunwindpositions.
Theyhaven'thada veryhappy2 months.
TODAy wqslhc &y we bloke out to the upsidc
of q two & o hqlf month range fr.om fhe trulle t7
high 1014^6
Ovcrbolonce tl
: Stror
t
I
ttng t rn BF.ok Alt

Bncoks norniag
t
t
Open
Themarketwentontobreakthe oldJune17andJuly14,1014^6doubletop
at 12:19pm
on a hugevolumespikeas an attemptwasmadeto holdit back.
Evenwiththe 1:1 at 1016therewasno continuing
sellingof any magnitude
andall the marketdid was movesideways
as usualfor the restof the quiet
periodintothe 2:00pmzone.Thenat 2:00pmwe bouncedoff an exact50o/o
retracement
for the day. This was the sign that the marketwas backin
business
andyoucanseewhereit wentto duringthe afternoon.
Theimportant
thingsto remember
abouttodayare:1. Howthe marketwassolddownafterthe openwhileit wasstill below
the 1014^6doubletop as hadbeenthe casemostof lastweek.
2. Howthe marketadvanced
to an exact1:1at 1016on a volumespike.
3. Howthe marketregained
the trendof the morningrallyaftermakinga
pointon the day.
50o/o
retracement
backto its hypothetical
balance
Daily RangePatterns
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Todaythe marketopenedwith a GAPfrom the closeof the day beforeand

soldoff intoa I-ARGER
DEGREE
50o/oRETMCEMENT.
1019.3q116l.B%l
*\*,
lx1's Keep
Overbolotcing
HI6HER LOWS
Prie
Dale
Tm
Opa
HSh
1010.3
09'|2m
15:35:00
1fi725
1tX85
1o,|725
qN
1017.75
Cs% -0.1
t Brys 12
Vol 6,065
Thehighestvolume5 minutebarfor the dayoccurred

on the low barfor the
day.
Oncethe GAPfrom the openinghad beenfilledthe marketsolddownuntil
12:30pm.A burstof sellingat the timewascleartyabsorbed
by buyers.The
marketmovedsideways
to upwardsuntil2:00pm andthenbrokebackabove
the consolidation
zone(Greenline).Thesignswereevidentfor the restof the
day that the marketwas goingup as the lx1's kept comingout and the
marketwas makinghigherlowswith goodimpulsesin the up waves.There
wasno apparentsellingat the 38.2andit wasonlywhenit hit the 50o/o
level
of the week'sdeclinethatthe profittakingcameintoplay.
The dailybar couldbe described
as a KeyReversal
Dayas a new low was
madewitha higherclosethanthe daybefore.
Thedeclinefromwherethe gapwasfilledretraced6 full pointsandbecomes
the benchmark
for the nextdaystrading.By this I meanthat we shoutdnot
retracemorethan6 full pointswhilethisadvance
remainsstrong.
Eachdayyou shouldtry andmakean objectivereviewof whattranspired
on
the day. If you do this then you will get the idea of what I say about
professional
tradershavinghabits.
Onceyou becomefamiliarwiththeirhabitsyouwill be ableto readwhatthey
areup to mostof the time.It's as simpleas that- onceyou knowwhatthey
aredoingyoucanusethe knowledge
to makemoneyfromit.
Daily RangePatterns
nl
The next day:
This is the followingdoy ord bosicollyit is telling us thot

lhe onedoy rolly hosstalled in its trocks'
I had no ideawhat was comingtodaybut I did havea plan,I

Personally
it in S3:C32P34.
explained
Whenthe day startedthere was not enoughbuyingto get the marketto
breakup throughthe 50o/olevelhigh(101S)so the localswentthe opposite
target.The 50o/o
way knowingthat 6 pointsdownwouldbe an achievable
of Friday;srangebackthe otherway was alwaysgoingto be a
retracement
problemfor the locaisso they took the pressureoff downthere aroundthe
alongnot knowingwhatit shoulddo'
1012andthe marketjust bumbled
tradersknowthe levels
Thethingto learnfromall of this is that professional
to actaccordingly.
to focuson andtheycometo workprepared
If it doesn'tgo the way they are hopingfor theyjust takethe line of least
whodon'thavea planor haveexhausted
ani playoff ine dummies
resistance
theirplan.
of
If you watchthe marketday by day,figurethe strengthsandweaknesses
will keepcomingalong.
the playersthe opportunities
If you playthisgamethe smartwayyoucanwin andeasily.Youdon'tneeda
doctoratein piychology all you need is plain street senseand an
the playersto do whattheydo naturally.
motivates
understanding'otwhat
Theworldis nevergoingto change,believeme- onlythe pricelevels!
t12
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I just had to add these chafts to the counie:

you in thiscourse.
Theactiontodayreiterates
allthe thingsI amteaching
+ JEq{dtier- Jr}herr'nErvab. @e+mlt ,!DC Ol gS e60 gosiit OTkt:
- Globex.S) Dtnrmicl:004:00
.-9jjt!e$_jt:1gq
-!: Lrq??o--9:l_1ql09
rm00
fi800
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1t600
It400
trz0lt
ttotttl
t
tttL00
r(D00
This CHARTis a good one foryou

to study. lt was the last fading day
for Aprll 2004.
Volume
Poblishdby e5ignal(ww.aiyrdrom)
Thisday was a Fridayand alsothe lasttradingday for the monthof April

2004.
Ed+
J E q u i t i B r -J o & s i n E r ' / a : 6 . @ e + , x t ' tg l D c S 1 E 5
e50 &ori:r Oti:t

oiltt6s
thjce's XABCITirl.6i!|
H:11&0
!:103ro
et@9I|*
t4s6
Thls ls the week leadlng up to and

including the day above:
?.1$t
1425
11.v1
13fi
|l500
r.1000
tt18.ofr
tADD
t0.2s
i
t
r2500
r.5r! I
27.s I
't0-cl
r
es.zso..
I
7.1trt"i
r2000
.29,5n
11{t.75
The trend was clearlydornngoing into

Friday:
.21,50
a
tt00,50
Publirhedby esgnal (ws,sigod,(m)
you in thiscourseyou
Whenyou learnto applyall the thingsI am teaching
will realisehow simpleit is to find reliabletradingopportunities
eachand
everytradingdayof the year.
Daily RangePatterns
113
Section 1: Chapter - I 8
Section 1: chapterre:
Summary:
In thisfirst sectionI haverelatedto youthe thingsI practice
andmonitoron
you
to becomean
a day-to-daybasis.Usingthese tools shouldallow
profitable
extremely
traderif youcanmasterthem.
I havewrittenmostof this first sectionin realtime to giveyou my thoughts
first handas the marketunfoldeddayby day.If you adopta dailyworkethic
for youranalysisand preparebeforethe tradingsessionopensyou won'tbe
in for anysurprises.
Thenas the marketmovesalongyoujust keepupdating
yourchartwiththe importantlevelsyoucantradeoff.
Thereis still anotherworldof thingsthat I needto explainto you that will
giveyou a widerfieldof focuswhenyou needto drawon them.Thesethings
arerelatedto old and newteachings
andthe practices
employed
by analysts
andtradersthe worldover.Whenyou understand
all the practicesandtools
worldandsomeof the beliefsthey holdyou will
available
to the investment
havea far greaterappreciation
for whatit takesto bea winner.
By understanding
what other peopleare up to and how they arriveat an
willgiveyouan EDGE.
analysis
It is imperative
thatyoustudythe restof the materialin thiscourseif youare
strivingto be in the top 0.1olo
of the winner'scircle.
Youneedto learnthe wholestoryto stayon top of the marketbecausethe
marketgoesthroughchangingphasesyearin andyearout. Newsituations
canpresentthemselves
of knowingwhathas
at timesandonlythe experience
happened
in the pastwill helpyou makeit clear.
in the pastandthe
Youhaveto havean understanding
of whathashappened
why.Simplybecause
the futurewill onlybe a repetitionof
technicalreasons
you
past
knowwhathashappened
in the past
the
in somesimilarformandif
youwill beableto dealwiththe futurefar moreeasily.
Youalsohaveto knowwhencertaintimesof the yearbecomeimpoftantto
tradersandwhy ceftainothercriticaltechnical
eventsareimpoftant.It will all
you are
in the moneyflowof the market.Withoutthisknowledge
be reflected
no morethana mechanic.
If you want an ongoingpeaceof mindwith the marketyou needto know
what the other playerscouldbe up to when you reachcriticaltechnical
situations
thattheywill actupon.
SummarySection1
tt4
Section1: Chapter- t9
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you don'thaveto
yoursizebecause
Tradingintra-dayallowsyouto increase
givethe marketanyroom,i.e.,likeyoudo with swingtradingwhenyouwant
to stayon the systemtrade.
Whatyou shouldconsideris that nothinglastsforeverandit is onlyas good
as it getswhileit lasts.The marketon an intra-daybasisis moreflexibleto
dealwithanda lot easierto beconsistent
with usingmy approach.
Thereis no pointin havingto rideout largedraw-downs
in youraccountto
comeout aheadin the end- that is if you actuallydo. It is betterto take
- if you hit and
smallbitesthesecouldendup in hugemouthfullssometimes
runwhenthe SIGNS
arethereyouarebetteroff in my opinion.Thenyoucan
go homeandsleepwellanddont thinkaboutthe nextdaytoo muchuntilit
comes.
As you becomemoreawareof whereto takeyour tradesyou can scaleup
yoursizeon the onesthat offerthe besthistorical
Whenyouget
oppoftunity.
intothe bigleagueyouwill beconfident
to tradein 20 lotsor more.Thereare
individualtradersout there pushinganythingfrom 5 to 200 lob on the
reversal
signseverytimetheyappear.
andcontinuation
Anytimeyou canget intoa tradewith a l-point riskfactorandcantakemore
than4 or 5 pointsyoucankickgoals.
Eachday you shouldbe lookingfor 2 goodtradesand onceyou haveyour
wagestakethe restof the dayoff.
Themoreyou get to realisethat all this business
is, is just a job, you will be
muchmorecomfortable
withit.
ONEDAYAT A TIME.
t
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SummarvSectionI
THE IMPORTANTTHINGSYOUSHOULDHAVELEARNT
FROMSECTION
1:
1. Payattentionto the NEWS
REPORTS.
andthe release
of ECONOMIC
2. The50o/o
Point
Rule.
Balance
3. The1:1Overbalancing
Rule.
4. TheTWODAYCorrection
Rule.
5. PriorSupportbecomes
futureResistance.
6. PriorResistance
futureSupport.
becomes
7. ThethreedayGannSwingis the bestmeasure
of trend.
pattern.
B. Rectangles
area signof a continuation
9. In a strongtrendcorrections
in amplitude.
shouldkeepreducing
10.OpenInterestcanonlyriseif newsellersenterthe market.
11.TradersbelievethatGAPS
on the daysession
chaftshouldbefilled.
12.Volumespikesat geometric
levelsarea strongsignfor a reversal.
13.A failedsignalsuchasa falsebreakis oneof the strongest
signals.
Formoredetailed
information
on falsebreaKseeS4:C1:P25.
Theforemostthingto learnis thatyou mustneverriskmorethana pointand
a halfon anysinglecontracttradeyouenter.
you enterit the chances
If a tradeis not workingalmostimmediately
areyou
arewrongandyoushouldscratchout andstartagain.
Believe
whatyouseeandnotwhatyouthink.
SummarySection1
116
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SECTION 2: chapter1:
SacredGeometry- The CardinalRatios

approachfor
Time & PriceAnalysisof MarketTrendsis a mathematical
comparing
betweenmarkethighsandlowsin bothtimeand
the relationships
priceamplitude.
throughoutthe ancientworld,suchas
Teachers
in the centersof education
PLATO
set their pupilsto practicethe atts
founded
&
those
by PYTHAGOMS
in orderto exercisethe facultyof
and NUMEROLOGY
of DYNAMIC
GEOMETRY
intuition.
by a
The ancientstaughtthat any situationin life would be represented
in nature.
DYNAMIC
PATTERN
for whichthereexistsa precedent
geometryre-enactsthe
GEOMETRY
deals with pure form; philosophical
preceding
one.
unfolding
of eachformout of the
the
The ancientsdeviseda canonof proportion.The canondemonstrates
betweenthe SQUARE,
squaringof the circle andthe bindingrelationships
is equalto
of the CIRCLE
MEAN.The circumference
CIRCLE
& the GOLDEN
the PERIMETER
of the SQUARE.
Circle= 8"OOO
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SQUARINGTHE CIRCLE
This diagram representswhat the ancientscalled the 3 phasesof

The squareactsas the base,the pyramidis verticalandthe
consciousness.
circledissects
the squareverticallymovingbothaboveandbelowit.
SacredGeometrv
NaturesLaw
Naturallaw of growthphases,as we knowthem todayoriginatefrom the
dynamiccycleswithin the construction
of the Cosmos.Beforeone can
possibly
the significance
understand
of whatwillfollowin thismanual
thereis
a needto learnhowgeometric
formsareconstructed.
Geometric
RatioSeries(1.618)
R.N.Elliottin his treatise,'The ElliottWaveTheory",identifiedthat many
markethighs& lowsin the DowJonesIndustrialIndexwereformedrelating
to eachother on progressive
ratiosof the GOLDEN
MEAN.Basically
what
theseratiosrepresentis the progression
of cardinalpointsin a GEOMETRIC
SPIRAL.
GOLDENMEAN
Goldensection
Square Root of 1.618
1.618
0.618
1.272
To fully understand
the unfoldinggeometrywithin a marketsstructurewe
needto be awareof the expanding
and contracting
relationships
that occur
withinthe geometric
spiral.
GEOI'IETRICRftTIOS OF THE SPIRfiL EfiSEI' OH THE PYBRI'IIDOF GIEft
EXPNHEf,ND COHTEFCTON THE SOUNFEROOTOF 1,618
SFIRRL PROGBESSIOI.IS
l.?7? = Square root of 1.619
End
8.786 = the reciDrocaL 1.?_72
1.618
e.858
e.BsB
e.61S
L,,""\L,=.=\L,",,\
r""7 l-''*"7 l-'*'7

V
V
8.78'6
I.BB8
8.618
9.78 6
B . 48,6
8.618
Movingfromthe baseof the triangles

in the direction
of the 90o(rightangle
leg) eachfuturelengthincreases
by a ratioof t.272to the preceding
leg.
Movingin reversethe legscontractby a ratioof 0.786to eachother.0.786is
thesquarerootof 0.618,theGolden
Section.
SacredGeometry
Section2: Chapter- |
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andappears
The GOLDEN
MEAN(Phi)ratioof 1.618is a growthproportion
Alsoyou
everywhere
in nature,in plants,in seashells
andmanyotherplaces.
shouldknowthatthe planetVenus(theclosestplanetto the Earth)orbitsthe
Sun 1.618timesfor everysingleorbit of the Eartharoundthe Sun.Put
anotherwayVenusorbitsoncefor every0.618orbitof Eafth.
TheAncients
left us a geometric
blueprintwiththe diagramof the "Squaring
that the Great
of the Circle".This diagramis alsothe exactmeasurements
Pyramidof GIZA was built to. I have alwaysbeen surprisedwhy this
information
wasnevertaughtto me at school.As a resultof my subsequent
things,on the
studiesin laterlife, I havefoundout manyotherinteresting
geometry
to
can unfoldand still holda bindingrelationship
strictwaysthat
"squaring
the
of the circle."diagram.
of trendin
Overthe past22 yearsof tradingI havewitnessedmajorreversals
I follow,thesesometimes
deff normallogicwhenit
all the MAJOR
MARKETS
geometric
havebeenthere
relationships
comesto the ratiosinvolved.Butthe
for allto see.MostpeopleI knowhaveneverbeenawareof themat the time
either,so I havecometo the conclusion
that there is a higherpowerof
present
it maybe is reallynot
influence
whenthesethingshappen.Whatever
my mainconcern;all I am interested
in is knowingwhenthe marketreaches
levelsof geometricproportionthat align themselvesto the theory of
NATUMLGROWTH.
Using Geometrywe can prove the ratio 1.618 maintainsa triangular
is
relationship
with the square,the cube and the circle.This association
purposes
geometric
forms must
extremelyimportantfor our
becauseall
rotatefromoneaxisto anotherif theyareto continuetoo relatein the future.
TRIRHGUI,RNBRTIOS OF THE GOLDET{I'IERHBELRTEI}TO THE
GOLDEHTRIRHGLE. THE CUBE & THE SqUHNE.
of
Diagonal
Rectangle
the
Golden
1 -gBZ necipr.ocal
8.526
Diagonal
L-?32
SacredGeometrv
the
Cube
reciprocal
E-5??
of
the
Squari.e
reciprocaL
E-?ts?
Iliagonal
1-41.t
of
TheFibonacci
GrowthSeriesof Ratiosare: L,t,2,3,5,8,L3,2L,34,89,L44,233,377,6t0,985.....
every future number
preceding
increases
numberandon it goes.Butin
by a factorof 1.618to the
the true senseof the growthphasethingsmoveby a factoror L.272- when
on the geometric
seriesnot by 1.618.
phasesof growth.The keygeometric
I callthesethe geometric
ratiosfor my
purposes
Time& Priceanalysis
are:
Expandinq 1.000
Contractinq1.OOO
L.272
0.786
1.618
0.618
2.058
2.618
0.486
0.382
3.33
0.30
As a noviceyou may not understand

of 2.058or 0.486
the significance
because
theyareso closeto 2.00& 0.500,but youwill in timewhenyoucan
identiffthe rhythm.
Whenthe marketmovesoverto a reciprocating
unfoldingpatternphaseof
the SQUARE
we canexpectto witnessarethe
or the CUBEthe relationships
- the squareratiosand the
ratioson the differentplanesof the conscious
cuberatios.Sometimes
we will experience
the ratiosof the circlepinpointing
marketreversallevelsat the sametime. You must be awarethat as the
geometryunfoldsthe ratio progressions
movefrom each levelto the next
- they
level.No seriesof ratioswill keepsignallingreversalsconsistently
rotateas the marketmovesalong.Oneday a 0.618will arresta correction
the nextit will be a 50o/o,
thenotherdaysit will be a 0.707or a 0.786.Then
in strongtrendsit couldeitherbe a 0.382,0.354or a 0.333depending
on the
rhythmof wavesin the unfoldingpatterns.
To understand
what I am goingto teachyou now,you will haveto havea
flexiblemind.
I havealreadyhalfexplained
all of this in earlierbooK but nowI thinkit is
imperative
students
I writeit all downthe wayI understand
it today.Previous
may havealreadyworkedit out but I now havethe luxuryto explainit all
over again.My two yearswith the Clublzl4group have enlightened
me
immensely
on howto knowwherethe novicejust lossestrackof whatI am
on about.
So manyunusualthingswill occurin the marketgeometrythat you haveto
be awareof whatwill constituteRHYTHM
howthe continuing
to understand
progressions
will relatein the end.
All this mayat firstseemcomplicated
but if you learnto workwithwhatI will
teachyou,youcangraspit. It is notthat hard,it is all a matterof logicasthe
marketunfolds.I havehadno problemusingit for wellover15 yearsandit
keepson workingfor me.
SacredGeometry
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Harmonic
RatioSeriesof the SQUARE
found
HARMONIC
MTIOS are generatedfrom the diagonalrelationships
withinthe SQUARE.
Musical
notesvibrateon ratiosof the square.HARMONIC
MTIOSrelateto the number2 andsquarerootof 2.
Sacred Ratios of
2.000
SquareRoot
SacredCut
L.4L42
o.707L
The SacredCut 0.707Lis equallyas impoftantas 0.618whendealingwith

proportion.Lateron we will see how the two ratiosintegratewithin the
geometry
unfolding
of a marketstructure.
2. EBB
1 . 4 1 4n 1 . 4 1 4
HHRI.IOHIC
SERIES
1,ts88
1 -414
2.OEE
2.S2S
4.EBE
SAUHREROOTOF 2
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1.EEE
fd-?6?
8.588
E-354
6.256
B.5BB
A,7A7
r.BBA
HfiNI.IOHICPSOPONTIOH$FORI'IEI}BT THE SQURNE
Theworksof W.D.Gannhavealreadymadefamousthe useof the ratiosin

the squareandthe cubefor the analysis
of timeandpricein markettrends.
Neveftheless
I haveneverseenany mentionof the SacredCut (a Masonic
term)in anyof Gann'swork.Theremayhavebeena reasonfor thisas Gann
wasa memberof the Masonic
wererequiredto takean
Lodgeand Mason's
to outsiders.
oathnotto teachtheirknowledge
Expanding 1.000
L.4L4
Contractino1.000
o.707
2.000
0.500
2.828
0.354
4.000
0.250
s.6s6
0.t77
The ratiosincrease
by a factorof L.4L42to eachotheror theycontractby a
divisionof L.4t42to eachother.I will referto this seriesas the harmonic
seriesof ratios.
SacredGeometry
ThirdDimension
of the Square
Thediagonal
of the cubecanbe usedto forma ratioseriesthat continues
to
hold its pure geometricform in a similarmannerto the geometricand
harmonic
ratioseries.
SacredRatiosof
SquareRoot
Reciprocal
3,000
t.732
o.577
It is importantfor you to remember

theseratioas you will encounter
them
manytimesin the future.
THIRD DIT'IEHSIOH
OF THE SSURRE
PHOI}UCESNRTIOS
1.986
1 -414
1.?32
L.699
E.?E?
B-5??
DIRGOHRL
OF THEGUBE= 1.?32
nEcIPnoGALOF 1.?32 = 6-5??
If you reviewthe diagrams

on 1-3youwill seehowthe squarerootof 3 also
canrelateto the geometricratios1.618and 0.618andthe squarerootof 2
relatesviathe squarerootof 1.618(L.272).
The systemof ratio relationships
evolvesin a strict mannerand leaves
nothingto chance.
TheKeyRatiosdivisions
between1 and2 for our purposes
sofar are:-
r.272
L.4L42
1.618
1.732
In a contracting
modewe usethe reciprocals
of theseratios:Thereciprocal
of
a numberis the ratioof thatnumberdividedinto1.000.
The most impoftant division of I.OOOis half or 0,500
following
between
0.500and1.000are:0.786
SacredGeometry
o.707
0.618
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and the
o.577
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The4th Dimension
of the Square
If we join two squarestogetherand measurethe diagonalrelationship
the Squarerootof 5.
between
the two extremecornerswe getto discover
SacredRatiosof s.000
SquareRoot 2.236
Reciprocal
o.447
pointfor you to consideraboutthe squareroot of 5 is that
An interesting
of 2.236is 0.447andis
2.236is the sumof 1.618and0.618.Thereciprocal
alsoan impoftant
ratiofor ourconsideration.
IIIfiGOHRLOF TlfO SqUfinES = 2.236
PRODUCES
RfiTIOS
1.066
2-? 3 6
t.60B
5.BBB
1.BEE
6-447
E.zES
ArithmeticRatios
ARITHMETICMTIOS are generatedfrom the simple division of whole
numbersby otherwholenumbers.A few examplesare listedbelow.
OneOuarter
One Third
One Half
Two Thirds
ThreeOuafters
0.250
0.333
o.soo
o.667
0.750
formsas a
Arithmeticratioswill playa part in the construction
of geometric
marketworksbetweenthe majorcardinalratios.The ratiosthat will form
formis workingitselfout
aheadcanbecomepredictable.
Eachnewgeometric
Thisat first mayseem
from the way the previousform hasbeenunfolding.
difficultto recognise
becausewe haveso manyratiosto considerbut it is
possible.
If you wishto makea completestudyof all theseratiosandtheir originsI
wouldrecommend
by RobeftLawlor,published
the book SACRED
GEOMETRY
byTHAMES
& HUDSON.
SacredGeometry
RocketScience
In the past18yearsI havehadthe misfoftune
new
the difficulties
to discover
studentsrun into when they are confrontedwith more than 3 thingsto
consider.
I haveto tell you that it all seemslikesometypeof RocketScience
in the beginning.But I havewaysof workingwith it that can reducethe
confusionmostof the time. It seemsnow that I am retiringthat I should
makea concefted
effortto try andclearup the picturefor all to see,instead
of just a selectfew.
published
Mosttheorieson Priceanalysis
beforeI camealongtaughtstudents
to usethe ratiosof 0.382,0.500,0.618,1.000,1.618and2.618exclusively,
as if that wasn'thardenough!Gannmethodology
taughtstudentsto workin
eighths,i.e., IlB,2lB (U4), 3lB,4lB(Ll2),5lB,618,718et cetera.Gannalso
taughtyouto workwiththe thirds,1/3 and2l3rds.Thishasjust confused
the
issuesevenfurther.
Studentsoften ask me, what is important?We have so many ratios to
considerthat the possibilities
are endless.I agreeand I wrestledwith the
problemfor manyyearsbeforeit became
clearto me,
I cameto the conclusion
that everygeometricform had to makesome
LOGICAL
whenit cameto proportion.
SENSE
If it didn'tthenI couldcastout
geometric
the ratiosaheadthatdid notfit the unfolding
form.
Whatis impoftant
to remember
allthetimeis this:If a geometricform is workingout relationships
to saythe square,thenthe
nextcardinalpointof the geometric
formwill relateon ratiosof the square.If
the geometricform is currentlyworkingalongon geometricratios(the Phi
group)thenthe nextcardinalpointwill relateto the Phigroup.I referto this
phenomenon
Thesamegoesfor geometric
formsworkingto the
as RHYTHM.
groupof ratios.
Arithmetic
The benchmark
divisionof 1.000is a half(0.500)so that is wherewe start.
Equality
is 1.000to 1.000anddoubleis 2.000.At leastonethirdof the time
geometric
formswill unfoldon the Phiseries(1.618and sequences
thereof)
proportions
of 0.382,0.486,0.618and0.786.At othertimesthe sequences
will switchto harmonics
that is whywe
or the ratiosof the unfolding
SQUARE,
get ratios of L.4I42, 0.707L and 0.354 determiningproportionsof
importance.
formstakeon
Thenwe havethe 3'ddimension
wheregeometric
propoftions
matter
of t.732,0.577,0.333
a
of logic
and0.667.It all becomes
to workout whatthe geometric
formis expanding
to.
or contracting
Beforeyou determine
that a marketlevelis importantyou mustconsider
the
unfoldinggeometric
form,if it makeslogicalsensethengo with it. If not wait
picture
untilthe
clear.
becomes
Sacred Geomehy
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Geometric
Proportion:
so far we haveto consider
Besides
the cardinalratiosI havebeendiscussing
the rectangle
of two squares.
factored
Thiscouldmeanthat we needto consider
everyratioof impoftance
geometric
formswill contain
by 2.000,what I meanby this is that some
proportions
andsofotth.
or 1.236(2x0.618)
of 0.764(2x0.382)
At first these proportionswill not seem importantbut if you study the
geometric
completed
format its conclusion
theywill beginto makesense.
To becomeproperlyproficientat identiffingthe geometryin formsyou have
the myriadof possibilities.
to lookabovethe horizonsometimesandconsider
Noonesaidthiswouldbe easyas it is a scientific
aft formandrequireslogic
to workit to itsfinalconclusion.
all of
Withoutpattingmyselfon the backI havebeenableto understand
all
thesethings.I havealso beenableto get other peopleto understand
thesethings.Notto manybut I havefoundmy teachinghasimprovedwith
theyearsI havebeenat it.
It is importantfor me to get my message
throughto the studentswho have
cometo me for help.Nothingmuchelsemattersto me anymoreas I have
everything
I wantin lifeandif I don'thaveit I canbuyit nextweek.
Beforeyou can becomeproficientat identifoing
the futuregeometryin the
possibilities.
you
markets musthavea thoroughknowledge
of the geometric
Youcanonlyget this knowledge
by workingbackoverthe existinggeometry
that hasunfoldedbeforehand.
I havedoneall this for yearsandyearsso it
hasbecomesecondnatureto me. Sometimes
I takea littletime andjust sit
of
downwith a chaft and pull it apartfor hoursto reinforcethe principles
geometry
I havelearntoverthe years.
It is amazing
whenyou havea clearheadwhatyoucansee.
in
The bottomlineto all of this thoughis that the ratiosmustmakeSENSE
just
the progressions
they
becomeMNDOMnumbersandare not
otherwise
woftha bumper.
For trading purposeswe must be sure that we have a RHYTHMin
the ratios if we are out to select a price point that the market should
revensetrend on. And I guess that is the only reason why we
endeavourto use these methodologies.We want to have an edge
againstthe other market playerc.We want to know when to buy and
when to sell as fast as the market can tell us. I have becomepretty
good at it so there is no reasonanyoneelsecan't learn to do it.
SacredGeometry
Section 2= chapter2:
GeometricRatiosin Market Corrections:

In previous
of the way
explanation
booksI havemadea morethanadequate
wavemovements
canrelategeometrically
but I am goingto writea complete
newexplanation
for thistext.
Thebasicsof the theorythat marketwavesmustrelategeometrically
hinges
on the ElliottWaveTheory.
Elliottstatedin his theory that, "All Wavesof similardegreewill relate
geometrically
in PriceAmplitude".
Neveftheless
can
becauseof the complexity
and the way this phenomenon
occurwe needto approachthe theoryin a simplisticway first and then
extendourviewsto includemorecomplex
thinking.
To beginwith the currentmarketwavemaybe a correction
to a longer-term
trendor it maybe a continuation
of a largerdegreetrend.
Justsowe haveourfactsstraighta MARKET

WAVEis a legeitherup or down
points.
betweenobviousswing
Themaindirectionof the waveswill determine
if we arein a bullmovement
or a bearmovement.
CorrectiveWave Relationships
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[c],BryceGilmore2004
PRICERETRACEMENTS:
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Priceretracements
in an ongoingtrend.
arecorrections
Priceretracement
levelsareour number1 toolwhenwe arelookingfor levels
wherethe marketwill reverseandresumeits larger-degree
trend.
The38.2,50 and61.8arethe majorratioswe needto focusourattentionon
because
thesearethe levelsthat eventhe noviceanalysthasbeentaughtto
monitor.
Justthe samethe 38.2- 50 - 61.8will not markthe reversalpointsmore
thanaboutonethirdof the time.Therewill be timeswhen33.3,35.4,44.7,
48.6,57.7, 66.7, 70.7and70.7willSQUARE
THEGEOMETRY.
It is all a matterof whatwentbeforeto determine
if the 38.2- 50- 61.8will
workor not.
It mayseemcomplexto you rightnowbut onceyou knowall the otherways
that wavesof similardegreecan relateyou will have a 90o/ochanceto
determine
whenthe levelswillworkfor you.
To reallyunderstand
what I am sayingyou are goingto haveto be patient
andtake it one stepat a time untilyou can graspthe intricacies
of market
geometry
poweful
you
will everlearn.
andhowit is the most
tradingtool
Butbeforewe go on just let mesaythata priceretracement
levelon a 38.250 - 61.8on its own is of no valueto you unlessyou cantie it into other
important
criteriathatwill meldthe geometry
of the currentwavestogether.
CorrectiveWaveRelationships
Section2: Chapter-2
MarketGeometry
is not as simpleas manyof the so-called
Guru'swilltry and
tell you,but! It is not difficulteitherif you knowthe approaches
you haveto
followto keepeverything
perspective.
aboutElliott'stheoryin
I havea 4-waytestthatI applyto retracement
levelsbeforeI tradeoff them,
the testdetermines
if theyshouldmeananything.Wewill getto thatlaterbut
beforewe do we needto discuss
all the possibilities.
Whena marketis heading
intoa retracement
levelpricethat hasthe potential
to reversethe currentmoveyou will needto seesomething
elsethat agrees
withthe geometry.
Thesecouldbe:
1. Thecurrentlegis reaching
a 1:1witha similardegreemovethatwent
before.
2. Or maybeit's that the currentleg is approaching
a previouslesser
degreesuppottor resistance
past
price
fromthe
andthe
will SQUARE
a
retracement
levelwhenit testsit.
3. Then there could be an old top or bottomthat lines up with the
retracement
levelyouarefocusingon.
Let'stakethesepossibilities
andI will explainwhatI mean.
MARKETRETRACES38.2 - 50 - 61.8 on a 1:1 with a prior correction

and retests an old low or high:
Youcanapplythe sameprinciple
to a 44.7,57.7,or evena 70,7and78.6
retracement
at times.
L2
Section2: Chapter-2
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to
Thepointreallyis thatyoushouldalwayshaveat minimum2 goodreasons
tradeagainstthe currentmovefor a reversalif you want to remainin this
business
for the restof yourlife.
Tradestakenusingtheseprinciples
havethe abilityto be tradedwithverylow
you
proficient
risk.When
at settingup yourcharGthe rightwayyou
become
willseethe opportunities
in advance.
Anothergoodplacefor a reversalin a correctivemoveis whenyou get dual
retracement
levelsfallingon the sameprice.
thatyou need
Thenthereis anothercomplexsituationthat ariseson occasion
to be awareof.
Multiple combinationsat a level.
A situationlike this would mark a reversalat point D 95o/oof the time. If it

didn'tthen you would reverselongimmediately.D then becomessupport.
l3
Thesesituations
areset up wellin advance
if youlookcarefully
because
there
areprogressions
in the ongoingtrend.
t* of all XBwasa 50o/oretracement
of AX.
2ndYCwasa 38.2o/o
retracement
of AYanda 61.8of BY
3'dYc = XB
youshouldnevermissoppoftunities
If youdo yourworkcarefully
likethese.
Theycouldfall on a differentcombination
of ratiossuchas 66.6- 50 - 33.3
or 70.7 50 35.4. lust as long as they are in a similargeometric
progression
theyareimportant.
THE50o/oPRICERETRACEMENT
LEVEL:
The 50o/olevelof any previousrangeis an impoftantgeometricpointto be
obserued
for a reversal
of trend.The50o/o
levelis normally
testedin the early
stagesof anynewtrend.
Here'sa recent*ample fromthe S&P500.
t
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5O-"i!Retrocemeni
llain
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WAVES OF SIMILAR bEGREE
Egclefrailer
lo
date
t
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s&P5BA
ilete 83661?
hi
1815.flB
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?8?.58
030312
S3BZ1S
Ona day-to-day
levelof the intra-dayrange,the last3-dayor
basisthe 50o/o
2-dayswingor lastminuteswingis an impoftantlevelto monitorfor trading
oppoftunities.
Tradershavebeeneducated
to buyor selloff 50o/o
levelsandtheywill place
ordersat themin advance.
Youmayonlyget a bounceat themsometimes
so
if the marketthen breaksthe 50o/o
levelit is tellingyou it is goingfurtherin
the samedirection
andgivesyouthe opportunity
to rejointhe ongoingtrend.
I4
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Qcharts CSU
859. AB
ES63H-5
866.84
ABSOLUTELYPOETR.Y
IN MOTION
853.6B
86-6.AB
85?.BA
854.84
851.8S
848.64
845.8A
s,42.W
Look ot this!
839.08
aI.ll/?w
H ai n
61/31
gT/37
gt/3t
Here'san exampleof what I am sayingand it happensvery regularlywhen

you start workingwith the intra-daymarket.The first 50o/odrrstedthe
advancingcorrectionto the prior 2-day rangeand the second50o/owas
supporton the samedaystrading.Noticehowthe marketkeptcomingback
to test the 50 levelafter it brokethroughit. On the 4h attemptit brokeback
throughandcouldntfind suppoftuntilit arrivedat the 50 of the total range
for the day.It wasonlya S-pointbreakoutbut still5 pointson 10contracts
is
50 points($2500)with no risk whatsoever.
The second50 was alsoa buy
pointas it coincided
as a 1:1 equalto the morningcorrection,
definitelynot a
placeto holdyourshortto seeif the 50 wouldbreak.
Qcharts f,SU
858. A8
Signs of STRENATH
Srcqk of 1:1
Folsc Brreokof 50lc
856. AB
s54.80
852.66
858. BB
848. 88
This high
wos 507"
in thc SAND E'15Y
Ronge
5 0 %& l r l
848. BB
a44.SA
a4z,.aB
Enfries I seewhichhovesufficient reoson
848.AB
r Buy rrBuy StopReverse

r 5ell
re 5ellStopReverse
r Close
838.8B
ffi6.48
lla in
Doqblc
6IT38
BLTST
aL/31
BI/37
aIr3l
aI/31
Wearegettingjust a littleaheadof ourselves

withthe sellat the 1-1in green
but this was a chartI had preparedfor my S&PDiary in fact manyof the
chartsI will useareonesI havebeengathering
togetherfor somemonths.
l5
Section2: Chapter-2
Trading to WIN Course- One day at atime
Hereis anotherwayyoucanusethe smallerdegree50'sto get intoa lowrisk

position.You haveto makesure it coincides
with a priorsuppoftof some
you
significance
would
not
risk
more
and
than 1 pointon a tradeentrylike
this one.Thetriggerto takethe tradein the first placeis the 7 pointsdown
hasoverbalanced
the prior6 pointscorrection.
FRIOR,SUPPOR,T
-7^?,
Intro-doy 5 minutahors
TAR6ET 1.7
$ign of Weqkness
Youmustalwayshaveseveralreasons
for takinga tradeif you wantto be a
youcanfindthe better.
winner.Themorereasons
THE61.80loRETRACEMENT
LEVEL:
The sameprinciples
levelas trading
applyfor tradingthe 61.8 retracement
the 50 retracement.
Youcanusethe 61.8retracement
on movesdownto as
smallas4 pointsbut it becomes
socloseto a 50 it doesnot mattermuch.
The 61.8 will commonlyoccurin the earlystagesof a new move,say for
instance
the firstcorrection
aftera doubletop or doublebottom.
Section2: Chapter-2
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Tradingto WIN Cowse - One day at a time
It can also occurin the middleof a wave seriesand is a very common

retracement
levelin the S&P500
futures.
THE38.2oloRETRACEMENT
LEVEL:
The 38.2 is suited more to larger rangesthan the 50 or the 61.8

retracements.
t
t
The38.2nearlyalwaysprecedes
a continuation
of trendafterthe markethas
hadoneor moreoriorcorrections
in the currentseriesor the initialthrustis a
very strongand expansive
move.The dailyor 2 daytrendwill haveclearly
changed
directionbeforeyoucanrelyon the 38.2asa solidlevelto anticipate
a reversal
andcontinuation
movetakingplace.
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Qcharts CSU
936.BB
933.AE
DOUI'NbAY AFTER,INITIAL STRU6SLETO 38.E

t3t^4
I|3A.BB
lsuindc
rl lhc
$t.2 lcvd
sz?.EB
+5
sz4.aB
fjzr.AA
+z
11:33
dl I
3 8 .2
3S.2
918.BB
s15.BB
-18
g12.40
gag.Ba
986.B0
oI/86/2-;863
ESB3H_5
NEWS: Bush670bln stimulusplanfo fake o

longfime to ba pussedfhroughCongrass.
6L/47
VVg?
I7
EL/ffi
Bt/98
g1/gt8
3B.e& 6LB
4^6
SELL
CONHTR,II'IED
4^&
4^4
3^4
3^4
-4
OUER,
B.4LANCEb
I am puttingthischaftin here,asthiswasthe waythe markettradedintothe

page.I willexplainthe implications
38.2& 61.8shownon the previous
of the
1:1'sgoingintothe highfor the dayas we moveon. Butfor the momentyou
cantakeit frommethatthisgeometry
wasa signalthatthe chances
the 38.2
wouldstopthe marketin its trackswasa 100/1ONbet.
Here'sanotherinstance
of a 38.2retracement
in the bearmarketfrom2000.
The highin January2002wasan exact38.2on the SPX(CashInde<).The
priorwavesof similardegreehad madea 50 retracement
at the May2001
high.
The correction
from the October2002low retraced23.6whichis 0.618of
38.2
llaue Trad.er
1839.BE
i{SEHtT
S&PsEB
This 23.6% retracemanthos

bearishtechnical implications:
1559.68
14?9.BB
1399.aa
1313.BB
1239.BB
1159.BB
1879.E0
sgs.BE
gls. EB
83S.BB
rareek
ending6th Dee
Opan936.31
High 954.28
Low 895.96
Close 9L2.23
?5S.BB
l-laitl
tZHsu99
lEJunBB
ZEJanBl
0?SepBl
l9flprEZ
BEIlec{Z
At the timethe 23.6hadbearish

implications
andthe marketdid decline167
pointsdownintothe March2003low.
18
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1:1 PRICEMOVESWITHIN CORRECTIONS:
1:1 movesare very commonin the S&P500.I have beenteachingthis

phenomenon
to studentsfor manyyears.
Theycan comein two's or three'smostof the time and offer a possible
confirmation
that the trendwill reverseif the end pricefallson a geometric
levelof the waveof similardegreethatthe marketis correcting
to.
Thisdiagram
shouldexplain
whatI mean.
li igh r
tA* KE:]$OriREdl I l
{.1
Tl{l
..,- I "--,
'r':":-l
i ;
';.'i'i
,'\
:
_;
't ";
:-l
i-1
iI-i
\'i'.'
i : ' l
'jI
thi! litil iTi[i-cdtl ba

,TrlI|'{rOl.:l:i :fi0n
-:"i
1..'t-
r-i*ir-fir-ri
, J
t]t t l
csu
l-r w
"",^
evcl"
-".t
j..i
_l
orifl
'Bull
r {i 1
fii
fi I
.,il
Il:
i l
l.-:..i
'li
l i j
{:
I ttttr
-t-iIl.
' i i - r - ' i -t-.
a-: i
i_T-i
i :
ri\
i - - 1i
i.;.i iJi-;,J
: - : .
i,.i / ' \ :
r-i-l
s9I,
i -i
''t
-:"ir i
'f
i -i
ill
Woi ai- 1, 2.& i.i*i l i b r o f e

t-:-j-i
i .-rj-I'
-:
,'i--i i , i . l
": r-i--r
':'l
, "i'i-.-I.
i 1 :j f
i,lf'r
t:
i i
': _f'
Ii,.',
:il
rll',
ilu
Knowingwhat is possible,will give you the EDGEto work out wherethe

marketcango to andwhereit cant go to, this will oftentell you what it is
mostlikelyto do next.
Whenyoubreaklevelsthat historically
havea historyof workingthe marketis
telling you the currenttrend is strong.If the marketreverseson the
predictable
levelsit is tellingyou that the priortrend couldstill be strong.
Whichever
waythe marketgoesit is tellingyou a storyandif you listenyou
willseethe nexttradesetup easily.
ThefirstthingI do whenI realisethe marketis in a correction
is to calculate
the retracement
levelsof the currentrangesandthen applythe 1:1 rulesto
seeif theywill comeout at anyof the importantretracement
levels.
If the levelsbreakI staywith the movein progress,if the marketreversesI
go withthe newdirectionfollowingthe sameprinciples.
By doingthis I can remainflexibleand am alwayspreparedfor a situation
whereI cantakeadvantage
of anyfastmovesthe marketmaymake.
GOINGINTO DOUBTETOPS:
Whenyou are headinginto a Doubletop it is impoftantthat you havesome

waveequalityas the smallerwaveshaveto "Squareout" at the top to give
youa clearindication
to SELL.
Therearequitea numberof otherpossibilities

buttheseareyourbestbets.
Bearin mindthe doubletopsI am referringto couldoccuroverseveraldays
or evenseveralweeK.
For the doubletop to attract sellingpressurethe News shouldbe in
agreement
andthe wavestructureheadingintoit shouldmakesense.
If the wavestructureand the Newsis not in agreement
then the prudent
thingto do is to waitto seewhathappens
or buya breakoutif it comes.
Anytimeyou get a significant
reversal
on a doubletop youwill haveplentyof
timeto evaluate
gathers
the situationandestablish
a positionasthe evidence
itself.
If the top turnsout to be impoftantyou will get the signalsas the future
marketunravelsand you can use all the other techniques
we havebeen
discussing
to establish
a shortposition.
Shott-termdoubletopsare morereliableover a 2 or 3 day tradingperiod.
The longerapaftthey arethe lessreliablethey becomeand are likelyto be
brokenor the marketwill neverreachthemandcanjust fall short.
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GOING INTO DOUBLEBOTTOMS:
Theonlypractical
ruleI havefor knowingthat a doublebottomwill holdis if
thereis an obvious
1:1goingintoit.
Knowing
for howlongis alwaysa problemin a fallingmarket.
BeforeI wouldfeelsafethat a bottomis in for anyreasonable
amountof time
the current2 or 3 dayswingwouldhaveto retracemorethan38.2olo.
Majormarketlowsseldomoccuron doublebottoms,theyareeitherexceeded
by a little(falsebreaks)or theyjust don'tgetthere.
Nevertheless
doublebottomsoccurall the time in the intra-daypicturebut
theyarenormally
onlygoodfor intra-day
trading.
as;D
'i:-tfE
t',
't'i'
,,1/'|
[.'
/-.i
fi
f:,
I I
at;
f.
I \i
\
,\
ll' fli
I
:\
:,i
l
l:
1
t, 'l"
:I
2[
f
i . i '
:-'i i
-: r;,'.
b{ UBt
i'1lr,Ti I/1115
Theonlypractical
adviceI cangiveyou otherthanthis is to waitandconfirm
thereis a bottomin beforeyoutradeit.
If the originalbottomyouaregoingto doublewith is an existingcardinalratio
retracement
of a largerrangethen it hasthe potentialto hold.Youwill have
to evaluate
thatsituation
asyoufindit.
Whenyou seehowstructures
canrelateoverallin bullandbeartrendsit may
add somelight to your overallanalysisdependingon the currentmarket
position.
POSSIBLE
EXCEPTIONS
TOTHE1:1 OVERBALANCING
RULE:
When the current correction overbalances a prior correction of
similar degree, i.e., the market correction exceeds the 1:1
measurementof the prior correction.
The nerG geometry where the market correction may terminate
couldbe on a L;L.272or a 1:1.618alternatewave relationship.
A correction
in a bearmarketcouldtakeon the followingform.
Regarding
the overbalancing
rule:
If a correctionin a trend (CD) overbalances
a prior correctionof similar
degree(AB)the normalconclusion
is that the trendhaschangedto a higher
you shouldstill be awarethat the correctioncan in
degree.Nevertheless
some circumstances
extendand finish as a ratio of the alternatewave
correction,
i.., CD:ABin Ratiosuch as L.272and 1.618are the main
possibilities.
The chances
thiswill happenare moreceftainif for instance
CD
werea ratioof XCor BCor both.A ratioof 38.2or 50 of CDto XCwouldbe a
betterreversal
signalat D in mostinstances.
Whenyou havea situationwherethe marketreverses
in circumstances
such
as this, on a greaterratiothan 1:1 of the Alternatewaveof similardegree,
dont treatit as a guaranteed
continuation
signuntilthe markethasretraced
morethan61.8of the CDleg.
I haveseenmanyinstances
wheremarketsdo continueon down,but I have
alsoseenmanyinstances
wherethe marketwill retraceonly 50o/o
of the CD
leg and then reversebackon up and continueon up. The bestthingto do
whenthe currentcorrectionhas overbalanced
its Alternateis to take each
geometric
signalas it comesandseehowthe marketreactsto it.
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COMPLEXWAVE STRUCTURES:
that canoccurwithinmarket
Hereis an exampleof someratiocombinations
relyon appearto be unclear.
wheneverything
structures
elseotheranalysts
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I am not goingto explainwhatit all means,I just wantyouto be awarethat

to explainwavestructure
throughthe useof sacredgeometryit is possible
justify
WAVE
THEORY.
enoughto
the ELLIOTT
adequately
This is an actualexampleof how a seriesof wavesof largerdegreein an
in the
uptrendin the S&Pmarketcameout. The smallestwave-amplitude
serieswasCD at 34 points.
In this casethe correctionthat terminatedat D was what I wouldcall a
RUNNING
CORRECNON.
of the
PointD coincidedwith a retracement
of BC at 0.707 (reciprocal
of the square
squarerootof 2) anda retracement
of XC at 0.447(reciprocal
rootof 5).
Theseratioscameout withinan accuracy
of 0.002overrangesof XC= 76.4
prices.
andBC= 47.9on the S&P1stmonthfuturescontinuous
Asyou pursueyourstudiesin the intricacies
of the marketgeometryI would
it is
adviseyouto keepthingssimplewhenit comesto trading.Neveftheless
you
imperative
for
to understand
thatthesethingsactuallydo exist.
23
BearMarketTrends:
Weareveryluckynowto havea completedbearmarketin the S&Pto study.
Duringthe bear marketfrom 2000to 2002I was neverwrongaboutthe
marketdirectionfor morethan a day,I wasableto identiff everymajorturn
alongthe way usingsacredgeometryof time and price.As otherswere
predictingthe bottom time and time again I remainedfocusedon the
we
downtrenduntilthe markethaddeclined50o/oin value.Notwithstanding
tradedallthe ralliesup fromprogressive
lowswhentheywerein progress.
EgcleTrailer
S+P 506 CffSH
IIARXERS
tsl
6BE3Z4
1552.87
TO
azl
f,,zt01B
?68.63
AAoy2OOl
5O%Retracement
Jqn ?OO2
38.2f" Rstrocement
TI}IE ItCLE
ilags
S3E
degree
913
ueeks 132.9
nths
38.6
gears 2.536
RRTIGE
it0uE 7fr4.24
B
50.5
Sqr9d
Zl:Bj
Thetwo majorcorrections
in this bearmarketwerepredictable
in as muchas
theywerepefectexamples
of ratioin wavesof similardegree.
TheMarch- May2001bearmarketrallyterminated
of the totalmove
at 50o/o
downfromMarch2000to March2001.Pointsin thisrallywere235.
- January2002bearmarketrallyterminated
TheSeptember
at 38.2o/o
of the
2001.Pointsin the rally
total movedownfrom March2000to September
were233.
Thetwo consecutive
bearmarketrallieswereequalin amplitude.
Thefirstthingto remindyou of is that corrections
shouldneverget largeras
If theydo then it is reasonable
to assumethe bear
a beartrendprogresses.
(June
trendhasterminated.
The currenthigh
2003)is now up 246fromthe
October2002lowandwouldindicatehigherlevelsto comein the future.
BearMarket Trends
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TheMay2001highwasa no-brainer
at 50o/o
of the existingbearmarketand
impliedfufther downsideto come.The economicrepoftswere becoming
increasingly
negative
at thistop.
TheJanuary2002highwasalsoa no-brainer
at 38.2%of the thenexisting
bearmarket. Therewas very little doubtthat the 38.2 and the 1:1 were
goingto mounta formidable
technical
obstacle
for the marketat the time.It
wasbecoming
moreandmoreobviousthatthe eventsof September
11,2001
werehavinga devastating
effecton business
was
activity;the airlinebusiness
in a disastrous
state.The Fedhaddroppedratessignificantly
by thistimebut
unemployment
wasrisingat a rapidpaceandwe werestaftingto hearnews
of massivebankruptcies.
As moreand more bad newscameto passthe
just
market continued
to selloff.
TheSeptember
2001lowsupportcamein 10 daysafterthe 911disaster
and
to be honestno onecouldhavepredicted
But by takng
this low in advance.
thingsonedayat a timeit wasclearwhenit did.
Ggclelrailer
it\arch 2OOO
S*P 568 GffSH
FRIf,ECYCLE
TRl BBB3Z4
Pr
1552.B?
TB]
ALBSZZ
Fr
1881.19
The leg down from the 5O?,

rstrocemcnt raros78.6 of
the /Ularch2OOO- Mqrch
2OOlnst declina.
Eng 4?1.68
H
3A.4?,
FROJECTIT]H
TCl EL&SZZ.
Fr
1315.93
tT]
B1BSZ1
Pr
344.?5
Whew: Grim
Week Ends
Shroudedin uncertainty,
U,5, stockindexesFost
historicweeklylosses,
lrlarket Uodete
Efiillr*.no
Dow Jonas Indusl"iols Indcx

The na*et ruas wcolc bcforc
nowit k wcoker..,...
Scptcnber 2001
Bear Market Trends
25
NEXT2 DAYS:
S&PsBE
date B1B5ZZ
hi
1315.93
Markets
Rise
Investors
werefinallyin a
pushing
buying
moodtoday,
theDowup367pointsandthe
78.
Nasdeq
Market Update >
Ebr.tt
About rt F
(il'l.cortr
s44;?5
rBushfreezesassetsof suspectedterrsrists
818S21
dat
*londay 24th Scptrember 2001
B1B8Z4
THE FOLLOWINGDAYS:
l.lave Trader
fift ILf
Ilate BIBSZZ
TffI 1BB1.19
Ilate BlBgZ1
tBI
944.?5
ilnge 138.44
Hoot
11.68
Sqr9it
386
,507c
61 doys Uf
]l[il'l']
PERCEHTfiGE
-12.62g
>
<
14.449
WATERFALL}ATTERN
IIECBEE L77
uib
a.772
uib
B. ?46
ueeks
ZE.!
Uears 8.4S1
l{ain
;ht['\r
ZZFebBl
B9HprBl
Srings
U?
Six Alonths 180q
Z5}lag8l
L3JuI61
Z$ffugEl
ZZOctBl
Thetimingwaspeffectfor a technical
21 low.
reversal
at the September
Gann'sEquinoxdate for a reversalcombinedwith a DynamicTime ratio
between
the previous
up swingat a 2:1 to the day. Sixmonthsfromthe prior
majorlow.Allthe thingswe havelearntto monitorovertheyears!
It wasallthere...
Bear Market Trends
26
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January2AOZand March2002 DOUBLE

TOP:
l,laue Trader
BftII,T
/Ulorch?OO2High
Ilate B1BEZ1
tHI
S44.?5
Ilate EZB313
rBl 11?3.34 I
Fnge ZZ:t.19 r
Boot 15.14
Sqr9il
Jon 7th
Tolol Beor
Rclroccncnl
33.e
835
DoublcTop
PER[EI-{TflGS
>
(
zL.zB*
-19.5Utr
NEGNEf, ffiB
uib
1.272
nffYS
Uib
1?S
1. ZBB
r,teeks 25,6
gears B.5BB
llaiu
t80o-
68HarB1
B1Jun01
??ffug61
ZZFebBZ
Zlt{agBZ
March2002 high: This was anotherno-brainerin the progressive

bear
market.Therewas alsoanotherimpoftanttimingelementthat cameout at
the doubletop that is wofthmentioning
for posterity.
l.lave Trader
Ilegrees
157 EZEZZA
tzl BzB319
Jon.Tth
rlA.ini
Triple Top
II].|E... .
f,alendar
27
Ilegrees
z 7 .E
Ilisplag
z7
}IEEHS
3.S
YEfiFS
B. B?5
44
Doys
?7
boys
1.OOO' 0.618
P n I C E. .
HRI{GE
98.58
IHRHGE
s.zw{
H ai n
B65epB1
Z6tlctEl
15llecE1
BZFebBZ
Z4llarEZ
l5l,lagEZ
Thereis reallyno excusefor missingSIGNSlike theseif you understand

marketgeometry
andthe classic
teachings
of Elliott& Gann.
BearMarket Trends
27
SOMEMARKETLOGIC:
Whenyou arriveat a decisionpointthat seemsto be of a majordegreeyou

possibilities.
shouldinvestigate
all the technical
The moreimpoftantthe signs
you canseeat workthe better.Somebottomsor topsin the marketwill not
beasclearasthe onesI amshowingyounowbuttherewillceftainlybesigns
for youto follow.
As my policyis onlyto tradeintra-daynowthe majorturnsneverhaveme
holdinga positionfor very long,but it is handyto knowwhat the general
marketdirection
will mostlikelybe.As I go fromdayto dayI seethe smaller
wavesworkingthemselves
into completion
and
and I can trade backwards
fonruards
takingadvantage
of the ebbandflowof the market.
I havebeenstudyingthe otherplayersin the marketfor well over20 years
andit neverceases
to amazeme howpredictable
theycanbe at times.
Whetherthesetechnical
thingshappening
in the marketare because
of some
preordained
just
naturallaw or
becauseof the actionsof tradersactingon
pre-taught
technical
is
education not very importantto me.Thefact is these
thingshappen
andthatis allI careaboutasit givesmean EDGE.
I alsoknowonethingfor surethat marketscanonlygo up or downbecause
morepeopleare buyingratherthansellingor vice-versa.
If theystaftbuying
going
or sellingin forceaftera majortechnical
signalI am
to followthe flow.
Whatevertheir reasonsfor buying or selling there is always some
fundamental
reasonbehindtheiractionsthatwill makesomesenseaswell.
It maywellbe that whena marketis fundamentally
readyto makea reversal
practiced
it takestechnical
percentage
signals
by a large
of tradersto come
into syncto tip the balance.
Thiswouldbe the onlylogicalexplanation
if the
marketswerenotworkingto somepreordained
naturallaw.
Thiscouldexplainwhyat timesit is nearlyimpossible
to explainsomemarket
highsandlowsthat nevermakeexactgeometrical
sense.
Nowsomepeoplereadingthis pagemightwantto callmea hereticfor saying
this nowafterall the booksI havepublished
subjectin the
on the geometric
past.But I will haveto livewith that if it is youropinion/because
I am only
you
telling howI feelrightnow,that'sall I everdid in the pastanyway.
The thing is I startedout lookingfor waysto forecastthe future and as the
yearspassedI decidedit wasa fool'serrand.Forecasting
wasfun but it never
reallyhelpedme makeany moneytrading.To makemoneytradingall I had
to do was readthe marketone day at a time andthat is how I havebeen
doingit all my life.At timesmaybeI thoughtI wasdoingsomething
elsebut
now I realiseit was only my constantdailywork ethicthat hascontinually
mademea successful
trader.
BearMarket Trends
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Tradins to WIN Course- Onedav at a time
THEJULY246,2OO2LOW:
A flashback
whenI waswritingthe 1* Tradingto Win
to August22nd,2OO2
manual.
Thisis whatI saidat thetime.
As it turnsout my ideaon how wavesof similardegreeshouldrelatehaskept
my mindin the right directionthroughoutthis bearmarket.
Ggclefradu
ilRnrcns
tsl
Ef,03u4
1552.8?
m
tzt
En?24
7?5.68
III{E EYCLE
dags
852
degree
B:l?
ueeks IZt.?
lrths
Z.fj.tr
Uears 2.fr6
NRNGE
S+P 5BB GASH
2000
HISH
AuErst 22nd,2DO2:
SeP5m hasrnadea significonttechnical
Lorru
ct this tine horing relracad tO years
of goinsby 6LB and follen 5O%in
fronr tha all tirnc yeor 2OOOhigh.
50% FALLIN VALUE
f*ffi'
sqrsd\!QS,/
Rightnow a solidtechnial bottomhasbeenregisteredand it is onlya matter

of time to see whatthe endresultwill be.
From my point of uiew I have been trading the upside more than the
downsidesincethe Juty 24 low - but then as you read more chaptersyou
will seethe reasonswhy.
Situationright now is that the S&P500is tradingat 950 up 175 points from
the July low. Thepreuiousralliesin similardegreewere235 and 233 poinB
so it remainsto be seenif this rally can exceedand overbalancethe CYCLE
DEGREE
andstaft a newseriesof wavesof similardegree.
As far as I am concernedthe trCLE bear marketis still intad until we take
out the 38.2 of the total declinefrom 1552to 775. Thatwouldmeana level
of 1075has to be exceeded.Timewill tell, in the meantime it is businessas
usual.
775wasthe July24frLowandthe rallyup fromit failedthe dayafterI had
writtenthis, the thing was that the August22ndhigh of 966 basisfutures
didn'tmakea hellof a lot of sensegeometrically
thanthe percentage
OTHER
increasefrom the July 2001low to August2001highwas identicalto the
percentage
increase
fromthe September
2001lowto the January2002high.
BearMarket Trends
August 22ndr2OO2Bear Market Rally High:
l.laue Trader
IZBE.8E
sfl Itt
lst Month ConiinuousFulures
1ffi8.94
11zs.0a
1888.BB
1848.09
1008.08
+134.8
968.BB
sz8.oB
888.88
Augusl22nd High didn't quile moka

the l:1 or the 5O of thc prior ronge
848. AE
8S8.A8
?68.64
I'lain
05Feb0Z
l5llar8Z
ZSftprBZ
B4JunBZ
lSJulBZ
57.7
retroce
Z3AugBZ
Nowthesearethe situations
that createa dilemmafor you.The marketjust
failedto makea 1:1 with the priorwaveof similardegreeand it alsojust
failedto makeit to the 48.6or the 50 retracement.
The48.6wouldhavebeenat 969andwouldhavefittedwiththe 1:1- the 50
wouldhavebeenat 975. The highwas966 on the futuresand965 on the
cash.Neveftheless
the marketreversedand went on to makea new low
whichjust brokebelowthe July low by a minornumberof pointsand that
didn'tmakemuchsenseeither,I am nowtreatingit as a biggerpicturefalse
breakbecause
of the wayit reversed
so quicklyat the time.
S&F5gB
ilate 9,ZBBZZ.
hi
s66.08
2l Trcdingbays
Ggclefrader
ln
date
f{ain
34 TradingDoys
767.50
&ZIALE
WZSTZZ
Bear Market Trends
159.4
421915
30
Section 2: Chapter - 3
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The thing I have learntover the yearswhen the ratiosdon't comeout

perfectly
is to go withthe patternandmyotherrules.
1. Corrections
shouldnotlastlongerthan2 days.
2. The3-Dayswingis the fastestindicator
for the currenttrend.
3. Corrective
wavesof similardegreeshouldnot overbalance.
Following
theseruleshasalwayskeptmeaimedin the rightdirection.
THECOMPLETED
BEARMARKET:
CgcleTrader
BEARM/4RKET
2OOO-aOOZ
S*P 500 CASH
G
a
r
t
I
e
U
HRRHERS
tSI
BBA324
1552.8?
ro
IZt
: \4339 1
EZIAilA
764.63
S
t!
232.2
11
c
^ u
s 2
k
-40E.3
Keepo record of cverything
OnethingI wantto remindyouof againis to alwayskeepa recordof events.

If you do this thenyou will not overlookanything.It is easyto forgetsome
got pastyou.
thingsandthenrealiselateron thatan oppoftunity
As I saidwhenI startedwritingthis chapterthe S&Phascurrentlymadea
highof 1015two weeksago,that is 247pointsup fromthe October2002low
and226up fromthe Marcht2, z}O3low.Thewaveup fromOctober10h to
December
2ndran 187anddid notoverbalance
but nowit is a differentstory.
s&P500
rtate 83661?
hi
tBI4.Ag
This wos not enoughto OVER.

BALI4NEE thc bcor trend
+1E73
Cgclefrader
lr
d n 1e
?6?.5S
az7ai8
llain
BearMarket Trends
3l
Thisis howI potentially

seethe currentElliottWavepositionof the S&P,I am
presenting
this as a guidefor my studentswhoarecurrentlytakingrealtime
trainingwithme rightnow.
tlEEl;L'l
l.lave Trader
1682.A0
s&P5as sPX
llty ELLIOTT WAVE inlerpreiotion
right nouris this:
tSzB.aa
1438.0S
It moy not help me mokeony money

but it is o focus T con concenlrote on.
1356.BB
tz?4.89
D+th
1192.0B
Lt1'A.sg
1BZ8.0A
946.08
864. BA
Somcmay dispute the olb counl but it is

coveredin Elliolt's work:
78Z.gg
?EA.A8
I'ln i tl
B3l,farBB
TTBgfBE
Z9Jun61
ZZEebEZ
F
250ct0Z
BlJulB3
PointE was the July 24tr'2OO2low. Officiallythat is whereI seethe bear

marketended.The up and downmovebetweenJulyand Octoberalthough
still withinthe confinesof a bearmarketdid not extend.We couldcallthis
periodan adjustment
period.The interesting
thingaboutthe low on October
10th2002wasthe waythe marketjust tookout the Julylow on a panicsell
off dayandthenreversed
VIOLENTLY.
Within3 daysthe markethadregained
points.
over116
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t
AZ1A1B ??6.88
88?.38
?E?.58
BBZ.58
The conceptof the A-B base at the end of a bear marketwas twice
mentioned
writtenby
in "NaturesLaw"according
to the ElliottWavePrinciple
FrostandPrechter
[C] 1978.
BearMarket Trends
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Section
2l chapter+:
Bull MarketTrends:
Bull movesexpandin orderlyways,i.e., they movein stagesof minute
degree,medium-term
degreeandlonger-term
degree.
Eachdegreeof movement
withinitself.
shouldnormallyrelategeometrically
Whena moveof similardegreeis in progressany corrections
withinthat
moveshouldneverexceedthe amplitude
of the same
of any priorcorrection
degree.If theydo thenthe wavestructureis saidto be movingup a degree.
Waves
of similardegree:
Thecommonwavesetsyouwill getarethese:
Wave1
Wave2
1o Resistance50 of Wl
57.7of Wt
61.8of Wl
66.7of W1
70.7of Wl
78.6of Wl
From orior
Downtrend
Couldbea
38.2or 50
retracement
Wave3
Wave4
1 : 1o f W 1
1 : 1o f W 1
1:1of W3
38.2of W3
38.2of W0-3 1:1.618W0-3
44.7of W3
38.2of W0-5
44.7of W0-3 50 of W0-5
61.8of W0-5
50 of W3
t,272of W1
t.4L4 of Wl
1.618of Wl
2ofW2
2.618of W2
Wave5
1:1of W2
Thesearejust a guide,asthe marketunfoldsyouwillseewhatI mean.

Bull Market Trends
BullTrendCompletions:
is by
Oneof the waysyou can tell if a bull trend has reachedcompletion
lookingat the wavedivisions
of the completed
move.
Forinstance
the totalmovecouldbe 100pointsandthe amplitude
of Wave5
is 38.2it canalsobe 50 of the totalmove,in somecasesit willbe61.8of the
totalmove.
j
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i ,
i I
t - -
TERMINATTONPOSSIBILITTE
5 -+
r
L ! \ a t t 4 t
r a r
l - l
r 4 v t r
v g g * v + L r . r L g
J - r
]
i
o '
Oftenyou will find that becauseof the internalstructureof a wave seriesit

will terminatein a way where the last leg into the conclusionbecomesa
Cardinalratioof the entiremove.
Froma trading point of view it is betterto keep it simpleand only deal with
wavesetsin similardegree.
its
1.272
yourfirstexpectation
Whenbuyingbreakouts
targetis the 1:1
Bull MarketTrends
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,ot jffi
Price
Date
j
839,56
o3,/31,i03
,n,otu, p--3
Hrr^_.urc :
u : E H s j ts A ' i E B i e * t f f i i A F i e
This is vuhothoppencdover the

first two doys of the weak.Ii
is worfh renremboringhow
technicol buy ord scll poinis con
be if you do thc cElcs.
ALL WAVESCOLOR
C O D E DA R E 1 : 1 ' s
Hereis an S&Pchart I savedfor the two daysof March3l and April 1 when
we resumedthe establisheduptrend.We reversedbackinto the uptrendoff a
50o/oretracementon March31, 2003.
Sincethen this has beenthe progress.
t
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Price 961.74
Date 06/S,iO3
open 97612
High 9ffi.61
Low 973.60
cl@ 974-50
Csr % 5.0
# Bars 1
Morkei Trcnd in lAojor Degree
-36.6
30th June 2OO3:
Thc morket is o{J 41.7 fron its high this is
5 points mot'ethon the prior corection of
simifor de4reoso l'he rrcxl decisionpoint is
fha 52 ? dovn ot the end of lAoreh.If ihe
trand up is lo renroinintoci we hovoto stoy
obove963-96O olhervlisewc ovcrbolonce
betweenthe March31 lowandtoday'slow is the patternover

Thedifference
havebeenat it againbut it is hard
the pastfew days.The"windowdressers"
to saywho waswinning.Whenthe Junefuturesrolledovera weekagothe
or most
majorityof the short positionsthat expiredwere Non Commercial
were
funds
hedge
the
likelyHedgeFundsshoft positions.It meansthat
in the
to applypressure
thismarketallthe wayup andmaycontinue
shorting
daysahead.
Bull MarketTrends
35
Section 2: Chapter- 4
you will
territory,basistechnicalindicators,
As marketsmoveinto overbought
professional
the
findthatthe publicarebuyingin casetheymissout,whereas
traderis lookingfor a placeto sell.
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Professional
tradersarewellversedin markethabitsandthat is whytheyare
alwaysthe big winnersovertime.Theyare alsomarketsawy so they know
whena moveis runningand will buy with the trend if they don'tsee any
in the way.
barriers
t
t
fairvalue.
Interesting
timesasthe feelingnowis thatstockshavereached
we go
In anycaseyou shouldhavethe ideaby nowthatfor tradingpurposes
it wantsto go uF,go down,or
withthe flow.The marketis eitherindicating
restalongthe way.
As a traderit is not terriblyimpoftantwhetherthe marketis goingup or
down.Whatis impoftantto knowis whereit will find technicalsuppoftand
andcorrect.
resumethe up trendif it is bullishor whereit will hit resistance
dailytrend.
On a day-to-day
basiswe haverulesto followin anyestablished
Thetrendwill alwaysbe clearto you if youfollowthe rules.
trendit will havemorebuyersthan
If the marketis goingup in an established
in an
sellers.It is normalthat marketswill havemorepublicparticipation
just
public
The
not educatedin tradingbear
are
uptrendthan a downtrend.
movesandmostlytheyhavethe mentalityinstilledin themfrombirththatthe
onlywayto makea profitis to buy- hopeit goesup- andsit with it.
The publichavea habit of holdingpositionsway pastthe top of market
Whena bulltrend
advances
andget themselfwashedout on the corrections.
reverses
mostwill hangon untiltheirworstfearsare realisedandthenthey
willcapitulate.
or the 1:2.000
or 1:1.618
In advancing
markets
theylikethe 1:1or L:L.272
levels.
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thesepricelevelsyou haveto be watchingthe market

So as you approach
activityto seeif theyarelookingat a reversalto go backthe otherway.
Neveftheless
on anygivendaythe hardcorewill followrulesandbuyandsell
the levelsthattheythinkofferoppoftunity.
for theiractions,afterthe
Tradershavean abundance
of reasons
or excuses
eventtheywill tell the mediabut then it is to latefor the averagepersonto
the levelsat the timeto pafticipate.
actupon.Youhaveto recognise
Tradinga bullor beartrendis no different- it'sjust that in a bulltrendthe
publicwill havea greaterpafticipation,
evenif it is onlyviathe mutualfunds.
Bull Market Trends
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Tuesday1* July 2003:

Todaywe bouncedoff the 1:1 levelwith the Marchcorrectionafter a gap
downopening.
Themarketclosedon its highsfor the day.
S&P5BB
date BSBEl?
hi
1815.86
1:l Corrcction*
in similordagrec
Cgclefrader
ls
date
?88.58
8383tZ
l{ain
AfAfZq
Nowin the shorttermthe 3 dayswingonlyhasto turn backup to changethe

currentmoodof the market.We havethe 4mJulyholidayon Fridaywith half
daytradingThursday.
Thereis likelyto be a Iot of booksquaringgoinginto
the endof the week.
Echarts ESU
sse.BB
SEg.BE
ESB3U-5
3 Doy High- 988
sCI6.08
s83.68
-aPgttliglt: ?-E?-.9
98B.BB
S??.BB
g?4.98
s71. BB
Linein the $snd - 971^4
s58.BB
965.89
s6z.BB
This low is o lcrge degrec 1:1-->>>
EE,/3B,/ZAE3
l,lain
Timewilltell butthe lowtodayhasallthe earmarks

of a majorreversal.
Bull Market Trends
Sohowdoesthe ElliottWaveinterpretation
fit togetherrightnow?
S&F5BB
date ffi4617
hi
1815.33
W 3 : 1 . 6 1t8i m e sW l
W4 is 1:1rnrith
W2
EgcleTrader
The conclusionright now is lhot

the trend is up os longos tha lorar
of W4 ramoinsintoct.
la
itnte
?fifi. Sfi
B3'&313
l{ain
B3B1Z4
83833?
Eachday you just movealongand readthe signs.That is why it hasto be

onedayat a time.In ElliottWavetermswhilethe W4 low holdsup the bull
marketis still intact.If it failsthenthe wholestructureup to the highwould
countasanA B C conclusion.
l.lave Trader
ilegrees
tsl 838331
tzI B3B?81
T I I { E . ...
f,alendar
9Z
Ilegrees
88.9
Ilisplag
8g
Somaconventienollechnicol things
sean betvJeanthe lov.rs
l,tEEl(5
1 3 .1
YERRS
E.?.47
9O begreesTima :
tdain
Z?SepE?
lEHovBZ
lBJanB3
B?l{arB3
03Ha9BI
BlJul83
Justfor the recordrightnowtherewerea coupleof thingsI sawthat might

be in playat this low.Theyareon Gannrelatedteachings
that you canread
aboutin my DT&PAnalysis
book.
Bull Market Trends
38
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Wednesday 2ndJug 2003:

I
tntavatliF--=
I- Alsessions
5 P 0 3U
ir lrov,lUP
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Todaythe marketopenedandat first met resistance

at the 50o/oretracement
but laterworkedit's way slowlybackwards
andforwardsto the 61.8. The 3
day swinghigh was at 9BBso that is now up again.Nowthis has to be
countedas the secondday up so we do not knowfor sure if it is just a
correction
in a downtrend
or a newwaveup that will keepgoingandtakeout
that it
the 1015high.If it is the beginning
of a newwaveup we canassume
has everychanceof goingup a minimumof the amplitudeof W1 (108
points).Sofromthe lowof 960.5thatwouldtakeus up to 1068.5.Nowthisis
onlyhypothetical
at this stagebut I am just givingyou an ideahowwe can
useour knowledge
to mapout an ideaof whatto expectin the futureif the
confirmation
comes.
The 1:1 targetwith W1 wouldmakea 0.618:1with W3 so that would
definitelybe a logicalresistance
in any furthermarketadvance.The 1068
of the total bearmarket
areaalsocoincides
closelywith a 38.2retracement
rangefromMarch2000to October2002.
I am not makinga forecastherebecause
I will be takingit onedayat a time.
Someweeksago
Nevertheless
it is handyto havean ideaof whatis possible.
andRobeft
ElliottWaveexpefts(BobPrechter
a coupleof the selfproclaimed
of the bear
Miner)were still callingfor a markethigh and a resumption
marketto newlows.Theyhavebeenthe wrongwayaroundall the wayfrom
the Marchlow.Youknowtheybothpreachthe powerof contrarythinkingso
I won'tturn bearishuntiltheyarefinallyforcedto admittheyarebullish.
Bull Market Trends
39
Solongasthe recent960lowholdsI amgoingwiththe trendwhichis up.

Just for the exerciselet's havea look at the big pictureand see how the
markethasdeveloped
sincethe Octoberlow.
Cgclelrader
t574.ffi
HIGfl
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Morch ?OO0
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Oetober'2O02
L0l.l
?6?.56
zf,aaa3z{ - Z9,BSETBZ
= new
Therecenthighhasexceeded
the two previous
highs- old resistance
suppoft.Thosetwo highsare 966 and 955 respectively.
Whilethe market
tradesabovethesehighsit hasto betreatedas bullish.
The 50o/olevelbetweenthe 2002JanuaryhighandOctober2002low liesat
973.Whilethe marketremainsabovethe 50o/o
bullish.
it hasto be considered
Anotherthing is that the marketbrokethe simpledowntrend channelline
sometimebackandhasremained
aboveit for sometimenow.
Theseare just simplethingsbut they are thingsthat the investment
funds
haveto take into account.Manyfundshaveremainedsidelinedin the early
stagesof this rallyfrom March2003and mustbe gettingneruousthat they
havenowmissedthe bottom.The mediais nowpersistently
that
broadcasting
the USeconomicreportsreleasedrecentlyindicatethat the USeconomyis
rebounding.The
factsareencouraging
for higherprices.
fundamentally
With fundamentalconditionsthat encouragepeopleto invest in stocks
aboundI wouldn'texpectthe marketto go intoa tailspinlikewe sawin 2002.
Repoftsalsoshowthat there hasbeenrecordinflowsof moneyinto fundsin
recentweeks,this indicatespublicparticipation.
That indicatesthis current
moveis a bull market,maybenot in the samesenseas the bull marketfrom
1990to 2000but a bullmarketneveftheless.
Nowyou can haveyourchoice.Do you fight it or do you go with it? I think
you knowthe answerto thatquestion.
Bull Market Trends
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PREPARINGYOURANALYSIS:
Just in caseyou are not 100o/osure how to go about it - here is the

procedure:
1. You look at a LONGTERMchartand establishwherethe marketis
basisthe past3 yearsor so.
2. Nowyou go to the dailychaftandworkout wherethe marketis basis
the pastfew monthsto a year.
3. Havingestablished
the likelypositionrightnow,i..,if the marketis
goingup or down,yougo to the mostrecentmovesandlookat where
the supportandresistance
zonesare.
4. Onceyou have done this muchyou are staftingto tune into the
market.
Nowyou canworkto the 60 minute,15 minuteandthenthe 5 minutetime
frames.
Thesewill giveyouthe placeswhereyou needto watchif youwantto initiate
trades.
Thursday3d July 2003:
u @--fJ
t"t"'a lE6-*l
Price s7155
Ode 07fi}3io3
Time 89:30:00
Open 98625
Hsh 99425
LOW s85.50
Cle
989.00
Csr % -0.7
# Ear$
Vol
144,1S
r. snsessiom
Thursdoy3rd July 2OO3 Holf doy closed1:1OET
,rllI
<--- This spike di
Somev.rildswingstodoy: l didn't renlly

expect the 61.Eio comooui todoy.
Holf doy iroding todoy
The rallythat beganat 960two daysbackhasyet to confirmit is a W1 of a

new expansion.
Still it couldprovidegroundsfor a 1-2 with the deepspike
downto 974.5today,asthe Linein the Sandat 971.5is stillintact
Whenhalfthe regulartradersare awayon holidayit's not unusualto get a
suddenreaction
levellikewe didtoday.
off a cardinalretracement
Bull Market Trends
41
[c] Bryce Giknore2004
Let'stakethe holidayweekend
about
to summarize
whatwe knowtechnically
this marketrightnow.I am writingthesechaptersin realtimesoyoucanget
the ideaof howI go aboutthings,I don'tknowwhatwill happenin thefuture
but if I followmy rulesI amalwaysprepared.
Wecanstaftwiththe bigpicture:
TherecenthighJune17 qualifies
with
asa W3as it wasa 1.618:1expansion
the W1 from MarchL2. In Elliotttermsit wouldbe eithera W3 of a bull
marketor a WaveC of an ABCbearmarketrallyfromMarch12.
This week'slow at 960.5(Big pit Contractlow) qualifiesas a W4 in a bull
marketor a W1of a newbeartrend.
Today'shigh994wasa 61.8retracement
of the Junet7 (1015)highandthe
July1 (960.5)low range.Thisqualifiesit as eithera W2 in a beartrendthat
beganon June17or a Wl of a newexpansion
thatbeganon July1.
Qcharts GSU
1B16.BB
W3orC
ELLIOTT W/4VEPOSITION
1616.06
1S84.BB
99B.OB
!xtz.g0
!I85. A0
:t8B.gB
s74.BE
gbt-BB
s6z.Ba
!F6.ES
ES83U-58
r
r
g6,/13
a6,/1?rZAWl
|{a in
W4 or wr
:
r
|
BE/Lz
|
|
g6,/2A
r
i
AWZS
l
i
ffi/3n
l
l
g7/63
If you applythe ElliottRulesto the currentmarketpositionthe WaveCount

possibilities
areveryclear. 960as a W4 lowimplieswe go higherand994as
a W2implieswe go lower.
Soour largerdegreealternatives
areto buyit on a breakof 994or sellit on a
breakof 960.
The short-termtrend (3 day swing)is currentlyup, yet the current61.8
resistance
doesn'thelpthe Bullcaserightnow.
Positives
for the Bullcasearethatthe marketis stillabove973,966and955,
the levelsI mentioned
a coupleof pagesback.
Rightnowthe caseis strongerfor a bulltrendthana beartrend,i.., unless
the 960lowcomesout andconfirmsa downtrend
in progress.
Bull Market Trends
42
Section2: Ctnpter - 4
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Monday7u July 2003:

Whenyou see what has happened
this morningyou will knowwhy I am
marriedto thisbusiness.
The Globexsessionfrom Sundaynight traded up towardsthe 994 level
indicating
the marketwouldmostlytestthe 61.8resistance.
The marketday sessionopenedandwithin5 minutesthe breakof 994was
completed.
It wasa no-brainer
tradebuyingthe breakof 994.
0charts GSU
tw?.w
u&.08
ffi81.48
st6.80
61.8broken: Trad UP
s95.BB
s9.08
s{1.80
s6.48
9&t.08
SB.E8
s??.48
E?/6?/zg]A3
Laus
g?/BZ
1E:15
LEhZ.AB
1AE4.ZS
m81.68
1B83.Zs
W./A?
It's a toughlife@.A breakoutfroman established

suchaswe saw
resistance
todayis likehavinga licenceto printmoney.
Qcharts ESU
tgz4.ffi
18ffi.04
leLZ.W
1Bffi.SO
IEBB. E9
994.m
s88.m
s8z.@
s?E.m
sm.w
gFt.06
g7/97/m3
Rat ios
tPlrice
ab=
54.50 cd=
.14.?5 cil/ab= 0.8e1
The retracement
hasextendedto 82.1now,78.6wouldhavebeena levelto
watchso nowwe shouldexpectit to go higher.Thedoubletop at 1015is the
nextresistance.
arenow1000andin the worstcase994.
SupporG
Bull Market Trends
I hopeyou guys are learningfrom my day-to-dayanalysisof the current

situation.
I justfocuseachdayon whathashappened
on
andformanopinion
what levelsother serioustraderswill see as impoftant.Oncethey have
analysed
the importantlevelstheywill placeorderseitherunderor overthem
to sellor buy.
This is how the market flow works. The more buyers that are
present and the price goes up, more sellers the price goes down,
nothing else matters, it is a fact of life.
All that is important each day is to identify the levels the buyersor
sellersdeemto be critical to their current opinion.
S&P5BB
date S3861?
hi
1814.80
Just o lcminder - or vuokeup colll
PRICf,
ln
riate
RB=
S4.ZA
f,l=
fl-38
t,'ttfu
I-BEZ
?S8.sfi
83E3tZ
Scroll
rrr,
The bull trendfrom the March12 low is still well and truly intact;the only
thingthatwillchangemyopinionnowis a two-day break below960.
Tuesday8h July 2003:
Todayafter a lot of backingand fillingthe marketfinallybroketo a new
Futureshighof 1008.5fromthe 960 low.Youcanseethis marketis coming
underpressure
asit getscloserto a doubletopat 1015.
1818.BE
1BB6.OB
1AAZ.BB
gg8. BB
994. BB
Bull Market Trends
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wednesday9u' July 2OO3:

lffi--]
r'u"a ff---l
F Arsissions
Prbe 1000.43
Date 07r@O3
Iine 12m(x}
Open 999.50
High 999.75
Low g96IXl
Close 99l"fl)
Csr% 0.3
t Eers-120
Vol 17,42
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<-Vohenespikc on low bor
Thedaystartedoff in a choppyfashionand hadthe lookof a countertrend

dayafter 10:30amET.I loston the 1s two tradesbefore10:30amandwas
to
with the chop.I managed
1.5 points,I was not comfoftable
underwater
my
shortafterthe highof 1010at 1007^4and as soonas I had recouped
losses
closedout andquittradingfor the day.
Openinteresthasbeenbuildingup the pastfew daysso it seemsthereare
plentyof traderswho don'tthinkthis marketwill takeout the June17hhigh
of 1014^6.
Personally
I thinkit canbut it needssomegoodnewsto helpit along.Weare
The
into Q2 profitrepoftingso someextragoodnewsmaytip the balance.
if
linein the sandis stillat 994andthe 3 daylow is at 995.5so technically
thismarketbreaksbackthrough994it is in a weakposition.
Any moveup to the old highat 1014^6is surelygoingto attractextreme
sellingpressure
thingtodaywasthe volumespikeon the
but the encouraging
low bar of the day. It showsthat there are plentyof buyersdownat the
support
zone.
Bull MarketTrends
45
Qcharts CSU
16z4.W
ffi18.m
E:iE3U-3O
tA14.75
Rasisionce
1612.04
Whilethis markettrades above994 the doubletop

1014.75or breokouttradeis a reol possibility.The
something
marketis becomingcrompedright novrr
needsto aive.
Retrocement is now 91.3?.
1O1O
1086.gB
13]gA.W
sg4-m
SB8.EB
s8z.m
s76.ffi
s?a.m
s54.AA
g7/wrzh0.3
nat ios
lPlrice
ab=
54.58 cd=
49.?5
cdlab=
8.913
Let me explaina few morethoughtsI am havingat this time as they may

comein usefulto youin the future.
We toppedout on the 17h Junewhenthe W3 went 1.618of W1 and the
progressive
wavesin W3 went 1:1. Now everyoneworth their salt as an
analystmusthaveworkedthis out by now. Nextwe reversedbackup from
whatI am callingW4on a 1:1withW2.Theentirewaveformin majordegree
is"square"
to theW4label.(SeeS2:C4:P38)
Nowby my rulesthe onlywaythiscurrentmovecanreversebackdownis for
it to makea doubletop with W3 (1014.75)or go on to 1068to keepthe
integrityof the wavestructurein the samegeometric
form.Oncewe passed
(994)
move
from
1014.5
to
the
down
960.25we exceeded
abovethe 61.8
of
the maximumgeometricpossibility
that wouldhavesignedand sealedthe
fromthe March12hlow.
fateof the W3asa conclusion
In anycaseanytestof t0t4.75 is goingto be metwithstrongsellingandany
breakaboveit is goingto attractstrongbuying.This is very clearto me, I
hopeit is clearto you.
picturewe couldstaybelow1015andabove
Neveftheless
in the shofter-term
960 and still maintainthe integrityof the wavecount.WhatI am sayingis
that while the markettradesin this rangeit is a tradersmarket.I was
explainingratiosas we went alongjust so we havea "road map"of the
biggerpicture.Nowwe are in a "no man'sland"so to speakso it is very
impoftantto watchthe dailypatternsand usethemas a tradingtool.As we
have beengettingcloserto the old high (1015)the markethas become
Thisis because
we havetraderswho believeit cango
choppierandchoppier.
high.
higherandon the othersidetraderswhobelieve1015is the seasonal
The marketstillhasto tell uswhichsideis correct,thereis no needfor usto
decidein advance
allwe haveto do isjust followthe signsto makemoney.
Bull Market Trends
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ADDENDUM- 1* December2003:
Theprocess
thismanualhadbeendelayedfor overtwo months
of completing
sinceI completedthe originaldraft so I am addinga little extra to this
chapteras the S&P500todayhas finallyachievedthe target I havebeen
talkingaboutfor so long.
Here'sthe up to datelong-term
swingchaftsoyoucanseewhatI mean.
EgcleTrader
S+P 5BB CftSH
1 I l e c Z 0 B 3. . . . .
166S.95
FRICECYf,Lg
ifft
BaB3z4
Pr
1552.8?
tB]
B21618
Pr
?6fi.83
Fng 744.24
2
5B.5:r,
PRI]JECTIOH
ICI
EZtAtB
Fr
?6ft.53
tnt
B3L?8t
Pr
1868.E5
R
BB.32
'4 n g 335.
L:4
RRTIOS
Pr
E-38e
pr
S.383
'1
9.774
't
fr.774
of the total points

The high this morningrepresents
a 38.2 retracement
declinein the 2000-2002bear market.Alsotodaywe havea time factor
present.
highas well.The ls major
Thismorning's
highis in linewith an anniversary
highafterthe bearmarketlow.Willit holdthat is the questionrightnow?
Egclefrailer
I'IARHEBS
T5]
BZ1B1B
?68.E3
TO
121
1 Ilec 2963
S+P 500 CffSH
, This is as close os it gcts so if

i ii is not o high iodoy v.reshould
, go muehhigher:
i
lst 2002
tll becember
sSLZEt
1B6E.9s
TI},IEf,Yf,tE
dags
4I'l
degree
412
uleeks 5t1.6
mths
13.?
gears I.144
RAIIGT
it0uE 3BB.3Z
B
39.1
Sqr9d
8S5
Bull Market Trends
Vcry close to exocf

4-5=t
4-i = 3xO.618
$\arch 12th 2003
47
Whicheverway you look at it there is plentyof evidencetechnicallythat this
marketcouldhavea setbackat anytime.

But as the day wore on the tradersdidn'tseemedto be phasedaboutmy
targetand plentyof themknewit wasthere.I evenwitnessed
a floortrader
interuiewed
on Bloombergearlierin the day sayingthat the markethad
arrivedat a KEYRESISTANCE
LEVEL
andwastestingit.
liEEf+
- nc @r @s @oo @oaih @r*

i J E q r i u e s 'L f o f p r t n b r v a l s@
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09:00 10:00
U:oO
t2/ou03
13:00
!4:00
1e;00
O: {08225 H: loatso L:10815{,
P{ilbtf,d
by esgEl
(m,esiJnd.@J
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CSU Ilata
Current
82.75
ES-I}RY
Range
prior
ranges
f,I-BC
1.618
[i]"frE
1. 825
f,D-XR 1.465
Reuerse Cross
fiD_EC Z. TSE
Insiile
Cross
f,I]*Rn A.737
r iil
0utsirle Gross
B D _ R I ] 8 , 7 . 4 1 ' ' ,, , i '
Iloub le Crtrss ll,.,r"'
Hn-xc 4.15?
Retrace Z
cil- xc
3. 8fi5
ffI}_Xff Z.ABg
tz/81/83
Lnus
LB/Zg
Bull MarketTrends
It's not out of thc woodsyetl

By ony meonsbut of leost our
torget v.rosochievedtodoyl
1869.BA
1B7B.58
48
1455.75
1868.?5
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It hasbeena roughrideup to today'slevelsoverthe pasttwo monthsbut we

got hereafterallthis.
haveeventually
in April
is thatthroughout
the pastmonthsbeginning
WhatI can'tunderstand
"Guru's"
year
of
of this
Bob Prechterand Bob Miner,both self-proclaimed
of the 2000ElliottWavehavebeencallingfor a finaltop and a resumption
kept their
2002 bear market.Effectivelytheir forecastinghas successfully
footed
way
up.
newsletter
followerswrong
all the
andthe marketwill do everythingin its
alwaysa forecaster,
Oncea forecaster
power to prove you wrong. Now that the market is way above the
psychological
it wouldtrade
in a 5b Wave,the chances
1000levelandclea.rly
in the
remote
backbelowthe levelsof the 4* Waveof lower degreeare
area.
future.Therangeof the 4h Waveis the 1015-960
As I havesaidin the lastchapterof this boolgthe marketshouldeventually
keepgrindingits way up overtime.It will havesetbacKalongthe way,but if
yougo backovermyworkthisyearyouwill seethat I amwellawareof that.
of all the toolsused
Whatwill be will be, but it helpsto havethe knowledge
game.
going
you
their
own
to beatthemat
by othertradersif
are
CSUllata
Current lange
48.25
ES-IIflf
Sfightly exeeedso mqjor dagree 1:1
prior
ranges
34.25 1.1?5
48.25 4.ffi4
39.58 1.A1s
58.96 B.5SZ
51.25 S.?85
sB.?5 8.4S8
45.?5 B.8Sg
3A.58 1.328
4t.E
A.g?E
54.54 0.?3S
55-58 8.725
+E?15
-5L.25
Corractionshovenol overbolonced.
IZ/SL/E3
f{ain
g7lzL
the Trend is still UP.

I will leaveyouwiththisobseruation:
Whilstthe nextmajorcorrection
downdoesnot exceedthe largestcorrection
sincethe March12m2003low, minus56.5points,the majoruptrendhasto
be viewedas still intact.The hightodaywas 1070.5so the marketnowhas
plentyof roomto remainabovethe 1000level.
ElliottWaveis a great tool for trading;it helpsyou preparefor what is
possible.
morethana one-dayaheadis for fools.
Butforecasting
Bull Market Trends
Section2: Chaptnr- 4
Section
2= chapter5:
Alternate Waves& RetracementLevels:

Levelscoincide
LevelswhereAlternateWavesand Retracement
Combination
in trend
continuations
are extremelyimpoftantto lookfor as they cansignal
mostof the time.
Alternotc / Reiroca ment R,otioRevarsol
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CO,IABINATTONs
1: Uptrendin Progress.
Example
The marketis going up and is currentlyin a correction- the correction
on a retricementlevelof the previousimpulsewave(Green)and
terminates
on an equallengthto the previous
terminates
at the sametimethe correction
correctionin the series(Red). Ideal situationsare (38.2 or 50) direct
anda 1:1withthe 1* alternate.
retracement
WhenI havea situationlikethisgoingI almostalwaysbuyintothe weakness
belowthe 1:1level.
in thevicinityof the 1:1witha stopandreverse
Buy@4vrhen3-4=t-2
of 2-3
&3-4: retrocament
/;'n,
Sell
Sell below4 af 3-4 exceeds1''2
Alternate Waves & RetracementLevels
50
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Thesesituationsare commonplace
on a S-minutechart and offer you a
precise
entrylevel.
Example
in progress.
2: Downtrend
Thesamesituationappliesin reverse
to example1.
This is a strategyfor buying or sellingat the extremepoint of the
retracement.
The beautyof thesesignalsis that you havean alternative
to
you
not
tradeif the continuation
of the originaltrenddoes eventuate
because
pointturns
yourtradeif the wave3 termination
canSAR(stopand Reverse)
outto bea reversal
of largerdegree.
Reversolof largar degrce ai 3
The longeryou studythe geometrythat unfoldswithinthe marketstructures

youwill seethe obviouspointsof forcethatthe marketnormally
to.
adheres
An idaqlsituotionto SELLinto STREFIETH

2
1:1on at the 5O ratroca
AlternateWaves& RetracementLevels
Section 2: cnapter6:
The ReverseCrosst':
The Reverse
is a term I havecoinedfor a ratioanalysis
Crosstm
techniqueI
useto helpclearupthe picturesometimes.
Thisconcepthasbeenmentioned
in my earlierworkandinvolves
measuring
the relationship
to a completed
3 wavemovement.
of the 2ndwavemovement
l:l'19
-,-----:*-/'.
;"J--il;;il[;rffi,;;;j;;
By checking
the internalmathematics
of a structureyou will oftenfind the
geometry
binding
necessary
to alertyouto a trendtermination.
This diagramillustrates
the approachin an upwardtrend and the same
approach
wavesin a beartrend.
applies
to measuring
internal
Whena 3 wavemovement
extendsthe ratiocanneverbe lessthan 1.000so
in caseslikethisI wouldreferto the ratioasan Outside
Reverse
Cross.
It's a funnything but I haveneverseenmentionof this conceptanywhere
beforeI first broughtit up so I am claimingit as an originalconceptof my
own. I now expectanyoneteachingthis techniqueto referto it as Bryce's
Reverse
Crossin future.
Findinga future pricelevelwherethe marketmight meet resistance
or
price
You
suppoftcan be locatedin advance
measuring
using3
techniques.
wantto usethe Cardinal
Whentwo or more
Ratiosfromthe Sacred
Cannon.
ratiosfromthe samefamilyof progressions
hit on the samelevelthenthatis
wherethe priceis saidto "Square
up".
ReverseCrossTechnique
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Tradins to WIN Course- One dav at a time
geometric
Whenyou areworkingout possible
I usein
targetsthe procedures
orderare:
1. PriceRetracement
levels
2. Alternate
WaveExtension
levels
3. Bryce'sReverse
Crosslevels
Usethissametemplatein reversefor targetsin a beartrend.

Onepieceof adviceI cangiveyou is this:
1. If you find a levelwhereThe ALTERNATE
WAVErelates1:1 and the
RETMCEMENT
is goingto be 38.2,50, 61.8then the chances
of a
reversal
at that levelareabout90o/o.
2. If the ALTERNATE
WAVErelates1:1 andthe REVERSE
comes
CROSS
out at 1.618,2.000or 3.000thereis alsoalmosta 90o/o
chanceof a
point.
reversal
at that
Therearemanyothercombinations
that offera highprobability
for a reversal
in trendbuttheyareso numerous
I cannotlistthemhere.Myadviceto you is
youtrade.
to exploreallthe possibilities
withinthe markets
I havea routinethat I havedeveloped
in my WaveTradersoftwarethat
allowsmeto testimpoftantlevelseitherin advance
or at the timetheyoccur.
priceseriesI findit easierto checkthem
WhenI amworkingwitha 5-minute
asI go usingmyX-ABCD
routinewhichwillbeexplained
in a futuresection
of
purpose
get
you
thismanual.
My
rightnowis to
readyfor thisexplanation.
INSIDE REVERSECROSSES:
patternit is not a
The insidecrossis morelikelyto occurin a continuation
majorreversalsituation.The insidecrosshasa ratioof 1.000and lessthan
1.000
Lessthan 1.000 ratiosare more likely in a watefall type patternin a

downtrendbut they can occurin an ascending
diagonaltrianglein an
uptrend.
Whenyou are havingtroublejustifyingthe existinggeometrywithina wave
serieslike this it is one way to turn. The 0.786 ratio and the 0.707are
probably
If the ratio
the mostlikelyratiosto "squareout" in thesesituations.
comesout at 0.786thenthe targetfor the movedownfrom D will be L.272
of BC.
In an uptrendyou just reversethe diagramdemonstrated
for the downtrend
example.
In an uptrendI wouldn'ttreatthisasa buysignalbut I wouldtreatit as a sell
geometryis present.In a downtrend
signalin a downtrend
if othersuppofting
you havethe lower highsand lowerlows in your favourand the market
strengthwouldlookweakto mostplayers.
The mainbenefitof understanding
this geometricformationis that whenit
you
occursit will set
movethatcomesout of it.
upfor the continuation
Justremember
thereis no needto tradeeverything
that comesalong,just
your
you
good
tradewhen
tradehasa
aresure
chanceof success.
54
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The 1.000 : 1.OOOREVERSECROSS:
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Whenyou get a 1.000to 1.000ReverseCrossit is most likely it will be

associated
with a patternthat containsfalse breaksas the CD leg is
overbalancing
the amplitude
of theABleg.
Here'san example
recently:
that occurred
6O lUlinutaChort
Cross= 1S.25
l"-]ffi,'-d
,,,,rhlhtr: 1S.25
biogono.l
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ill I
Ul
Thc 5&Pfirst modao FALSEBREAKto the

upsideondtheno FALSEBREAKto thedouln
sidercsultingin o Revcrse
Crossof 1:1
The signto buy was not confirmeduntilthe marketmadethat 1$ little 1-2

pattern.
outsidethe Rectangle
andthenbrokeout of the consolidation
If youarehavingtroubleunderstanding
whatthe geometryis tellingyouthen
you had betterrememberto checkthe Reverse
CrossFormation
as it may
holdthe answer.
Section
t
t
2! chapterz:
Inside, Outside and Double CrossLevels:

Thesemeasurements
are just anotherway for you to see if the unfolding
geometryis workingto somepreordained
plan.
geometric
If CDterminatedon ratiosof 1.000,1.618or 2.000with ACor BDterminated

at ratiosof 0.618,1.000or 1.618with ABthey wouldbe verystrongsignals.
l#;:;
*'
Double
cnoas
Occursin on arpcrdingTRIANGLE
Current Rarrge
lti.'/5
prior
,{D cs ratio XC
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rdnges
clt-Bc 1.z8s
cn-Rn 1.675
f,n-xfi
1.554
ffe"uerse Cross
lfrG =
13.?5
OtherGeometricMeasures
to BLUE'
13.'15
56
PflICE ltatio
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Boththe INSIDE& OUTSIDE

ratiorelationships
oftencomebackintoplayas
a retracement
levelof somefuturesignificance
sostayaleftto them.
INSIDE RATIO
J*t1r
If th is markefpatternrollied
backto the 61.8youwnuldSELL
it agoinstthe priortop:
1.618
Cb is Shortar thon ,48
D
If you examineall the optionsas the marketmovesalongyou will seewhere

the geometry
comesbackintosync.
The moregeometrythat comesout at priorhighand lowswingsthe greater
the significance
is, thentheywill act as a supportor resistance
if the market
comesbackto testthem.
SUTSIbE R,ATIO
t,r*Ft
In this coseyouwould
s e l l t h e3 8 . 2
Thereis no excusefor not knowingthe internalpricegeometrythat the

marketis workingto.
OtherGeometricMeasures
Section2: Chapter-7
Tradingto WIN Course - One day at a time
Section
2: ctrapter8:
Bryce'sX-ABCDGeometricPriceApproach:
Nowthat I haveexplained
that are possiblein the
the geometricstructures
of where
unfoldingmarketpatternsyou shouldhavea basicunderstanding
we aregoingwithallthis.
The first thing to rememberwith my approachis that wavegeometrywill
Ratiosthat bind
form in small,mediumand largerdegreewavestructures.
the smallerdegreeto the mediumdegreeand the mediumdegreeto the
largerdegreearethe criticalmarketpoints.Thatis, at theselevelsthe market
cansignala reversal
of trendor it canconfirma continuance.
As traderswe need to considerthe way the wave structuresdevelop.
Potentially
thereare 100'sof waysa bullor a beartrendcandevelopandplay
itselfout. Butalongthe waytherewill be verycleargeometric
signsthat we
willwitnesswhichwill allowusto taketradesat criticalpointsandcontrolour
risk.
you needto be clearon
Beforeyou embarkon this expedition
of discovery
determining
whichwavesareof similardegree.
rule.This is where
I haveone rulefor determining
this - the overbalancing
whenany set backto a trendexceeds
a priorset backin the currentwave
series.If this happensI assumethe wavestructureis then workingto the
nextlevelandI will recalculate
all mytargetobjectives.
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It is irrportontyou understondthis to uEefha XABCDcffectively
Bryce'X-ABCD
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RATIOTESTSREQUIRED:
PRIMARIES:
/
/ r
/ , J , '
/
'
A
AD no XA
DIRECT
CD no AB
CD to BC
lsr TTLTERNATE
lD no EC
DIRECT
RE!'ERSECROSS
#2
A
,t
t
X
Cb no BC
Rclrrocencnt1
Cb ro )(C
Rclrrccncnt 2
CD no AB
1st llnernoie
CD no tD
INSIDE CRO9g
BDr'o lD
ouTsIbEcRoss
tD no )(C
DOUBI,ECROgS
Theseareexamples
of the waveformsyouwill be measuring.
Bryce'X-ABCD
Tradineto WIN Course - Onedavat a time
BUTIT IS IMPORTANT
HOWTHEWAVESFITTOGETHER:
Somecombinations
will be important
and othersjust won'tmeananything.
The best thing I can do is to go throughthe possibilities
of the wave
formations
combinations.
andtry to pointoutwhatI thinkarethe impoftant
Straightout bullor beartrendsin development
arethe easyonesto read.
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thelX,a
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i-"j
Nowif you get intosituations

likethesebelowit mightcausesomeconfusion
to otheroperators
whenthe
usinggeometryso theywill not be as committed
ratiosbetweenthe wavescometogether.Standasideor go on holidayis my
bestadvice.
Tha mor:lr
et dilGSn
... ,'l
5',1
hovr on) dir'ricti
. , . , -, ,- ]
II
t
\
\
t\
I ,l
1l
I
ll'
\;
\,
, I knov of rothing,-tF
m
' . - . i* v [u ct 'uld lEe;+r
Et t :
i/'
Wh,n m (r:kes str
Bryce'X-ABCD
'his
YFo f t
dici vE.
ring sto"d,."j
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FROMA TRADING POINT OF VIEW:
As the marketmovesalong it encountersgeometricsituationsthat will

influence
traderswhouseELLIorrWAVEtechniques
to buyandsell.
The majorityof informedtradersare awareof the retracement
rulesthat
applyto the ELLIOTT
WAVEtheoryandElliott'stheoryof expansion.
1.
2.
3.
4.
5.
wave2'swill normallyretrace50o/o
or moreof the prioradvance.
Wave4'swill normally
findsuppofton a 38.2o/o
retracement.
Wave4'scannotexceedthe priceamplitude
of wave2's.
Wave3'swill begreaterin amplitude
to wave1's.
Wave5'scanextendor theycanfail.
Thesearegeneralrulesthat applyto ALL wavedegreesandit paysto know

themsoyouwill be ableto understand
whyothertechnical
tradersareacting
the way they do. The big point to rememberis that traderswho have
suruived
in the marketandlearntto makemoneyfromit are habltualpeople.
The betteronesare basically
mindreaderslike myselfbut theyall knowthe
rules.
The best opportunities
for a profit are to buy into weaknessor sell into
strengthwhenthe marketis correcting
againstan established
trendand is
readyto reversebackintothe largerdegreetrend.
This examplewouldbe the perfectset up but as long as pointD did not

overlapthe priorresistance
or supportat pointA the ratioswouldbe enough
on thereownto signala reversal.If two of the ratiosare present,i.e.,a 1:1
Alternate
with the priorcorrection,
or a 38.2of XCor a 50 of BCa reversal
is
almostceftain.If CDto XCis 38.2andCDto BCis 61.8thatwouldbe odds
onaswell.
Bryce'X-ABCD
The ratiocombinations
of CD- XCand CD- BCthat are impoftant:-
1. 38.2/ s0
2.
3.
4.
s.
6.
7.
38.2/ 61.8
4.7 170.7
48.6I 78.6
33.3| 66.7
35.4170.7
33.3| 57.7
I needto mentionthat whena strongtrendis in forcethe impulsewaveswill

normally
takeon a steeperappearance
Thismeansthat
to the priorimpulses.
whena correctionis overand donewith the marketshouldtake off like a
it
rocketas it stepsbackinto trend.If it doesn'tyou shouldbewarebecause
maybeout of steam.
Nowif thereis othergeometryin the lesserdegreewavessuchas a 1:1 or a
reversecrossas the largerdegreecorrectioncomesinto a retracement
ratioit
get
you
will alsosignala reversal.
levelof
a retracement
Sometimes will not
patternandgeometryin the
BCor XCat pointD but therewill be convincing
smallerdegreewavestructure.
Thesesamesituations
alsoapplyto a bearpatternas well.In a bearpattern
the CDto BCratiowill mostlikelynotexceed38.2if the trendis strong.
Beforeyou applytheserulesto buyingor sellingintoweakness
andstrength
prior
the
trendmustbe clearlyvisible.If the markethadnot beenin a strong
trendpriorto its currentcorrection
it wouldbe muchmoreprudentto waitfor
tradeor a correction
a breakout
to the nextadvance.
Bryce'X-ABCD
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When the trend is not obviously strong and the retracement exceeds
38.2 of XA:
You need to be careful when the trend in progressbeforethe current
correctivewaveswas obviouslynot a strongthrustingmove.The market
couldreverseon a retracementlevelof )(A only to go backand retestthe
breakoutpoint at B. It could also break back insidethe BC rangeand
terminate
on a 1:1withBC.
R,ulesfor buyingo
RETRACEiAENIT
of XA
L Thereshouldbe evidence
thot the smqller degree
hossomegeornetry.
2. Bc coreful of the 1:1
with BCos o resisionce
levafto ovr'com"
3. The trend chongeis not
confirmeduniil the 1:1
qnd
BC is overbalonced
pricesexcaadlavelC.
It paysto be carefulin situations

likethls because
a 50, 61.8or 70.7on its
ownwouldattractElliottWavetraders.Whatyoudont knowto startwith is if
the supportat D wasjust because
of profittakingor not.If the S-minutebar
that terminated
at D contained
a veryhighvolumethenthe reversalis more
likelyto succeed
in the biggerpicture.
My first instinctif the reversalat D wason low volumewouldbe to sellthe
retestof B, evenif the pricebrokebackaboveB andvolumedid not increase
I wouldsellthe 1:1 with BCfrom D. If that didn'twork I wouldbecomea
buyer.
Justrelyingon geometryon its own is not goodenoughas any reversalof
substance
shouldbeobviousby attractingmoretraderparticipation.
Whenit is all saidand doneany reversal
to trendshouldshowhighvolume
on a S-minute
barto bevalid.
Forthat matterwhenthe marketis headingin a constantdirectionfor more
thantwo S-minutebarsandthe volumeis increasing,
you cannearlybet the
movewill continuefor a whileafterthat. Whichever
directionis fuellingthe
volumeis the directionyou wantto be goingin. As soonas the volumedries
up it is timeto takeyourprofits.
Bryce'X-ABCD
XABCDratio situationsthat are not valid signals:

will meannothingat all andif
In certainsituations
somewaveconfigurations
youthinktheydo youwill be usingfalseinformation.
directis
Theonesthat meansomething
I haveoutlinedon the right.A CD-BC
CD-AB.
alwaysimportant
andso is the 1sAlternate
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that
Depending
on the wavestructuretherecan be up to 9 wavestructures
important.
4
are
onlyabout3 or
canrelateon ratio,but normally
What I am lookingfor mostof the time is situationswhereanyoneusing
the obviousgeometry.The signalsneedto be
ElliottWavecan recognise
strongenoughfor themto puttheirmoneyon the line.
in the knowandstillthe market
to everyone
Whenthe signalsarenotobvious
justify
you shouldalwaysbe ableto
whyafterthe event.Thenif the
reverses
you
patterns
will be able to trade the new
confirma reversal
unfolding
Thisbusiness
is alwaysaboutprobabilities.
with moreconfidence.
direction
Bryce'X-ABCD
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Thischaptermayappearto be a littledisjointed
fromthe flowof this manual
period
for a
just before
becauseI haverewrittenthis chapteron the XABCD
publication
in May2004.The reasonI havedonethis is to introducea new
aid to tradingI havehad in development
for sometime sincethe original
draftwasconceived.
we havedeveloped
the Bryce'sxABcDprogramas an add-onto the Esignal
advanced
intra-daychartingplatform.It is a visualprogramthat you canuse
to applyall the thingsI havebeenteachingyou in this manualin realtime
tradingconditions.
I havebeendrawingmoreandmoreillustrations
for my TTWgrouplatelyto
clarifythe impoftanceof the systemand havedecidedthey needto be
included
in thischapter.
A
Thcscore priority AD-
Eqnd tc E
lr. bchw
Equclte.B
Abcvc
A
Thcsa situ.rtions abova muld be rrre importorf if they conrbinedwith a
1:1 Alierncie or ord qrfsidc Rz.ter* Cr.ossdf point D
4D.BC
1.516
4.000
2.286
2.6t4
9.000
AD-X4
0.38e
0.500
0.618
0.707
o.786
1.000
Tlrasa a<onples clrlrbc rever*d for *re w,illera
is a lout
If you wereto find the marketpatternin anyof thesesituations

therewould
be a verygoodchancethatyoucouldscalpit for a reversal
firstandthenadd
on moreconfirmation.
or if it kept breakingout throughthe geometryyou
couldtradeit for the nexttargetzone.
Thesepointsof geometricforce act as our road map as we movealong
throughthe day.
Bryce'X-ABCD
Somethinga little simPler:

Cb-XC
Pduity Strings
6D = 0.382
o.#7
0.500
o.3Tl
0.51t
0.707
o.786
1.000
IIIfiFONTINT
CD-BC=1.000I xc= nATro

Cb-AC=1.000f XC=IATIO
Spccial Siiuolien::
Oonbinaticrr 6D ic XS and BC
0 . 3 3 eI 0 . 5 L
0.E82./ 0.500
1.447 I 0.707
0.500 / o.8L3
0.500 I 0.707
0.486 I 0.746
ahc
o.$sg I 0.557
0.t54 / 0.707
A reversal
at D will be at leasta scalpat the veryworstbut it couldturn into
thattakesthe marketto newlowsor highs.
a majorreversal
to be in a steadyuptrendor
SignsliketheseareGOLDif the marketappears
you are lookingfor the termination
steadydowntrendpriorto the correction
of.
The mainthing to keepin mind is that there shouldbe no extraoutside
aboutto hit the market.If the newsis alreadyin the marketandit
influences
is beingabsorbedat a steadyrate the marketshouldcontinueto trade
technically.
in a priceseriesof wavesthat allowsfor the
PHASE
Whenyouget a RHYTHM
the majorityof
with multipleconjunctions
futurecriticllpricelevelto coincide
will pickup on it in advance.
ratioanalysts
that is wherethey will targettheir ordersfor profit
If they feel comfortable
it.
of it if youcanrecognise
of trend.Takeadvantage
takingor a reversal
Brvce'X-ABCD
66
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Prior Suppoft or Resistancelevels:

when the marketretracesbackto a prior pivot pointand the CD leg hasa
ratio of retracementto the XC portionthere is a strongerpossibilityof a
reversal.
Whenthe CDretracement
of XCfallson a 38.2,50 or 61.8ratiothe reversal
guaranteed.
is almost
SIilAPtE PATTERNCoililEINATIONS: FOR A REVER9AL
OtD SU?PONT& OLD RESI9TAT.ICE
ANy CCXL$NATIONS
oF eBOirtETRy
WOUTD
rsstsT yout
DECI9ION TO TRY A
REVERSAL
TTADE:
IN ADEN iAY
PNIORITY WOULb BE:
CD-XC=
0.ttE
0.500
0.61t
AC - eD.; 1.000
OF
CD - BC: 1.000
NETIERLOOK A EIFT HORSEIN THE iIICtr'T}I
Anytimeyou can combinean XABCDsignalin with a straightout pattern

suppoftor resistance
levelit will be important.
Thethingyou shouldappreciate
is that thereare plentyof traderswhojust
tradeoff simplepatternrules.Everytimethe marketapproaches
a priorhigh
or lowof somesignificance
theywill usethat levelto buyor selloff. Whenthe
level is connectedto a wave seriesby ratio it becomesdoublyimportant
because
it willattractthe attentionof the tradersusingElliottwave.
Youmustalwaysremember
therearethousands
of tradersout therewhoare
usingElliottWave.It is not impoftantif ElliottWorksunderthe circumstances
it is onlyimpoftantwhatactionsthe othertraderswilltake.
Bryce'X-ABCD
67
SpecialSituations:
It is wellworthyourtime to studythe situationswheregeometryformsin the
Reverse
Crossconfiguration.
Sometimes
in a progressive
marketthe CDleg will be longeror shofterthan
the AB leg as the marketis tryingto reacha levelthat may"squareup" a
retracement
levelto a prior )(A leg.The ABCDneedsto relatein someway
andif the BCandthe AB legsdont relateby ratioto the CDleg it will most
likelyrelatein the BC-ADReverse
Crossconfiguration.
IITIPORTANTWAVE FORl,lATIONS
- REVERSE
CRO55
BCx
BCx
BCx
BCx
BCx
1.618 =
L.732 =
2.000 =
2.236 =
3.000 =
A
A
A
A
A
b
D
D
D
D
B C x 1 . 0 0 0 =A D
H E1uc Gilnorc
Thelowerformationon this illustration

more
wassomething
I havewitnessed
than once.It can be confusingat the time becausein both instances
the
marketmadea false breakto the upsideand then a false breakto the
downside.It sort of rules out the RECFANGLE
formationbecauseCD is
greaterthanAB.
But if you were just using patternas your tradingguide the rules of
engagement
with falsebreaksis to immediately
reversebackthe otherway
whena breakout
fails.
Whenyou havegeometryto substantiate
the priceat D it givesyou more
confidence.
Bryce'X-ABCD
68
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.
IIUIPORTANT
WAVEFORITTATIONS
Inride Crocs
CD asa Rntioof AD
:
II'IPC'RTANTRATTO$AR.E
6t"g7. sOf. ond 98.d.
This mkcs the lqst wqvaCD
0.618. O.5OO
crd O.382of tufol ABCD
Ollr;r CDIAD rafios arc'possible:
0.333, 0.447. 0.577. 0.667. O.n7. 0.746
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INSIDE CROSS
INSIbE CRO55 I5 NOT

TO A
APPLICABLE
PATTERNLIKE THI5
D
II,IPORTANTWAVEFORIIAATTONS
OUTSIDECRO55
OutsideCross BD qsa Rctioof AD

IIUPORTANTRATIOS *R,E:
6Lt8% 50% od 38.2%
This rnEkesthe distcrce of BD
0.618, O.5@ord O.3EZof totol ABCD
Other Bb/dD rctios are possibla:
0.333. O.47. 0.577. 0.667
OUTSIDE CROSS]5 NOT

APPLICABLE
TO *
PATTER,NLIKE THIS
D
a
Theseare internalmeasurements
that couldbe fulfilledto demonstrate
bindingrelationship
withinanABCD
conclusion.
Bryce'X-ABCD
69
Someunusualthingscan occurin wavestructures

andthey don'tappearto
perspective
beclearfroman analyst's
at the time.
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I don'tusethisconfiguration
as a tradingsignalat all but it is handyto check
the wavestructuresometimes
to seeif theydid relatethisway.
In Elliotttermsthe marketwouldbe in an expanding

or contracting
diagonal
triangle.
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COMPLICATEDWAVESTRUCTURES:
Thistypeof patternwouldmostlikelyoccurin the smallerdegreewaveseries

somewhere
markethighanda significant
alongthe waybetweena significant
marketlow or viceversa.In whichcaseit will be eithera distribution
or an
accumulation
typepattern.
Yet it is possibleit couldoccurat a significant
markethighas sometype of
headandshoulders
typepattern.In whichcaseit will be a formationbetween
higherdegreewaves.
If it is a markethigh or low terminationa new trend of majordegreewill
beginfromlevelD.
LIiPORTANTWAVEFORiTIATIONS
DoubleCrcss
The mly importort Rqiio is a tl
I ruoul*r't gef to involvad with this

ona but if it comcsout os o tt
thon it corld be on exccllent sigrul.
[C] BryceGilmore
Ab=XC osal:l
srpprtirg
Therccouldberroinne
geometryirwolvedsuchas :CD/BC= t"272or
C6|AS: 1.618or
Ab/XA = L.27?
Bryce'X-ABCD
70
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Hereis a reversalday that really got them going:

BE+
JEquitjss- JDfrsrirEr";b..'eS.Xt'r
gtDC (}r
&OO goaiil 61,.t
tr,.fl,23
Ha.kt Evess
on bili 6l.8 and lesr
degree 66.7
1flr00
1lre ):t I ola_rEa

tclualty
douhle toDped irr

earller-
:
:
soFF Tor i
Gann
llidr
{s-At
<<
>>
r.t500
d
tt:lt3)
66,r *
6t,E XC
td00n
lhi: bvtar tatpfned rqdsy Tlcdat April A0

Thb wB a daythrt GteeBpatr annoumed dBllalior w6 ndv not an lsu
April20h 2004:The marketopenedat 9:30ETat 1136on a breakout - the

overnightGlobexhad alreadybeento 1138.5in earlytrading,the 61.8
retracement
of XC.Greenspan
was goingto talk to Congress
regardinghis
currentopinionof the economic
situationin the USA,sothe dayniO an iir of
indecision
aboutit to beginwith.As the dayworeon the 61.8andthe break
backthrough1136becamethe technicalconcerns.Buyersfled the market
whentheythoughtthe FEDwouldsoonraiseinterestratesfromthe 1olothat
everyone
hadbeenenjoyingfor manymonthsnow.
J E q u i t i s r - J O r h s r j n t s i , r a 6 .G E $ , : O H g r X
Ed+
@r OS SeO Oair Sri:r
{ESt!!-2 - StP 500E-tr
o_i.1@9. H:11H.0 !,1!U?9 c:J.L!!!-Q
B{yce} x{Bfo Y1.6j5
,148,25
A
lll ?5
to.st,l
1.000nrfltrpl
0.iB[t11,{3]b) r73tJ0
c l1]t-5
613 Y:0
o.orolrtori;
.1tsJ.25
tt.so
05m
B - 1119.00 f,125
A - l14BJ5
15.25
X - 113300 l/,00
t
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: s e : F s r - "r t D + t l X
6snt=z sarsootrinir,irurs-Gi;;roijttoinoriifriurar,rn
ij,iiibri i,ii6Ei i.iri{;i"e,iruitia
Brycel:tr\BCltfi.oej
,tf0.0{ ,
t
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i3500
t$00
F ArR
t2500
F-8tr-1
F-aoI
S.OFF TOFF .
GAP OUTSIDEREVERSALDAY
sr5
a5 t;
rtt3.2t
l:t - t1075
Volume
r,r
0t.it5 otitc
l8:lt0
Bryce'X-ABCD
71
Now the next day ChairmanGreenspan

appearedagainbeforethe Joint
Economic
committee
in Congress
He
toned
his remarKdownsomewhat.
and
inferredthat the rateincreases
wouldnot be neededimmediately
butwarned
thattheywereinevitable.
Themarketrallied.Whena congressman
askedhim
why the stock marketwent down so sharplyafter the televisedsession
yesterday?He replied,"I read in the newspapers
today sayingthat I was
(andwitha smile)but I don'tknowwhatthe marketwilldo."
responsible,
LatestUpdates
@aOd&_rvv:e!g!l
Clce Dor +2117at LO3L7Zl. S&? +5.9?al I,l21.L2,Iasdaq +17.(D at 1,995-63:Today's
session
couldbe
separated
into two parts,withthefirst beingduringChairnanGreenspan's
testimonyin frontof theJoiatEcouomic
Committee
andlhesecondbeingafterlhesaidevml... Notethalthis wastheseconddaythatthe FedCbairnanmanaged
to
ruffletaders'feathers...
In yesterday's
regardingtheaboence
session,Dr. Oreenspan's
ratherinnocuouscomments
of
deflationandbanksbeingreadyfor higherintereslntes ledto a 122.1% sell-offin themajoraverages...
Today,theftst partof thesessionnasspentwiththemaix averageo
tradingin a choppyfashionasparticipants
continued
to weighthebenefitsof thegeneralltbetterthanexpected
eamingsreports,highlightedby Motorola's(trlOf 1930 +3.08)
stellarresults,withtheprcpectsof risinginlerestratesandaccelentinginflation...TheChairman,
for hispart,appeared
Iess
periodof
hawkish,sayiry thatthefedfundsnte will haveto riseat somepoiut,butindicatingthatasof yet,theprotracted
monetaryaccommodation
hasnotfosteredanenvironment
in whichbroad$asedinflationpressures
appearto be building...
Asa result,themarketbreathed
a sighof reliefwhenDr. Greenspan's
testimonywasoverandspenttherestof theaftemoon
driftingwitha slightupwardbias...Themajoraverages
closedwelloff theirsessiouIowsandin positivetenitory,rryiththe
Nasdaqatfreshsessionhighs...Accordingly,thebulk of lhe sectorsclooedin lhe green,withleadersto theupaideincludiae
theinlernet,networking,semiconductor,
telecom,biotech,healthcare,
hotel,airline,andindusrialsectors...Amongthe
laggardsof nolewerethegold,metalmining,coal,iron & steel,aluminum,andpaperproduclsgroups...
Likethestockmarket,thebondmarketalsohada volatilesession,withthe l0-yearnoleclosingwithina shortreachof its
hiehs,up 682, bringineits yielddownto 4.43%...NYSE
AdvrDec1560/1?7f, NasdaqAdv/DecLffill%z
Two days later:

+ J Equitis. - J
tLJ
ra-c
,.Jg
4q.r{l
Bryceix.{acovlJEl
Dlherlntrvab- @Es-c'il omc Sr Os e60 Sroai;.1@ti:t,

DyEmic0:002{t00
.!; !-!-t$g .9j-1|lq!,1"
_q-j-1-E-0n..-l;,.r$q4.o.-.
GANNS}AflNGCHARTOVERLAY
Tr6d ncnecio. '
trr,rzr;Jt3l'fi
0ti224d:
tx',?t,,04:
0rr0,o{:
2515 \bi
0,tJt9'o,l: t-m
rat i or;rg,olt t0-15
4lns*i urlsor, 1{.50
11-25
^ -. r uilto{:
-'ot'Y i u,tit3,t)<t 2?rn
.M!-9!i1 g1r1244; 5l$\rh
Avrag flange:
tf33,5t
tulrl
fltn
Ioddtdals
-14.50
2 and 3 Day Balance Points

For nqt|
As seen in Sl:Cl:P26
61.8betorr deliD
0,61t
-t1.25
14.60
A
trrc,0o_0.mq
:
ll11326l _
hcru
Gr6s6p.n
[as
FerE
ddy
VolumE
l i l , r
0{o6
0{.o7
Asthe bandplayson thereis a craziness

sends
to the musicandit continually
you.
you
signals
to
out
Youeitherrecognise
themor
don't.
Bryce'X-ABCD
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Section 2! chaptere:
Someexamplesof X-ABCDGeometry:
geometry
Overthe pastfew yearsI havebeensavingchartsof the X-ABCD
thatwaspresentat impoftantreversals
they
are
as clear
trend.
Sometimes
of
asa bellothertimestheyhavebeenobscurely
esoteric.
I.IEfiP.L'J
l.lave Trailer
15gB.gB
SAPsBB sPX
1s36.BB
t4?8.88
ft/"'\
ltlil.
,,I
ItH
il.|
'tt[lt,
1418.
Bs
13so.B6
lzsa.00
AB
BC: O.5OO
C
Cb:0.618
AB:1.ggg
123S.BB
I'tirr
11?0-BB
IIIB.BE
1858.BA
SSB.BB
g3B.BB
lta i rr
tember2O01Lsv,r
14JanB0
BZJUnBB
ZB0ctBB
161{ar81
B3ffugB1
This was how the pricegeometryin the big picturecameout when the
S&P500
madea majorlowin September
2001.Thislowcamein 10daysafter
the 911 disasters
whenthe terroristscrashedtwo planesinto the NewYork
TwinTowers.Thetimingwasperfectfor a lowwhenit camein.
IIEE]4LY
Haue Trader
1598.64
S&PsBAsPX
TIA,tINIg
C b : 2 . 0 0 0B d
Bb : O.5OO
AB
153S.00
L47B.W
1410.BB
ffi54.68
us8.m
1z3a.a0
AB: 363 doys
Lt?a.ea
Cb = 7?? dovs
EQUII.IOXES
tltg.Ea
1B5B.OB
g9B.0B
S3B.BB
l4a i ir
14JanB0
ExamplesofX-ABCD
BZJun90
260ct0E
Therallythat beganfromthe September

7h,
2001lowterminated
on January
2002on a 38.2retracement
of the entirebearmarket.
In Elliotttermsthis was pefect as 4m wavesoften terminateon a 38.2
retracement.
It wasn'tuntil the doubletop on March19u',2002,6 months
fromthe September
lowthat the bullsweretotallywornout andthe market
pace.
setoff downhillat an amazing
IIRILT
Have frader
1598.90
1538.66
S&PsBBSPX
6r'owfh pFogtlBsdon
1478.gA
1418.00
CD=AB
135S.08
C D =0.618BC
C D =0.382XC
tzsa.50
tz38.gE
11?8.BB
1118.0A
ffisB.BB
s98.60
CONTINUATTON
PATTERN
938.86
llain
D : Jon 7th
ZBJUIBB
Whenyou go backoverthe geometryat the majorswingsin the bearmarket

to this pointyoucanconclude
that thereis a definiteElliottWaveinfluence
in
this market.Whetherit is preordained
or simplya sideeffectfrom people
actingon massusingtechnicaltoolsthey havelearntfrom all the published
methodologies
is not impoftantto me.Theonlythingthat is importantto me
is that it happens.
Thepointis you needto keeptrackof the geometrysoyouwill knowwhenit
all comestogetheragain.If you dont you will be left in the darkwhenthe
oppoftunity
to profitcomesalong.
You must never forget how impoftant the 6l.80/o, 50o/oand 38.2o/o
retracement
canbe in the mindsof technicians.
1 . PointB on the chaftabovewasa retracement
of 50o/o
of the )(Arange.
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It is well knownthat I told all my peopleaboutthe potentiala day

beforethe marketreversed
at that pointin May2001.
2 . PointD on the chaft abovewas a retracementof 38.2o/o

of the XC
rangeanda 61.80lo
retracement
of the BCrange.I am alsoon record
as tellingmy students
wellin advance
the importance
of this levelwell
beforewe got to it.
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Examplesof X-ABCD
74
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S&PsBBsPX
date gZgLgT
hi
11?6.97
TOPS
LON6-TERA4
DOUBLE
Ggclefrader
The $IfiNS of a sariously waak

markat were obviousto any chartist.
Sapt
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lo
date
llain
?75.68
EZI?Z4
After /lltay LT the Corrcctions to thc doumirand

naver lasted longer thon 3 days - most werc Zdays.
Oncethe ballstartedrollingthe declinebeganto feedon itselt newsof fresh

It was clearto me at the time
bankruptcies
and companyfraudabounded.
thatthe marketwasin a freefall.
ACCURACY
IN RATIOS:
to work for you then you
I am convinced
if you want thesemethodologies
I meanyou needto workto the
mustadopta policyof accuracy.
Byaccuracy
place,
you
you
If
will only be .foolingyourself.My
third decimal
don't
is not thisexactI haveto justify
benchmark
is 2 tradingticks.If the accuracy
otherreasons
why.
It does not matterwhat the marketpatternlooK like as long as you can
differentiate
thewavesof similardegree.
between
and seewhatyou
A goodstartingpointis to workwith a 3-wavesequence
of it. If you
canmakeof it. Afterthat addthe 4h waveandseewhat becomes
alreadyknowwhatwentbeforeit shouldbecomeas clearas a bellif the next
reversalfits intoa ratioprogression.
you will find that marketsunfoldin geometric
If you followmy procedures
progressions,
if they aren'tdoingthat you do not havea pricesignal,You
a
shouldonly tradeagainstthe prevailing
trendwhenyou haverecognized
valid signal. This is a disciplineyou mustfollowto removethe errorsof
judgement
thatcreepintoanytradingplan.
with
By reducingthe marketto the previous4 wavesyou are still complying
will
similar
degree
waves
of
the ElliottWavetheoryof markets that is, all
relatemathematically
in a sacredpropoftion.
Examplesof X-ABCD
I can'tstressthe simplicity
of this approach
enoughbecause
as soonas you
add extra wavesinto the systemyou leavethe systemopen to personal
interpretation
andthatcanbedangerous.
If youcanfind geometricwavesetsin two or moredegreesof wavestructure
youwill be in chargeof the situation
9 timesout of 10.
Allthisworkis worththe effoftandit hasa definitereward.
Whatyoumustremember
is thateachwavein a seriesshouldbeworkingout
price
timeand
in relationship
to whatwent before.Identiffingthe degreeof
the seriescansometimes
be difficultbut it is MORE
THANpossible
usingthe
X-ABCD
approach
the wayI haveperfectedit for myself.
Whenyour mindis preparedto believethat this systemmustgiveyou the
answersyou can throw awayall the falsetruthsyou havebeentaughtby
othersandmoveontoa higherlevelof consciousness
andunderstanding.
The approachis DYNAMIC
and can be appliedto all free tradingmarketsif
theytradewithsufficient
volumeandarenot manipulated
by insiders.
Wavesetsshouldbe obviousin all degreesof marketmovement
for you to
adoptan opinionthat the trendwill change.Whenyoufind onewavesetthat
fits yourcriteriago furthera fieldand lookin the largerdegreeto seehow
yourtargetpointis in the largerschemeof things.
significant
Knowledge
is power neverforget it. Overthe yearsI havecalled100'sof
marketreversals
eitherin advance
the dayafterif
or on the day,sometimes
the marketpatternneededto confirmmy signals.Butnevermorethana day
out.Thestrongest
tradescomewhenyougetthe confirmation
in anycase.
DualRatiocombinations
in wavesof similardegreeoftensignalreversals
of
trendor the beginningof a correction
in similardegree.If the marketdoes
not correctandcontinues
throughthe *SIGNAL
LEVEL"
the signalbecomes
a
non-confirmation
and confirmsa continuation.
Whicheveris the casethe
signalbecomes
a tradeentrypoint.
Thisis the mostvaluableinformation
I canpasson to you,trust it forgetall
the otherthingspeoplehavetaughtyou unlessthe marketfits a geometric
citeria. I promiseyou it will saveyou a lot of heaftbreakand makeyour
process
tradingselection
far easierto dealwith.
Thisstuff is like magicif you canunderstand
it - you will onlyunderstand
it
whenyou loseyour impatience
andlearnto openyoureyesandtakea little
in at a time.
Following
is a geometric
situationI recorded
in the JulySoybean
contractat a
corrective
highin April2002.
Examplesof X-ABCD
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The ABCDfell togetherlike this:
S0YBEftNS-Julg
Have Trader
4A4.86
4?S.00
'iil't,t
4?Z.Bg
466. BB
468.68
454.89
44S. E0
lJrt
44Z.Ag
436. BB
It'
438. BB
4Z4.gA
Rat ios
l{ave Trader
484. BB
4?8.08
BC : 38.75
BiilLY
f,lr : 49.75
f,$rr$f,: 1.618
S0YBERHS-JuIg
bIAGOFIALOF A 6OLbEl.lRECTANGLE
472.89
[|tr
486. BA
468. A0
454. A6
448. BB
44Z.Bg
1.9O2: 1.OOO
436.00
43S. B0
4Z4.EE
Rat ios
lP Irice
formation.
Thesignificance
is geometrically
a GoldenRectangle
t.Aofu/ '
i r.are
Examplesof X-ABCD
, 1.ooo
i
Section2: Clnpter - 9
[c] Bryce Gilrnore2004
ATTERNATEWAVESIN A SERIES:
The recentJuly 14thdoubletop with June17u'2003.
sPB3U-38
Qcharts DSU
Lgz4.E8
u18.AB
bouble Top
1014.8
+32.8
\EIZ.EE
Altarnaies
1SBE.68
1886.AB
+33.7
ss4.0B
988.66
9fJ2.88
s?6.48
s?B.0B
boy only PfT COFITRACT
s64.AB
E6/17/mg3
t{a i r-r
gE/L?
86/23
EE/27
g?/E?
g7/L1
E7/17
The 1:1 AlternateWavelevelsare the bestto targetin the intra-daymarket

patterns,if theyareexceeded
you lookfor a continuation.
If the marketstops
on themyoucanstafttradingthe reversal
asthe marketconfirms.
Youcanseeby the waythe marketadvances
on the way to the doubletop
wereforming1:1 patternsin the Alternate
Wavesof similardegree.
Evenif this top hadexceeded
the priortop of 1014.8whichit didn'tit would
haverun into resistance
1 pointaboveandmostlylikelyreversed
in anycase.
Thetradewasto sellthe doubletop andplacea stopand reversebuyorder
1.5pointsabovethe priorhigh.
Allyou haveto do is readthe signsfromeachswingpointto the next.
you will find someodd-ballgeometryintermingling
Sometimes
with some
geometryin a differentdegree.I havea goodexampleto
morerecognisable
showyou in the nextchapterbut for now learnto pickup on the easyones
first.
Followingis an excerptfrom my diary I was keepingon the S&P:
This excerptis taken way back in February2003 when we were in a
downtrendbefore the decisionto go to war with Iraq was actually
consummated.
Thecoalitionwerebuildingup forcesas a signof authorityat
the time but the moodof the marketwas negativeat this time because
the
UNwereobjectingto any attackon Iraq untilall the negotiations
underway
hadbeenexhausted.Eachdaythe uncertainty
wasgrowing.
ExamplesofX-ABCD
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The mainfocusthis weekwason the geopolitical

eventsandthe rhetoricof
the mountingthreatof war with
GeorgeBushand ColinPowellconcerning
Iraq.
Nevertheless
continuedto unfoldin their normalfashion.In
the technical's
fact someamazingsignalscamealongthroughoutthis weekand I had to
document
themfor my records.
u @,--fJ
r't"'"ali6'-l
r Atsessidrsu g E s l 5 De
432.48
} t , 1 l f BI l r n l f f i l A l # i d
4:07pmE5 spiketo
921bustedby C[{E
mlwlo3
l5:{Xl:0O
EZefil
@?ro
&25-25
liore WARTALK
re m6.5O
qr -{L4
Brs -7
t 1,4?a
pf
On Tuesdaythe 4h lust after the 4:00pmbell someoneattackedthe'ES

session
with somelargebuyordersandset off a chainreactionthat cleaned
it was"busting"
announced
all the stopsfrom 850 up to 920.The exchange
all tradesabove860.The pit hadonlytradedto 854 so a lot of peoplegot
burnt.
Therewas a doublebottomthat occurredon Thursdayafternoonand set up
was to be
REPORT
anothertrade the next day when the EMPLOYMENT
released
ratiosfor the doublebottomarebelow.
at 8:30am.TheX-ABCD
Current [ange
1 1 .S E
ESO3H-18
A^ U^B.I .
C = ?8.2RETRACEIAENT
prior
ranges
clt-Bc
1. gBg
cll-ffB g.3az
cn-xfi
fl.484
fleuerse Eross
ffIl-BE 2.618
rqtios
All Fibonocci
i \ r'1''J
f e+r
11
t
RII-Xff
L.Z?Z
Lnurs
Examplesof X-ABCD
EZ/ES
DOUBLE
BOTTOAAXABCD
15:34
ffi?.?s
838.68
79
832.60
832.?5
EZlffi
Overnight
the Globexsession
tradedup againstthe prior843higha coupleof
timeswhileit waswaitingfor the morningreport.
Whenthe EMPLOYMENT
figurecamein at5.7o/o
down0.3%fromthe forecast
60lo.Firstindications
werethe marketwasaccepting
it as a signthe economy
wasimproving,
i.e.,whenit sparked
a rapidrally.Butthisdidn'tlastlongas
economists
beganto arguethat the figurehadbeenseasonally
adjustedand
wasnotcorrect.Thisinformation
wasbroadcast
overBloomberg
at the time.
861.0A
ffi8.m
ESB3H-18
Eochleg up lL^6
ffis.@
ffiz.m
84S.m
846.m
843.@
840.Bs
8B?.BB
884. AA
6lobex
0vcrnight
boublc Bollom
BZ/g,6,/?giB3
EZ/87
llain
The highon the spikerallywas 849^4 - The fir$ leg up from the double
bottomwas 11^6 followedby a 6 pointcorrection(50%)and then another
11^6up.The61.8levelwasat 849^6.
Bythetimethe daysession
openedthe printwasbackto 845.
Qcharts CSU
ESA3H-18
EVER.YONE
His TO sEETHIS
BE6/{USE
I CALLED
IT E'RLIER,
TODIY BEFORE
H/4ND.
Current Range
17.?5
prior
ranges
cll-Bc
1.618
cn-RB 1.618
ctl*xR 8.61S
Reverse Cross
RD-BC 1.618
Insitle Cross
CD-AD 1.AA6
0utside Cross
BD-AII 8.382
Ilouble Cross
RD-)(c B.618
Xetrace Z
cll-xc
0.618
RII-XR 8.618
LiDTUSTEb THIS HI6H l TICK

849'6
843
\
J\B
Notice how the ronges

are oll LUCASvolues
gz/95/z;68'3
Lotls
03:35
843.50
844.58
843.A6
844.25
82/67
This MBCD relationshipwas totally predictableafter the double bottom at

832.lust lookat the ratiosin the X-ABCDprint out they are perfect.
Examples
of X-ABCD
80
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in a low of
Ffiday was a down day from the openingbell.Terminating
825^2at 3:00pmET.
It was prettyobviousthat therewouldbe someshoft coveringbeforethe
closeastherewasa heavysnowstorm
in NewYorkthat hadmanyWallStreet
tradersleavingearlyfor the weekend.
851. BA
7th Februsrv 2OO3
848.SS
845.84
B4Z.W
ffig.94
836.88
833. B0
838.00
BZ7.gg
BZ/97/Z:9i83
lat ios
ES03H-14
tPlrice
ab=
ZE.B0 cil=
18.60 cd/ab= 4.500
I wasexpecting
the marketto go slightlylowerbasedon a 1:1withthe 861832 849^4but nowthat I haveinspected
the dailypicturethe 825^2 low
fits fine as a 1:0.500downon the day.You mustadmittherewas a great
tradeon the shortsidestaringthe smarttradersin the faceat the beginning
to do!
of the dayandtheyjust didwhattheywereexpected
BASIS:
LEARNTO OBSERVE
THEMARKETON A DAY.TO.DAY
If you analysethe unfoldingpatternseachday you will find that set-ups
veryobviousto the trainedeye.
become
I get phonecallsall the time from peoplewhojust wantto learnall this as
fastastheycan.It is impossible
to learnovernightandwhenI tell themthey
don'twantto hearit. WhatcanI do,I canonlywarnthemthat'sall.
Theaverageguytradingthe marketsis a moronwhenit comesto combining
technical
fundamentals
andmood,mostcant do it.
analysis,
Mostgoodtradersare "StreetSmart"and they havelearnthow the wrong
to
sideof the marketthinksandtheyjust lookfor placesto do the opposite
for intra-day
trading.
the"wrongside"mostof the time.It is a goodapproach
yourselfto do the samewhenthe timeis appropriate.
Youshouldeducate
ExamplesofX-ABCD
Section
2: ctrapter1o:
Odd Ball RetracementLevels& Targets:

Undernormalcircumstances
we are alwaysexpectinga standardratio in
retracements,
e.9.,38.2,50,61.8,70.7andsofofth.
Manytimesthe markettrendmaycorrectto a levelthat doesnot conformto
yet the patternwill reverseanda newmovement
ourexpectations
begins.
Thegeometrymaybe ableto be explained
by crossrelationships
but at other
timesit seemsa mysteryuntil the next changein trendwherethe picture
becomes
clear.
58.6 & 41.4 Levels

Whenyou get levelsof 58.6or 4L.4thesecan be easilyexplained
because
theyarethe means(internals)
of the squarerootof 2.
In geometry
thesecanbe explained
as:
The marketmakesa 58.6retracement

andeveryoneis expecting
it to go to
61.8- so theywait.I alwayswait too, i.e.,untilI seea higherlow or the
patternindicating
a reversal.
Whensomethinglikethis happensit foolseveryonebut it is legitimateand
you cancalculate
out a futuretargetwherethe geometrywill "square"up in
the futurein thatsimilardegreeof movement.
Odd Ball Ratios
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Tradineto WIN Course- Onedavat a time
Don't mistakea 58.6 levelfor a 57.7 becauseit is a 58.6 and indicatesthe

Ratios.
marketis workingto the "square"in HARMONIC
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The UP Examole:
CD = L.4L4of BC
CD = 2.000of AC
;;.j--
i
i
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.
_ --,1-
fi.
i
i
l1
_l
The DOWNExample:
CD = 2.828of BC
CD = 2.000of AC
Here'sone that markeda major bear marketrally high in the S&P500on the
7thJanuary2OOZwith a minor doubletop. The high day was even more
impressiveon a long-termratioof 38.2 (see52 C9 page74).
Qclrnrts |jfiU
ll_88. Htt
5&P500- Jonuary20SZ High
1l?it. BB
cb = I 4t,t Bc riE : 1 707 E4

ac=0414J.8 CD=0tt|i6
11lfi. BS
116e.EU
1156.BB
t 15fi-ffff
t
t
1138_Bn
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ll,t,l . Bd
1 1 3 I .A B
T126,BE
1 1 Z Bg_8
lll{. tsu
l{ain
OddBall Ratios
ESBZT{-15
,,
tzl18
tt|H
,
f ,414
0-i07
t
].2t13
IZ,IZE
83
0.58$
1.000
t
BI/EZ
El/E?
Square Root of 3
It paysto knowall thesethingsso you will saveyourselfsomeconfusion.

I
bet everyonewho hasstudiedratioanalysisseesretracements
that just go
pastthe 0.618levelbutstopon 0.634or 0.636.
Thisis a commonoccurrence;
the difficultywith 0.634is decidingwhetherit
appliesto the geometryof Root3 or to Phias 0.636is halfthe Squarerootof
1.618whichis t.272.Sometimes
in the smallermoves1 tickwouldmakethe
differbnce.
Betterto stickwith the 0.618projections
for ballparktargets- but keepit in
mindthat the geometrymay be workingon the CUBE.If it is the next leg
mightbe L.732timesthe lengthof the 0.634leg.
Square Root of 5
C IUO 'eiF
I
of 5
-:--:'i l
36
rfli
0;3l9-.
.l{.{
qt
'fi'F:0t
s
Sameprincipleappliesto the squarerootof 5 the mean0.691is so closeto

the 0.707ratiowe useas a cardinalratio.The ratiosare to closein many
instances
unlesstheyarecalculated
on largeranges.
It is reallynecessary
to understand
whenyou get
the preceding
STRUCTURE
downto this levelof analysis.
I onlyworryaboutthesetypesof thingswhenI
geometry
can'texplainthe
anyotherway.
Odd Ball Ratios
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84
Section2: Chapter- l0
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Section
2l ctrapter11:
Bread& Butter TradingSet Ups:

in priorchaptersI am goingto
AlthoughI havecoveredall thesesituations
lookingfor.
giveyoua summary
of the marketsetupsI amcontinually
THE 1:1 ATTERNATE WAVE COMBINED WITH A

CAN RECOGNISE:
TEVELTHAT EVERYONE
RETRACEMENT
SOLID
r.f-.:
'A
s E ( ;otti 1 - O I
rtai
o
38 IrirFl:oll
m
l
.1.,:...
I
r
:,j,t
tl
T
\
'1
/
f,
{,",
nt.'
Ettt
:I::.;l
.,1 {
\
5 t:i
p,.$[tv
LL.
P...5J
v-::
waythe marketgoes
whichever
Thisone is a moneyin the bankprobability
in an uptrendandif
you havethe oppoftunity
to buyintoweakness
because
and prOfit
the 1:1 doesnot holdyou can reverseshortalmostimmediately
fromthe continuation.
The probability
of a reversalbackup in a situationlikethis is in my opinion
is readinganywherenearoversold
closeto 90o/oif the 5 minutestochastic
andthe 3 dayswingis up.
evenstronger.
levelof BCthenthe signalbecomes
If CDis alsoa retracement
Alsoif CDunfoldsasa smaller
degree1:1youcannearlyputthe houseon it.
to standingon a cliff edge
Everyone of thesethat you missis tantamount
andthrowingyourmoneyaway.
I see thesesituationscomealongvery regularlyin the intra-daymarket
patterns.
Bread& Butter SetUps
THE 38.2 RETRACEMENT

WAVE:
ON A 1:1 WITH THE 1STALTERNATE
x\
\
', gB
? R.etr.acetner
rl on o 1 : Altilrnoie
,
,
I\ i
,*rtnl",otn
Ir
t l \
i :
i
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t j
I
T
I
l i \/
t
BU
5E
'l
-.--j-
'
i
\
3 8 ?ri"
11
' , l]: , \I t
Neverlook a gift horselike this one in the mouthif the dailytrend is down.
The onlytime it is not likelyto work is if the low at C was somethingmajorin
the biggerpicture.
A 38.2 or 50o/oRetracementmay even form like this examplebelowwhere

the wavesup from the low are holdinga form of equality.
oistl
If you are planingto sell the retracement

levelyou needto havesome
evidencethat the move upwardsis workinginto a geometricform that
providessomeevidencethat it will exhaustitself at the suggestedprice
retracement
level.
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TRADINGSET.UPSon 1:1's:
: 5
r.'f;
f,rA
r'
/\
f't,,
$'
'6'
[.8,
50
l r " rl '
V
l;8ri , 5 0 i R I TR;
11of
tqi;
iEr-rl
EQ'IAL
w/1 ts:
UP:
. e . : ; */
ot',I)out la 1:
Bu' Bt:t ak, > {
I\
:'t
i,
, B r B n'Loko ti >> /
J\ , t
{.''
/,, \
.\
iffiENr '
I
\,
A
LL
,u'-t
\
\
grl
3t
4,
:l
1:1
-,ff,
t . , . ii .. : . . :
L( W ; IT5K.EN]i Rv [EVl L5
DOUBLETOPSon 1:1's:
signalsI know
Tradingset-upson 1:1 alternatewaveratiosarethe strongest
of.
in the market
TOPSkeeprepeating
It's a strangephenomenon
that DOUBLE
placeso often,but theydo, andyou haveto learnto takeadvantage
of them
whenthey line up with something
elsethat seemsto be impoftantin the
geometry.
unfolding
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Doubletops that form without any obviousgeometryshouldbe taken
cautiously.
The bestwayto handlethemis to wait andseewhatthe marketdoesandif

the top doesnot breakthe marketgenerallytries for a retest.The market
mightbreakthroughon a secondor thirdattemptbut if it doesn'tthenyou
just sellthe basebelowthedoubletop.
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Bread& ButterSetUps
Section2: Chapter- 1I
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DOUBLEBOTTOMS:
of geometric
Normally
for a doublebottomto holdit hasto havea foundation
larger
suchas a pricelevelfroma previous
strengthin its favour.Something
degreewaveseries.If it doesn'tthenit will mostlikelyfail andit is betterto
tradeto the downside.
besoldasa breakout
won'trunawayfromthe lowin
If a doublebottomis goingto holdit normally
wait
and see if the marketregains
in
my
to
a hurryso it is better
opinion
somestrengthbeforeyou buyit.
then you can beginbuyingso
Oncesomepatternof rejectionis recognised
longasyoucanjustiffan unfolding
strength
onthe chaft.
allthe smat traders
ThereasonI don'tlikebuyingdoublebottomsis because
preferto sellwhenthe marketis showinginherentweakness,
as it is more
than
recovery.
susceptible
to failure
Thereis no bettertradearoundin my bookthanwhena markettakesout a
doubleor triplebottom.
Betterto tradethe breakof a doublebottomthan buy it. I havegenerally

foundin the pastthat impoftantbottomsform quickly,they are normallya
singlebar low ratherthana consolidation,
i.e., unlesstheyformwithinthe
middleof an upwards
trendingmarketandthat is anothermatteraltogether.
Bread& ButterSetUps
Section2: Chapter- l l
HOOKTRADINGA RUNNER:
Somedaysthe marketwillget intoa runningmoodandyouwillslowlyrealise

that it is not goingto stoprunning.It maystartoff unexpectedly
but onceit
getsmovingyouwillseeit happening.
Youwill knowbecause
the corrections
will be verysmallandnot lastfor very
long.The ES/ S&Pseldomcorrectmorethan2-3 points,maybe4 maximum
whena runneris in progress.
you
Theeasiestwayto tradeit is to BUYthe hookbreakoubbut sometimes
couldtry andbuythe smallcorrections
whiletheyremainlessor equalto the
previous
onesin the series.
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All you haveto rememberis that whilethe corrections

do not over balance
with
eachotherthe trendis stillintactandyoucankeepbuyingthe breakouts
verylimitedrisk.
Runners
constant
will normallyhappenon dayswherethe marketis receiving
positivenewsfrom economicrepoftsor is beingbuoyedby the mediaand
speculation
from the pit. Youhaveto be tunedinto the newsto seewhatI
mean.Thisis whyI amalways
watching
Bloomberg
duringthetradingday.
Runnerscan be very severereactions
been
in a marketthat has previously
extremelyoversoldand everyoneis coveringshortpositionson the day. If
youare not prepared
Runners
earlyenoughyoucanmissthe ridecompletely.
canlastfor the entiremorningor afternoonsessionandon somedaysgo all
day.
90
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RECTANGLE
BREAKOUTS:
----fi
-,-:
-r----:--
i ' i i i
i\'
mayform as a
On occasions
strongrun UPthe rectangle
afteran extremely
seriesof tops.A bullishrectangle
seldomhasmorethanonedoublebottom
is that it will
scenario
so if the movelookslikeit is exhausting
the best-case
reverse
directionbackdown.
aseachattempt
Youshouldbe ableto recognise
thissituationwellin advance
traders
at a breakoutto the upsideis metwith heavysellingby professional
whodon'tthinkit cango higher.
In thesesituations
will flushall the longpositions
the breakto the downside
andthe movedownshouldbeverydramatic.
The conclusion
bar as the shottsstaft
shouldend with a SPIKEVOLUME
profits
takingtheir
all togetherastheyrun intoa nestof buyordersproviding
underlying
support.
Bread& ButterSetUps
RE-ENTERING
A DOWNHILLRUNNER:
Sometimes
whenyou get a messybreakoutand it is followedby a steep
declineto confirmthe marketweakness,
you maynot be on the move.If you
seea haltto the declineandthe trendlooksclearlydownyou canplana reentrywiththe trendbasedon the amplitude
in the series.
of the 1ocorrection
The next correctionafter a move showstrend shouldnot exceedthe 1$
correction
by morethan 1 tick.Youcanalwayssellat the 1:1 backup with a
tight stoploss
or sellthe hookon a furtherbreakdown.
I preferto sellthe 1:1
as it givesyousomelatitudeif the nextbreakout
is
down a messyaffair.
In all the yearsI havebeentradingI havenoticedthatthe problemwith most
novicetradersis that they deliberate
for so longoverwhereto takea trade
theygiveno consideration
to the factthat it is possible
to stepin andout of
the marketat will. If your risk is smallyou can practically
enter a trend
anywhere.
Whenyou combinehighprobability
with smallriskthenyou are
tradingto WIN.
If youtakethe timeto studyeverything
I am sayingandwatchthe marketin
you
S-minute
you.
timeframes will beginto understand
whatI amteaching
Aftera coupleof yearsit will becomesecondnatureto you and you won't
thinktwiceaboutit whenallthe patternsignals
lineup.
Thetradeentrytechniques
I haveoutlinedin this chapterare yourguideto
professional
becominga
trader,if you havefaith and manageyour trades
properly
youmustWIN.Onlythefearof losingwillstopyoufromwinning.
"Theonlythingeasierthanmakingmoneyin
the marketis losingit." Anon.
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LINESIN THESAND:
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Linesin the sandbecomeobviousfrom time to time when an old market

resistance
turnsintoa supportzoneor viceversa.
it tendsto becomea decision
It becomes
a reliabletechnicallevelbecause
pointwheretraderswill definethe trendas eitherstrongor weak.Although
the criteriafits the doubletop or doublebottompatternit is even more
importantin a way as a tradingsignalbecausethe LINEIN THE SAND
viftuallybecomes
POINT
for the market.
the currentBALANCE
Thebesttradesusuallycomewhenthe marketreverses
backthroughthe LIS
at the beginning
of the dayon a GAPopening.
of an LISif it
It usuallymakesa big difference
to the suppoftcharacteristics
has a price levelof 38.2, 50 or 61.8 attachedto it. For instancein this
diagramif the marketreturnsto the LISand it is now a 50o/oretracement
thenthe oddsaremuchmorein its favourto attractbuying.It couldevenact
assuppoftfor a secondtimeas it becomes
a doublebottomon the 50.
BREAK
OUTTMDE
The abovescenario
then setsup the LISfor a SELLING
in myopinion.
that hasd 90o/o
chanceof success
pattern
In somecirclesthistypeof
couldbe viewedas a HEAD&
breakdown
TheLISis basically
the NECKLINE.
SHOULDERS
in progress.
analysis.
ThetradablepatternsI havedemonstrated
herearefor short-term
between
Mostof the timeyouwouldonlyneedto takeintoaccountanywhere
the
opportunity.
2 daysto 5 daysdataon a S-minute
frame
to
see
time
Section2:Chapter-11
ONEMOREOPPORTUNTTY
THATARISESSOMETIMES:
Thisis an exampleof whatcanhappenwhenthe marketis tryingto breakto
newhighsand becomes
boggeddownas it is shedding
itselfof the sellersin
the way.
Thesamethingis possible
in reverseon the downside
but in the casewhere
the marketis struggling
to makenew highsit is far morelikelyto taketime
breaking
out intoclearground.
Whenthe new breakis achievedafter a coupleof attemptsthe bearswill
relentandlet it go.Thisnormallyresultsin a goodtradefor the day.
Situationslike this tend to occurwhen the marketis travellinginto new
groundwherethereis littleto no technicallevelsthat seemimpoftantin the
biggerpicture.Thetrendcouldbe clearlyoverbought
shorttermandthat will
attractthe sellers,but when they try and sell the marketdown buyers
reappear
andtakeit backup.
Generally
this sort of situationoccurson low volumedayswherethereis no
significant
newsto swaythe previous
trendin force.
The key to buyingthe runningcorrectionis that the secondcorrectionleg
mustnot overbalance
the flrst leg.The marketshouldhavea confluence
of
higherlowsfrom the outsetof the new moveupwards.The only negative
thingsthat appearto be therewill be the overlapping
wavesinfringingon the
old highs.Eachtime they do this and recoverthey sendan arrowinto the
heaftsof the bears.
Eventually
as the daywearson the bearswill runfor the hillsor reverselong
gainpace.
andhelpthe upwardmomentum
Bread& ButterSetUps
94
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THE KAMAHL:
Nowthe reasonI callthisthe Kamahlis because

it is so obvious.Kamahlis a
famoussingerandoneof his popularsongshada verselikethis,"I hearthe
hasthe soundsof
soundof knockingit's comingdownthe hall...
goodbye....."
The otherreasonis that Kamahlwassucha sook,he usedto
get on stageandthenaskthe audience
why they hatedhimso much!I met
himonceon the beachin Fiji.
The basedoesnot needto be exactlypreciseas a triple bottomit could
containa falsebreakon the 1ddoublebottom.Thestructuremayevenbreak
downon the 3'd bottomattempt.But if the 3'd holdsthe 4tr breakwill be
cuftains.
In the oddcasewherethereis no breakdownfromthe baseor the market
doesbreakit but gets backabovethe basequickly- it is showingnew
strengthandbecomes
a buy.Thisis very rarebut you still needto be aware
possible.
it is
The longera markettradesin a confinedrangethen the ensuingmove
comingfrom a breakoutshouldbe largeenoughto offera profitabletrade.
Thereasonis logicalas the longerthe marketremainsstaticthe stopshavea
chanceto buildupjust outsidethe congestion
area.
Markets
onlymovefor onereason!Therearemorebuyersthansellersor vice
versa.Whenyoucanlogically
workout wheretheyareplacingtheirstopsyou
will havemastered
thisbusiness.
Alwaysrememberit doesnot matterwhatthe marketdoesoverthe longer
period,just think of yourselfas a JOCKEY
lookingfor the pefect ridewhen
present.
the oppoftunity
is
Section2: Chapter- 1l
Technicians
wrotemanyof the booksI first readon profitingin the market
yearsagoandnoneeverwentontoexplainwhatwasgoingon in the market
whenthetimecameto takethe trade.
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Butwhatthey all had in commonwasthey saidto be profitableyou should

alwaystry andtradewiththe currenttrendin progress.
Let the trend be your friendwas the commondenominator

I havereadin
mosttradingbooK overthe years.
Wellit is true,75o/o
of the timethe trendwill beyourfriend.Notso muchthe
1 monthtrendbutthe 3 daytrend.
Whenthe marketis reactingto pressuresfrom the most recentnewsit is

trendingor feedingon the currentnewsavailable
to it.
Section 2: cnapter12:
MarketLogic:
Marketlogicplaysan impoftantpartin whetheryou will becomea successful
traderor just anotherfoolfloundering
aroundin the fray.
Knowing
whenthe signssetyou up for the mechanical
is probably
application
impoftant
as
,
asthe execution
of the tradeitselfat the time.
As a daytraderthis is all I needto know.It doesnot matterwhatthe news

will be in a monthfrom now,what is in the newstoday,yesterday
andthe
daybeforewill be enoughto judgewhatthe marketbiasis likelyto be on any
givenday.
To be a successful
traderyou haveto continually
keepyourmindcurrentwith
the eventsof the day and forgetwhat happened
lastwee( as that is over
anddonewith.
Eachday is a new day and the technicallevelsare clearbeforethe market
begins
trading.
Whatis importantto the traderis how the marketreactsor confirmsas it
teststhe predetermined
levelsof supportor resistance.
Themarketactivities
will eitheragreewithyourthoughtsor theywon't.I take
the viewthat whenI havean opinionon the daythe marketwill alwayskeep
tellingme if I am on the righttrackor not.If I find I am out of stepwithwhat
is happening
I figureI bettertakea breakor reversemy opinion.Believeme
it onlytakes3 smalllossesin a rowto havemeadoptthisstance.
Market Logic
Section2:Chapter- 12
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I'm goingto tell you a few thingsthat can happento you on anygivenday
and you will alsofind they will happento you in the future sometimeor
anotherandyouhaveto learnwhatto do whenit happens.
1.
ceftainis goingto happen.

You startthe day believingsomething
you
do?Answeris - you stepbackand
Thenit doesn'tso whatdo
the situation.
reassess
2.
comesalong
Somedaysyouthinkthe trendis intactbut something
to wreckall yourplans,sowhatdo youdo?Answeris yougetout
'
the situation.
of the marketandreassess
3.
What ever happensthat falls out of line with your thinking

you fall back on the technical signals before you do
anything else.
If you want to win over the longer-term picture you have to have a
plan that stops you from getting involvedwhen things are not doing
what is logicalwith your current knowledgeof the market position.
Let's face it you could be totally off base with the market for some
reasonand the only clue that you are out of whack is when you staft
losingmoney!
So when you staft taking losses forget your pride and get out
immediately.
If you don't you are heading for the scrap heap where all
unsuccessfultraders end up.
I don'tsaythis lightlyeither,I haveseenall sottsof genius'scomealongto
meandsay,"Whyareyousittingout of the marketrightnow?
rightnow".
withwhatis happening
Normally
I just say,"I am uncomfoftable
Howmanyof themoverthe yearshavesaid,"I am stayingin the marketit

mustgo to hereevenif it is choppyrightnow".
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FAMOUS
I.ASTWORDS!
I've heardit all before.Sometimes
they get awaywith it but sooneror later
thatapproach
themout.
catches
I am still hereafter 20+ years,so are manyothers,but I havewitnessed
the smaftestpeopleI know.
100'sof bomboutsoverthe yearsevenamongst
at a time.
Theplanis 3 stepsforwardandonlyonebackwards
Market Logic
Everyloser I have ever seen in the futures industry has one thing in
common!
Theytook a positionand heldit whenit was goingagainstthem.To make
thingsworsetheycontinued
to believethat the positionwouldcomebackso
they toppedup the marginto fund morelosses.Eventually
they couldnot
fund the positionany longerso they hadto closeout or the brokerclosed
themout.
Thentherewereotherswhowentandgot somemoremoneyopeneda new
positionand repeatedthe process.
It was likethey had losttheir mindandwantedto provetheywererightandthe marketwaswrong.
Themarketis neverwrong! Onlypeoplearewrong.
It is reallyenlightening
to seewhatsomepeoplewill do whenthey havean
openpositionin the market.Onthe wholetheyaresayingto themselves
and
everyoneelse that they havea winnergoing,evenwhenthey are so far
underwater
thattheycan'tbreath.
Thisis the reasonyou mustneverholda losingpositionno matterwhatyou
think the marketmay do in the future. Because,as soon as you are
your brain cannot think objectivelyanymore.You become
undennrater
paralysed
further.
to actsensibly
andonlyexacerbate
the situation
I knowbecause
I haveexperienced
it manyyearsbac( morethanonceI can
you.
tell
Eventually
I learntfromit.
Frommy experience
in thisindustryI haveseenmanyothersdo it as wellit
is a faulteveryone
willfall intoonceor twiceandmaybe ableto sulvivebut if
you keepdoingit youarea deadmaneventually.
It is impossible
to tradeout of a losingpositionmostof the time,whichis
whythe losingtradesmustbecut at the firstsignthattheyarenotworking.
It is far easierto waitfor a betteroppoftunity
andtry againthanflog a dead
horse.
The marketwill alwaysbe herefor you,to be a winneryou haveto decideif
youarealwaysgoingto be herefor it.
Thereis no otherway!
If you wantto be a consistent
winnerremember
whatI am sayingbecause
if
youdont you mightaswellforgetthisbusiness
you.
beforeit destroys
This business
requiresmoreself-discipline
than the averageman is capable
provided
of. I have
it is up to you now.
thetoolsto shapeyourdiscipline;
Market Logic
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Section
3: ctrapter1:
Daily CheckListr S&PE-Mini

Justin caseyou havenot got it yet I amgoingto outlinethe dailyprocedures
youneedto followbeforethe marketopensandafterit beginstrading.
to giveyourselfthe
Eachdayyou are goingto haveto followthis procedure
2
bestopportunity
of Tradingto WIN.
If you don'tthen you are lazyandyou will nevermakeit as a professional
trader.I don'twantto tell you anymorewhy you can be a loser(thatwould
takeanotherbook)- I just wantto showyou howto be a winner.
DAILYTRENDAPPEARANCE:
1* youmusthavea clueof the currentdailytrendandyou mustknowwhere
the ne>Gtechnical MOBlevelsare at.
If you knowonlythis muchbeforethe marketstaftstradingyouwill havean
ideaof the currentmarketMOODandwhereto switchyouropinionaboutthe
priceactivityasit unfolds.
daysprobable
NEWSBEFORE
THEMARKET
OPENS:
for the
Neverapproach
the marketfor the daywithoutwatchingBloomberg
asa daytrader.
latestNEWS,
to yoursuccess
asthisis paramount
GLOBEXPREMARKET:
Reviewthe GLOBEX
sessionand see how the overseasmarketshavebeen
influencing
the USpriceactivity.
If you do your analysiseachday beforethe marketopen you will place
yourselfin a positionof Tradingto WIN. If youdo notthenyouaregoingto
placeyourselfin a positionof tryingto "catchup"all day.
It is importantto be preparedbeforeyou even considertrading.Markets
sometimes
movevery quicklyand if you haven'tgivenany thoughtto the
currenttechnicalpositionbeforethe openyou will becomea casualtyor you
will nevermakethe cut.
without any preparation.
BEPREPARED
or suffer the consequences
Day to Day Checks
Section3:Chapter-1
ADVICE:
Eachday beforethe marketopensyou haveto get yourselfin the ZONE.If

youdont youwill nevermakeit asa trader.
TheZONEto me is whereI seethe currentsupportor resistance
thatis likely
to halta currenttrendor confirmit is stillin force.
patternsastheymovealong.
OnceI am in the ZONEI canreadthe unfolding
If I couldn'tdo that then I wouldnot havea cluewhat I am doingand L
wouldhaveto givethe gameaway.
Sometimes
I haveto sit backandwaitfor moreinformation
oncethe market
beginstradingfor the day but other timesthe marketjust unfoldsas I
originally
expected.
The realissueis that you eitherhavethe VIBESandyou haveCOMMITMENT
or you haveDOUBTS!
If you havedoubtsjust sit andwatchfor a while.
Thereis no realneedto takeanytradeon anydayunlessyou havethe right
SIGNS.
Whenthe signsare not therejust staypatient.Eventually
the market
willshowits handandthenyoucanjumpalloverit.
Asthe marketmovesalongkeepyoureyeon the NEWS
as it will giveyouthe
MOODand as the day unfoldsyou will eventually
seethe BIASas you see
points
you
howthe markethandles
the MOB
havecalculated
in advance.
Eachstepof the tradingday you will re-adjustyour MOBpointsand learn
moreaboutthe strengthor weakness
on the day.Whenthingsappearclear
youcanhit it. Youwill be rightor wrongveryquicklybutthat is trading.
Readthe patternsas the day unfoldsandyouwill alwaysknowwhichsideof
the marketto beon.
There are always 3 or more STANDOUT trading oppoftunities per
day, Learnto recognisethem and you must WIN.
Be patientif you makeseveralentriesyou haveto closeout andtheywould
havebeenprofitableafterthe event- just put themdownto lostopportunity.
I neverworryabouttradesI closeout for a smalllossthat wouldhavebeen
profitable
laterbecause
I knowtheycouldhavegonethe opposite
anyway.
Only worry aboutthe WINNERS
whenyou get them goingand dont quit
themuntilthe marketgivesyoua reasonwhy.
Do thesethingsand it will all turn out the wayyou want.If you don'tthen
don'tblameme because
I haveno ideaof yourabilityto thinkandact.
Day to Day Checks
Section3:Chapter- 1
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MOB,S- MAKEOR BREAKLEVELS:
The traditionalMOB'sare levelsthat standout as prior levelswherethe

marketfoundsupportor resistance
duringthe past3 days.
levelsaregoingto
If the marketis generally
trendingup the lowercorrection
are goingto act
of prioradvances
be MOB'sof suppoft.The 1:1 projections
astargetMOB'sif the marketmovesup into newterritory.
A BULLTRENDMOBDGMPLE:
BULLISHIII\OB,s
A doubletop possibility
nAoB2.
tl,IOB1.
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,TIOB3.
BEARISHCONTIFIUATION mob's
For the continuolion down to seem real

lhe markat shouldnot exceed the 1:1 level.
Basisthis currentpatternexampleoncethe marketopensit hasto do two

thingsto confirma bullishcontinuation.
1. Takeout the Linein the sand(LIS)whichis MOB1.
in the movedownfrom
2. Breakabovethe 1:1 levelof the 1* correction
the high.
If neitherof the abovelevelsare takenout andthe chaftbreaksthe recent
largerdegree61.8it becomes
a SELL.
Day to Day Checks
Section3:Chapter- I
READIFI6THE 5IgN5'->>>
A breokabovcthe 1:l wouldsignal

o BUYin progrcssos oll tha moin
tachuicalresistoncecomosoul.
If you go throughthis exercisedaily using the currentmarketpatterni

availabbto you,on anygivendayyouwill seethe obviousMOBlevels.These
levelsactasconfirmation
or non-confirmation
of the marketdirection.
Youonlybuywhenthe directionis up andyou onlysellwhenthe directionis
down.If youfollowtheserulesyouwillWIN.
in cosa you or vlondering vuhathoppenedl
2 doys dov.rnio
61.8rctroce
THE TWO.DAYCORRECTION
:
Alwaysbe awarethat a correction
of majordegreein a volatilemarketcanbe
expected
to expireafter2 tradingdaysor at leastby the 3'dday.
If you lookfor the signs,i.e.,watchthe toneof the news.Thenlookfor the
logicalgeometriclevelsthat couldsignalresistance
or supportyou will be
prepared
quickly.
to changedirection
It shouldbecomeobviousto youthatthe overalltrendhasnot expiredby the
newsand the opinionsof the "experts".Sometimes
the marketwill correct
whilstit is awaitingsomeveryimpoftanteconomic
datato be released.
Once
the newsis released
it will be business
as usual.
Day to Day Chec}s
Section3:Chapter- 1
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[c] BryceGiLnore2004
you will be ableto placetradeswith a limited

If you followtheseguidelines
risk and a high probability
outcome.If you ignorethe signsand tradeon
opinionyouwill remainin the 90o/o
bracketof losers.
SOMETHING
TOTHINKABOUT:
If you
Thefirstobjective
for anygoodtradingteacheris to stopthe bleeding.
present
as they
followmy examples
the oppoftgnities
and learnto recognise
you will stop your accountgoing down. Onceyou become
themselves
comfortable
thenyoucanbecomemoreaggressive.
withyournewsituation
Thefirst requirement
of a goodtraderis to be ableto executewithoutFEAR.
Youcanonlydo this whenyou canenterthe marketas closeto the SIGNAL
PRICEas possible.If you take the view that when the marketdoesnot
confirmyour choiceof tradeyou betterget out - only then canyou WIN
consistently.
Smalllosseson bad entriesset you free to start againfrom fresh,this way
you do not missthe nextoppoftunity.
hoping
Loserswho holdontopositions
they will come good becomeso confusedmentallythey are ineffective
traders.
Goodtradingis aboutplayingthe"hands"astheyaredealtto you.
Thatis just
tradersapproach.
Thereis no roomfor HOPEin the professional
liketryingto draw1 cardto fill an insidestraightin Poker.
Nowthat I havetold you all thesethingsyou needto be awareof to trade
it is up to you to do it - not me. Youmustthrowawayall the
successfully
crutches brokersand advisoryletters- just watchthe newsand do your
Thatis whatI callTradingto WIN.
ownanalysis.
Someoneasked me recently to explain my attitude to trading and

this was my reply:
3 thingsmotivate
the marketpriceaction!
Traderc,Tradercand Traders,...
Learnto recognise
whattheseguysaredoingandyoucanmakemoney.
is doingjust by the price
Youshouldbe ableto tell whateverytrendindicator
activityin the time frameyou are watching.But it paysto watcha normal
indications.
Stochastic
for Overbought
andOversold
Day to Day Checks
Section3:Chapter- 1
You shouldknowfrom the normallyacceptedresistance

and supportlevels
howthe marketis flowing.Wellyoushouldknow70+o/o
of the timewhenthe
trendis clear.Theflowis eitherup,downor congested.
Whenyouseea clear-cut
trendjust tradeit andtradeit andtradeit.
Whatyou don'tknowis how manyordersarestandingin yourwayto cause
pluckedandyou just
the reactions,
but you cantell whenthe feathers^are
haveto jumpbackin afteryouseethemflying.
Youneedto tradeby feelandnot by mechanical
signalsto bea pro.
I changemy mind10 timesa day sometimes
untilI get the feelfor whatis
goingon. OnceI see the signsfallingtogetherI am seldomwrongabout
whatis goingto happennext.
Always try and get a clear view of your objective and then you can
trade with a free mind.
lust oneotherthingto remember:
Veryimpoftant.
Thereis no priceto high to buy and there is no priceto low to sell.
Yournusttradewhatyou seeandjust go with the moneyflow. Do not refuse
to take a trade just becauseyou have an opinionit is overpricedor
underualued.
Thestrangest
thingshappenandyou haveto be guidedby the
you
SIGNS arewitnessing notyouropinionof whatshouldhappen!
THE3 DAYSWING& AVERAGE

DAILYMNGE:
Alwaysmonitorthe 3-dayswingchart (and alsothe 2-dayswing)so you
knowwhatit willtaketo makethe swingchartchangedirection.
ln 70o/o
it will not reverse
of caseswhena medium-term
trendis in progress
untilthe medium-term
trend(say5 to 10daysat least)is exhausted.
Whenthe currentdaysrangefalls well belowthe averagedaily rangethe
marketis stagnating.
Whenthe daysrangeexceeds
the averagedailyrange
by a largemarginyoushouldstaftthinkingabouta countertrendtradewhen
you can identiffan exhaustion
pointin the patternas this is wheretraders
willtakeprofitsandreverse
the intra-day
trend,it'sonlycommonlogic.
I am continuing
thischapterwith somemoredayby dayanalysis
examples
to
illustrate
whatI amdoingto workout wheremy nexttradewill comefrom.
Day to Day Checks
Section3:Chapter- I
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Monday4h August 2003:
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Todaywas anothergoodexampleof what I am havebeenteachingyou.

Alwaysbe alertto the possibilities.
The highThursdaywas 1004andtoday's
low was 964.75a rangeof 39.25pointsDOWNin 2 days and then the
levelin 1 day.
reversal
rallyretraced
allthe waybackto the 50o/o
Qcharts GSU
Thursday
l1:lOsm
Ilisplag
Bars
154
4:15
r;
Each day thc
semeprocadura
PRIEE...
NANGE
39.25 r
CHAHGE
3.91S
SQNg
ilegrees
113
ItllOB
ESA3U-5
2 Doy Corraction ???

3 bay S.u'ringbOWN
g?/3g
10:36
966. EB
966.50
964. ?5
966.25
g9,/44
Thedaylookedlikethison the l-minutechaft:

ES03U-1
0charts GSU
s86.66
REVER,SAL
DAY
s84.49
982.68
980.40
Elose 979 2
oB e7e
g78.BB
9?6. AB
9?4.44
g7z.ta
s?9. ga
968.94
965.68
gg/a4/zgffi
EA/EL
A8,/84
E8/84
EE/94
a8/g4
go throughthe sameprocedures
so you are
Eachday you mustreligiously
fully preparedfor the nextdaystrading.This is the onlyway you will know
what is in the mindsof the technicaltraders.The low todaycamewithin4
pointsof the criticalWave4 lowmentioned
in 52:C4:P38.
Day to Day Checlcs
Section3:Chapter- I
Onanynewtradingday:
It paysto remember
that the technical
signalsbeingusedby the daytraders
couldrelateto only what has happened
duringthe currentsessionor they
couldbe usingrangesout for upto 3 or 4 days.
Forinstance
the 50o/olevelof the currentday sessioncouldseemimpoftant
to them,gapson the openmayseemto be importanton the day andthey
willtry andfill themearlyin the session.
The openingpriceis impoftantin respectto the initialpositions
that traders
staftthe daywith.It is a wellknownfactthatthe openingpriceprintsetsthe
benchmarkmostdays,historically
the openingpricerangewill markthe high
or lowfor the dayapproximately
50o/o
of the time.
As the day progresses
and everyonegets into stepwith the latestnewsand
the developments
a lot more
comingfromthe cashmarketthingscanbecome
predictable.
Theveryactiveperiodsare normally
the morningandthe afternoonsessions
witha lullperiodmostdaysbetween12:00-2:00pm
ET.
On Monday's
tradersbeginthe weekwith a freshmindso anythingis likelyto
happenif institutional
tradersare caughtthe wrongway aroundfrom what
previous
hashappened
to the
week.Tuesday's
the
tradeis normallyadjusting
relevantmoodof the marketand so it goesthroughto Friday.Fridayis an
unknorrun
dayunlessthe trendis quiteclearas manytradersquitearlyfor the
weekend.Weatherin NEWYORKcan be an importantissueon Friday's,
especially
if it is snowingastraderswill leaveWallStreetearlyto get home.
Daysprior to holidaysand days prior to optionexpiryare battlefieldsin
themselves
as buyersand sellersfight it out with their view of the current
marketpositionand it dependson who is prepared
to holdpositionoverthe
optionscloseout or holidayperiodto seewhowill rulethe roost.
Thenthereare daysliketodayas we go into the open,it is now9:10amET
and we havehad newstodayof a terroristbombingin lakarta Indonesia
where a car bomb was explodedoutsidethe MarriottHotel and caused
massivedamage,killed13 and injured200.Yet with all this the European
markethasbeenrallyingin the earlysession.
How the US marketwill open is yet to be decided,it is beingcalledup
marginally
but that meansvery littlerightnow.Thereis goingto be a huge
$60 billion bond auctiontoday which is likely to influenceproceedings
somewhatastradersdecideif moremoneyis destinedfor the stockmarketor
not.
Day to Day Checks
Section3:Chapter- I
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in the morningsession
If anythingI wouldbe lookingfor a downmovement
in mindandwill
so we will seeif I am rightor not.ButI havemy parameters
workwith them so it mattersnot. 9:25amETandthe GlobexS&Pfutures
aretrading979.5down.5 fromyesterday's
close.
9:3OAM
ET. TheBELLHASRUNG:
The futuresopeningrangehas penetrated
the 979 MOBto 978.5and is
sittingon979,theopening
5 minuterangewas979.75-977.5.
In the first 20 minutesand the markethastradeddownto 977 and up to
981.25andis currently
at979.25. 985to 977= 8 points.
Thereis an ISMSeruices
repoftat 10:00am
so I will waitfor it beforeI takea
trade.If the 977 levelbreaksit is the wayto go basedon my lowerMOBat
979.
\
10:00amISM camein at 65.5 muchhigherthan expected- estimatewas
58.5froma prior60.6so that is something
newto consider.Theseweremy
thoughtsaswe progressed
throughthe earlystagesof today.
10:05am
the highso far hasbeen982andthe low 977we areat the high
endrightnowandreallyin a no man'slandacceptfor the 61.8retracement.
10:07am
marketbreaks977hasonly3 pointsdownto makea 1:1
10:09am
at thislevel.
low973.5a priorswinglowfromyesterday
10:23am
977.25marketcomesbackto testthe 977breakout.
- it'sa sell.
10:26am977.25- 3 topsherenow- retesthelddowntrend
10:37am
972 Nowwe arethroughthe 973.5priorlowtrendis down.
10:39am97I.5- priorswinglowyesterday
at thislevel
10:40am
the
shoft
resell
972.75 Close
and
on a breakof 97L
10:51am974 rallyingbacknowthe higher1:1 is at 976.5let'sseewhat
happens.
IltroB 979
Siqn of weokness
ralast break
985 to 9II = I
ffi/U
Day to Day Checks
6A/94
AA/A4
ffi/94
BB/WL
gE/Ss
Section3:Chapter- I
Whenthe marketralliedbackabovethe 976.5I did not stayaroundas I had

beenworkingall dayandnightfrom 3:00pmETthe day before.Butthe day
progressed
untilafter
andthe reallygoodtradeof the daydid not materialise
3:00pmwhenthe lateafternoon
session
brokeallthe existingsupport.
Tuesday5th August2OO3
98?.46
!184.AB
981.OB
I Tickfrom61.8
9?8. AB
9?5.80
97Z.gg
965.CIo
s66. ga
RETRACE
Breoksthe 50
WEAKNESS
NoSupporton l:l
963.80
sEB.B8
g8/95/zgg3
s?2.96
s?2.25
969.?5
'J79.ffi
9E/ES
of the rallyrange
InitiaffywhatI sawat the 97L.5lowwasa 66.7retracement
of yesterday.The clue for the breakouttradewas the fact that the market
The minimumtarget
was sinkingafter havingmadea 61.8 retracement.
wouldhavebeena 1:1 with the earlierrangeof 985-971.5andthis gavea
target of 966 and then there was the doublebottom with yesterdayat
964.75.Now with the marketbelow both of these levelsthe next logical
objective
is a 1:1 off 985measuring
the declinefrom 1004to 964.75whichis
39.25downfrom985at945.75.
Anyrallyat thisstageshouldnot exceedthe 8 pointerfrom971.5to 979.5so
we shouldbe prepared
for tomorrownow.
the MOBon the
Evenshouldthe marketrallyovernightin the Globexsession
upsideis the 964.75low but we also haveto considerthat the low today
brokethe 960.5low backon July 1s so the marketis in a very vulnerable
positiongoingintoWednesday.
Justthe wayI likeit.
youcanreferto S4:C1:P10
Formy biggerpictureanalysis
as 54: is wherewe
havebeentrackingthe marketactionfor about2 weeksnow.
Youmustlearnto go throughthesestepseachdayevenif youdon'ttradeon
the day,as it will keepyou in tunewiththe market.
Alsolistento the Bloomberg
reportsandinteruiews
of the tradingdayas most
of them will be rebroadcast
overthe next 18 hoursor so as they try and
explainwhythe marketdidwhatit didon the day.
Day to Day Checks
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OPENINTEREST:
Eachdayjust beforethe marketopenthe OpenInterestfiguresfor the day
become
available.
Youshouldkeepa trackof theseas it can shedsomelightontomattersat
hand.
morningthe
astradingbeganon Wednesday
Thesewerethe figuresavailable
Phillips.
member
Carl
TTW
to usby our
6h August2003:Assupplied
Contract
I tAug
Volume
3I-Jul
Jfll-JuI
Ol
ES
lVolume
5ffi871145119:
Sep-tB
t
0l
Dec-B
ilolume
Ol
t/olume
sml
ilolume
162
x)91
I taw
Ol
1667
ud
tlolume
Ol
y'olume
Ol
3A2l
54uq
dolume
571tFE
3gffi
153:
E1
21t
Total
Delta
ol
ozororlsorrtr ro+mol s2w't2 zrarral48689t
31.JuI
Contrac
| &Aus
4-Auq
Ol
J/t17rl0l-5[E|{Fl]'t@ll
-217391 174sil 413131 27t
5/8661 6113f 1
-198701 44131 -5n71
-1721
1741
ol
555,ftr
42trt1
154!
281
11t
6283i
/tgFFl
-ln
had had a
The interestinginformationhere is that the OPENINTEREST
dramaticdeclineon the day that the marketwashedout into the 960 low
area.
Thiscanonlymeanonething: SHORTCOVERING
earlieropeninterestcanonlyriseas newsellersenterthe
AsI haveexplained
market.
of existingsellersboughtbackbookingprofitson
OnTuesdayan abundance
new sellersdid not replacethem.Thismeans
the decline;mostimportantly
by existinglongsliquidating
the othersideof their tradeswere consumed
losingpositions.
If you go backa few daysyou will seethat the selloff from the 1004high
in openinterestandthenon Tuesdaytheybegan
attracteda heavyincrease
covering.Thismayhavebeenpartof the reasonthe marketheldup today
(Wednesday)
and didn'tfall off the cliff like I thoughtit might.Everylittle
forgetit.
pieceof information
andwe shouldn't
is important
Dayto Day Checks
1l
Section3:Chapter- I
Continued
from:S4:C1
:P35:
Thesearethe preparations
I am doingfor Monday25d'August
2003:
Fridaythe marketmadea convincing
highandthe daysrangeresultedin an
OUTSIDE
GAPREVERSAL
DAY.Thatis the marketopenedup abovethe prior
daysrangeand reversed
trendand by the endof the day havegoneall the
waybackto Monday's
low.
"r lffi--ll
t*ervatp6---ll
s.11
@D2n3
15:3000
9S475
s5 25
991.75
9S275
Btrs 35
6s,967
F Alsessirrs
,f*il*-d+r4L'T[{r*
lurr,
tee4^?
3 doy SWIlrlE - DOWN

PREPARATIOI'IS
for Mondoy25th August?OO3:
Friday's
lowtestedthe 38.2retracement
of the entiremovefromthe August
5m- 958.25low.Technically
youcouldexpecta reactionbackup at this level
but it occurredrighttowardsthe closeand hadno chanceto tell us if there
wereany buyersthere.A breakbelowthe 38.2andthe nexttargetis the 50
andif thatbreaKthe61.8.
Eventhoughthe 3-dayswinghasturneddownthere is alwaysthe chance
thatthisdownmovecouldonlybe a onedaycorrection
at thistime.Untilwe
havebeengoingdownfor morethan2 daysI will bearthisin mind.Oncethe
marketbeginstradingI canseewhatit is doingas I nowhavemy downside
guidelines.
If the marketfindssupporthereI haveto alsodetermine
whatwill constitute
a buy situationfor me. In this caseit is quitesimplebecause
the current
rangewe areworkingwithis onlyFriday's
range.
The largestcorrection
in the movedownon Fridaywas3.25pointsso that is
the startingpoint.
Dayto Day Checks
t2
Section3:Chapter- I
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Tradingto WIN Course- One day at a tirne
Friday'sESlow was991.75 so a movebackabove995from hereconstitutes

an overbalance
andwe wouldhaveto consider
a changein relativedegree.
tnervat
lE--l
,u lffil
|- rutsessirns
s7.01
@tz2@
15:55:@
99250
9S2.75
s1.75
992.00
% {3
Bars-l 5
Evcnif we makeo lowcr low crd rolly trtOB 1& 2 will rernainimportcrt:
Mythinkingat this pointin time is this:

1 . Thetrendis nowdownanda breakof Friday'slowconstitutes
a SELL.
2. A breakbackthrough997will be the 1* indication
we cango higher
but I wouldstillSELLa retestof 997if it comes.

3. A breakbackthrough999.75wouldstartme thinkingthat thisdecline
is only a one-daywonderbut I would still sell at the 38.2 for a
continuation
backdown.
4. A sellat997onlyrequires
a ^6 (3/4 pointstoploss).
5. A sellat 999.5onlyrequiresa 1 pointstoplossandyou couldreverse
longat 1000.5for a testof the 50 andgetyourmoneyback.
6. If the 50 (1002)breaksthe marketis backabovethe psychological
1000levelconvincingly,
I wouldthen expecta retestof Friday'shigh
andperhaps
the 1014area,so I wouldbecome
a buyer.
So you can see that basedon my preparation

oncewe begintradingon
planof actionto follow.
Monday
I havea clear-cut
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Followsimilarstepseachdayandyou will knowwhatis requiredto be done

to makemoneyon an intra-daybasis.Youwill beTMDINGto WIN.
Asthe marketmovesalongI will re-adjustmy planto takeintoconsideration
any changesto retracement
levelsand any 1:1 levelsthat mightcomeinto
play.
Dayto Day Checks
l3
Section3:Chapter- I
Section 3! chapterz:
Weekly Check List:

No tradingmanualwouldbe completewithoutgivingyou a run downof all
thethingsyou needto remaincurrentwithon a week-to-week
basis.
Besides
the normalthingsthat influence
the marketon a day-to-day
basisthe
underlying
strengthof the marketwill be fairlyobviousby the week-to-week
activityaswe continually
moveforward.
Someof the longer-termissuesthat will affect the market strengthor
weakness
arethe technical
aspects,
but underlying
thesecalculations
arethe
political
andeconomic
considerations.
It paysto keepan eyeon the LONGTERMINTEREST
MTESas thesecannot
be manipulated
by the FED the FEDcantry andinfluence
the marketwith
its overnightratemanipulations
but whenit comesto costof borrowings
for
government,
companies
or publichousing,the ratesare governedby an
auctionsystem.
Basically
moneyfromthe economy
will find its way intothe variousavenues
of investmentbasedon rate of returnsand the perceivedsecurityof such
investments.
Theabilityof banksto makenewloansis limitedto the amount
of fundsthey can attractfrom investorsor pensionfunds.If longratesrise
thenthe borrowermustpaymoreandthe increases
are passed
on downthe
line.
llave Trader
155.00
US I-B0HI!S 6?. Coupon
IIEEHLY
1,l5.AA t5i0 = 4!,
Whotyouconread intothis charfrightnowisthat

borrowingcostsore increosing
onddemandis quite
strong,
iiy reod isthst the moneyis dryingup.
135.EE
125.E6
115.94
185.gS
1OO: PAR6%
95.48
g5.aB
The bond quoteswork os on index whero lOO

: a couponrote of 6-o./"
The index ulorks in reverse/invrsfor yield.
?5.09
65.68
55.88
45.8A
Hairr
Weekto Week
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A goodavenueto monitoris the trendin the 10 yearT-Bondsas thesewill

overall.
tellyouif the costof moneyis increasing
or decreasing
withcompany
Let'sfaceit unlessthe costof moneyis movingcommensurate
fund
expansions
then
the
to
business
earnings
changes
opportunity
andGDP
at an
is goingto be limited.Right now the cost of moneyis increasing
=
rate (the indexhasbeenheadingdown ratesrising).You
unprecedented
in a positionto take on
haveto ask yourselfthe question?
Are companies
theirownprofits?
moredebtfor expansion
or cantheyexpandby reinvesting
are
Thenagaininvestment
moneycouldbe in shortsupplyandrateincreases
an obvioussignof it.
Therecouldbe manyreasons
for this rightnowas realestatehasboomedin
years
recent
as the stockmarketdeclinedand the FEDdroppedshort-term
growth.The realproblemfor the FEDis that
ratesdramatically
to encourage
growth.
theydon'tknowwherecheapmoneywillflowto stimulate
I sawa similarinstance
of thisway backin the earlyBO'swhenan economic
recession
and fall in stockpricesresultedin a massivedrop in shott-term
ratesand a boomin real estateprices.Realestatecontinuedto boomfor
someyears,up untilabout1989whenthe ratesbecameso highonceagain
the sidessplit and cleanedthe clocksof those who couldn'thold their
positions.
The stockmarketdeclinedfor a whileuntil ratescamedownand
thentook off in a wild ridethroughthe 90'sas techstocksofferedthe best
gambleof the century.
or
The pointis that whenthe costof moneygoesfrom cheapto expensive
abilityto repaywe can have
expensive
to cheaprelativeto the economies
largeswingsin stockpricesandrealestateprices.
goingto provideuswith trading
Knowing
whentheseinfluences
are possibly
we shouldreflecton oncea week.
opportunity
is an impor[antexercise
few yearswatchingthe
WhileI am on this subjectit hasbeenan interesting
go into a boom.I
real
world
stockmarketfall into disarrayand the
estate
themselves
at the
haveseenpeoplemakefortunesbecause
they positioned
"It's
all overwhenthe
righttime but the old sayingkeepsringingin my ears.
fat ladysings"!
it hasto bejust
Whenthat is I haveno ideabut basedon pastexperiences
aroundthecorneronceagain.
As a traderit will neveraffectme so I don't care but for thosewho are
hockedup to the eyeballswhenthe trend in long-termrateshascertainly
soon
turnedthe cornerI canonlyexpectto seebloodin the streetssometime
in the realestatearena.The pointI needto concernmyselfwith thoughis
will it benefitthe areaI makemy moneyin?
Weekto Week
[c] Bryce Gilnore 2004
So eachweekit is a goodideato watchwhat is goingon andevaluate

the
progress
of the marketsyoufollowwiththe currentcostof moneyavailable.
Boomsof any kind havealwayshadtheir foundations
basedin a poliryof
creditexpansion
and they alwaysend because
the creditexpansion
cannot
pace.
keepup the
It is simpleeconomics
really.
THELONG.TERM
POSITION
OFTHEMARKET:
On a week-to-weekbasisyou shouldreviewthe long-termpositionof the
market.
r
Z1ffug8?
r
Z6tlctll0
07Jan94
14]lar9?
t
ZEI{a906
15tu9t3
Whenyou lookat the marketin thiscontextthingsdon'tlookthat badvisually

but the low last year was a drop in valueof 50o/ofrom the all time high.
Whichmeansto recoverallthe lossesit hasto go up a 100o/o
in value.
Presently
the marketappearsto be in a recoverymodeandat its recentbest
hadgained32o/o
in valuefromlastyearslowpoint.
Economic
figurescomingthroughthe pipelinewouldsuggestthat the US
economyis on the mendas companies
The
are returningto profitability.
biggestdrawbackright now appearsto be the unemployment
figures.But
that is not our majorworryas valuations
of stocksrely on their underlying
profitsandpaydividends.
assetvalueandtheirabilityto produce
Historically
the establishment
looksat PE's(Priceto earningsratios)and a
benchmark
PEvaluation
of a solidcompany
is 15timesearnings.
Weekto Week
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Often the marketover valuesa stock basedon the PE if it believesthe

company
will improveits earningsovertime.So purevaluations
on PEratios
guide- theyareonlya ballpark
figureto go on.
arenotan accurate
In recenttimesthe overallPEratioof stocksin the S&P500
hasbeenas high
as 2511,whichin my mindis the reasonholdingthe currentmoveupward
back.
Theredoesn'tseemto be any other strongreasonas there is plentyof
investment
moneysittingon the sidelines
by all repofts.
The main reasonthe marketfell over in the first placewas becauseof
fraudulentaccountingpracticesand a weakeningeconomy.
overualuation,
Thento top it all off the USAbecamea targetfor terrorismthat hasviftually
brought the airline and travel industryto its knees. Reducinghotel
occupancies,
retailsalesandthe ensuingunemployment
all addedto the drop
in consumerconfidence,
whichthen found its way into the stockmarket
sentiment.Investorsturnedto real estateand otherthingsas well known
companies
The majorworld
droppedin marketvalueby as muchas 70o/o.
sharemarketsfollowedsuit reducing
the apparentwealthin the worldby an
percentage.
enormous
Neveftheless
life as we knowit hasgoneon relatively
undisturbed
andthereis no reasonto believethatthingswill change.
The worldhas beengoingfrom one crisisto anotherfor as longas I can
remember
andthe stockmarkethasbeengoingup anddownwith it at the
sametime.
- the top 500USstocks.Onehasto realise
My mainfocusis on the S&P500
thereare thousands
in the USand as time goesby and new
of companies
grow they increasein wofth and becomebiggerthan existing
companies
S&P500
Whenthishappens
theyarethenmovedintothe indexto
companies.
replacethe onesleaving.As a resultthe S&P500is hypothetically
a growth
index.Thisis wherethe indexfundsget theirnamesfromas theyswapand
changetheirportfolios
to reflectthe stocksin the index.Soyou canseewhy
like ENRON
a majorbankruptcy
can affectthe indexfor a while but then
whenit is replaced
elsethe bleeding
canstop.
by something
It is my view,if the worlddoesnot changemuch,the S&P500bearmarket
thiscentury.
bottomof 2002is the lowestwe will everseethe S&P500
Sohavingsaidthat I canmoveontowhatI wouldbe lookingat eachweekto
keepconfirming
myview.
As I haveexplained
in otherchaptersthe marketmovesalongin ups and
downsthat relateby timeratio.SoeachweekI needto research
the existing
timecyclesso I canseeif the existingoneshaveanyrelevance
to the current
marketposition.
Weekto Week
Recentlythe S&P500futures marketmadea doubletop on the E-Miniat

LOL4JS(July14b day session).
This doubletop coincided
with a 1:1 time
so as we are approaching
a re-testof this double
rycleof majorimportance
top it is becoming
moreandmoreinteresting.
Technically
I nowneedto seeif
thistimeryde lookslikeit hasanybearingon the immediate
future.
llave Trader
LZg3.8E
1163.OO
Itz3.g6
1083.6S
1843.BB
1683.66
s53.00
9u3.60
883.08
Evcntuallyit
hos to breqk
onewoyl
843.00
883.A6
?63.A0
ftat ios
lC la lenilar
cd/ab=
1.844
To see the currentshort-termpositionof the marketyou shouldrefer to

S4:C1:P21
on.
We are at the crossroads
technically
becausethe currentrally high is up
against
a 61.8retracement.
One thing on my mind this weekend(16h August2003) is the possible
implications
OUTMGEon the Eastern
Seaboard
of the USAthis
of the POWER
week.Therewerea lot of disruptions
to the transportindustrynotto mention
the lossesto the freshfoodindustryandthe retailbusinesses.
Losses
would
haveto bein the 100'sof milliondollars.
Neveftheless
the situationwill becomeclearbeforelong.The purposeof my
explanations
is to showyou the detailI go throughto stayin tunewith the
marketaction.
I am a firm believer
that you needto understand
everylittlethingthat might
be in the mindsof the tradersas it is the traderswho takepricesfrom one
levelto anotherandnotanythingelse.
You need to understand the technical, the fundamental and the
psychological aspects surrounding the traders to be successful
today.
WeektoWeek
18
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rradingto wIN course- one dayat a time
numbersintosomesystemandhopingit will
Thereis no pointjust crunching
with any
work becauseit won't.Thereis no needeitherto get involved
"Guru"
market
planetarybullshit promotedby some of the so-called
as a
ASTROLOGY
Stayawayfrom thosewho promoteFINANCIAL
forecasters.
they say boilsdownto
tradingtool if you want to makemoney.Everything
absolutebullshit.Theylive in a worldof makebelieveand to saythe least
people.I haveseenit all overthe yearsandI knownow
theyaredelusionary
anythingtheysayas impoftant.
to neverevencontemplate
and Heliocentric
Justto provemy point here.arethe combinedGeocentric
positions'for
planetary
the 14hJuly2003andaboutthe onlythingthat shows
of the 13h.
up is a fuli moonon the evening
ANGIJS
GEOCD{IRIC Sfi
CgcleTrader
37814.73
Ilag
GI,iT 14/ 7/ZBB3
5:31
Gt{T
Phase 1?4d Z4n
llDncun?
12L Z7 t9 lE
UEHUS
161 38 5 Cn
HRBS
338 38 51 P i
274
RSPECTS
Ji:i'i:ilfi
l, i.:
SffTUNH
9 5 1 8 5
UNRilUS
332 1? 48
NEPTUHE
312 21 22
PLUTO
257 34 2A
Sun
111 24 4
B-------------
SUN
ERRTH
l,loon
59 46
296
tn
Pi
ffq
Sg
Cn
Cp
3B
SUI{ RNSLES
HELIOCENTNIC
Cgc lefrader
37814.73
Ilag
G}IT 14/ ?/2893
GIIT 5 : 3 1
Phase 1?4d Z4rn
RSPECTS
gB
HERCUNl
ui
152 4?
Uf,NtJS
8? 4? 24 G e
I,IRRS
386 Z8 ? fiq
139.33
156.33
14.93
145.s3
SRTURN
S3 22 1
UNAHUS
338 23 3?
NEPTUNE
311 33 5?
PLUTO
?58 38 3?
IRRIH
ZSl Z4 4
I't0olr
116 53 46
Weekto Week
1 6 1 .S 7
Ctr
1BB
Pi
38.S9
fiq
za.26
Sg
32.74
Cp
IRNTH
SUN
t9
MEDIUMTERMTRENDINDICATORS:
TrcndTrader
$&P5[0
TR E H0
IEP|lfiTINTE
IIPEH
t s # .l [
[3[815
illflt/Ult4
9t2.5[
v85- 5{t
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f,ange
Trcnd
Waue
Indicator
-5t.6
-t9-$
St0ltf
tdtD
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IHIIICf,TIIR
[E] 2ll[1B;Gilnore
$P5IN
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+ifl0 llfiY l{-nit-fi.c-0

IIIEGTIONNLIilIIEII
$H0RTTtftt'l
$tlll'l $T0EIfiSTII
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t+.1
HfiftHtT -
Iutt
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TftEHII
ltF
UP
$TftEHGTII
$ullish
. LT llnly
[T llnll
STEEH[TII
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HF 9S6.15
[LISE
l S ? .l 0
tilt.5[
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Yesterday
TilrRV
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UP
ltF
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P { I $I T I I I H
L0HC
L0H[
OUT
t0H[
fiTTIIIH
t0tlE
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ll igh
tl$ - 6ll
Lotll tS?.1X
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+ 16 - 15
Sll It
/f ffi Il
I tt2-8[$
97t.5[
According
to this repoftunlessyou knewanythingaboutmarketgeometry
youwouldhaveto saythe trendis on the up.
This is effectivelywhat the systemtradersare seeingso it paysto keep
informed.
s&P540
High
Loru
Rge
4 t{R1
sE8.Z?
1il t-tHZ
s B 3 .8 5
59 lrff3
gB?.?4
1014.86
958.58
56.38
E
H
D
T
R
R
D
E
18..-
50 doy iifiA
Slow Trend
STOCH
1ffS
AE
{ J
ztl
9.18
L3
t(
tt
You shouldreferto your trendindicators

eachtime you are approaching
a
beginto show
stronggeometriclevelin the market.If the trend indicators
signsof overbought
or oversoldat impoftantlevelsthey becomeveryuseful
indicators.
if the 61.8comesout the marketwill be metwith
In this instance
rightnow.
anotherfloodof buyingorders.Thetrendis in the balance
Weekto Week
20
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COMMITMENTOF TRADERSREPORT:
Finallythe commitment
to your overallviewof
of tradersrepoftis essential
the marketposition.
120000
100000
80000
60000
ao
40000
2oooo
9
n
U
-20000
-40000
-60000
-80000
L2
OE
o3
.".^5**${s}*'is}+i.}si"{'"s*,'-{r"{us
It's a littlehardto makea lot of senseout of thisotherthanto saythe middle

of Juneperiodwherethe marketrandownfor a whilesawthe publicliquidate
longswhilstthecommercials
amountof shorts.
boughtbacka substantial
The activitysince has been relativelyflat exceptfor the odd days we
witnessed
recently.
positions
haveremainedquiteresoluteto the
Nevertheless
the unreportable
net
remaining
longsidewiththe commercials
basically
andnon-commercials
shoftwithoutapplying
in recenttimes.
anypressure
positions
wouldbe
Eitheranotherswingup or downin the non-reportable
significant
for me on a commitment
basisbut as we are at a crossroads
situation
technically
rightnowthatis onlygoingto beseenwhenit happens.
In any caseif you followthe analysisprocedures

I am showingyou each
week.Youwill findthat everything
will lookafteritselfandyouwill
important
neverbe the wrongway aroundin the marketfor morethan a day at the
worst.
Weekto Week
2l
Week ending 22ndAugust 2OO3:
Fridaythe marketopenedon its high 1012.25and closedon its low 992

DAYpattern.
REVERSAL
forminga GAPOUTSIDE
Anysignificant
dailyreversalpatternsuchas this is a realsignfor technical
analystsand as I have said so manytimes beforeit is impoftantto go
haveanymeritbasis
to seeif the TIMINGFACTORS
throughall the exercises
methodologies.
the GANNor ELLIOTT
]lave Trader
Totcl timc 1.618
1eS3.gB
1153.66
ITz3.EA
ry
1083. Bg
ffi43.49
1003.60
s63.86
9z3.BA
883.66
843.04
g03.BB
?ffi.48
f{aitr
Z1sep61
and
The breakdownon the dailyactionhas beenexplainedin S4:C1:P34
present
so
T1meis
situationin the dailystochastic.
showsthe overbought
reversal.
is in favourof a significant
everything
llave
HSEXLY
frader
u3g.m
ror*'w
oRW: (
g8s.m
s64.08
?64.m
Weekto Week
22
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peoplefromtaking
I hadto laughon FridaysinceI havebeendiscouraging
any noticeof planetarypositionsin this chapter.But I haveto admitthere
wasa significant
aspecton Fridaythatwouldhavebeenpsychologically
active
in the mindsof anyonewhopractices
Financial
Astrology.
I am surethat if today'shighturnsout to be anythingof majorimportance
I
amgoingto copsomeflackin the yearsaheadas hashappened
in the past.
Neveftheless
I will stillstickto my originalwordsin thischapteras evenif the
planetscan be provento be importantI havebetterwaysto time the market
andmywaysarefar moreaccurate
asa tradingtool.
Thesewerethe aspectsfor Fridaythe slqypilotswouldhavebeenfollowing
and I mustadmitif enoughof them divedinto the marketit wouldhave
helpedfuelthe selloff thatoccurred
on the day.
HETIOEENIRICSUHRHGTES
f,gcleTrader
Phase 61d {5r,r
ss
HENf,UBY
Ilag
3?854.11
GllT zz/ 8/Z-B,43
GHT 14:31
Neu.rYork 9:31om
ffSPECTS
48.63
OppositionL 7 7 . 4 4
Conjunction z . B 4
OPPOS
I TIOII
1?S.84
1Z;5.74
URftHUS
338 4S 3
pi
TIf,tsTUHTJ
ERRTH
SUN
278
Eorth / Sun - Venus,Mors,Jupiter & Uronusore oll linedup.
This is somethingyou wouldnot see happenvery often and it is hardto

imaginewhat it reallymeansin an economic
senseonly a psychological
sense.ButI do remember
backin 1987whenthe marketcrashedit did do it
phase.
duringan Eafth/Sunfupiter
Opposition
My mainpointin showingyou this is just to makeyou awarethat it paysto
keepan eyeon whatothertradersmaybe usingevenif you don'tbelievein
it. I am in the business
of playingoff the otherplayersnothingmore.
Weekto Week
ANOTHERCOMPOI{ENT
OF THE S&P 5O0 is the DJIA - the top 30
Industrials.
this earlierbut it wasnot relevantuntiltoday.This
I shouldhavementioned
obseruation
mayhelpyouweighyouropinionof the S&Ppositionon a weekly
basis.It paysto keepbotheyesopenif you havetwo.
o Effi--'l
rt*."a $I--l
F !,ltlssions
/LL TIAAEHT6H
1500l]
1mo0
DOW JONES INIDUSTRIAL ovclog:

the 3O top slocks in th 5&P 5OO
Oct loth Lovr ->l

Apr
Jul
Oct
Apr
Jd
Oct
The DJIAbackedoff a 50o/oretracementleveland the word will be out by

Monday,
believeme.
Whichever
way you chooseto look at thingsthere will alwaysbe some
for you to fall backon comingfromeitherthe
suppofting
technicalevidence
performing
stocksin the index.
DJIAor the major
lookslike "the FatLadyis aboutto sing".
Certainly
Nowwith all the informationwe haveextractedfrom the data we haveat
handwe cango intonextweekfullyprepared.
we shouldhave
because
Wedon'tneedanyoneelse'sopinionor newsletters,
career.
If you haven't
every
trading
dayof our
doneour ownworkeachand
thendon'texpectto get the resultsI get.
- I
Preparation
and marketanalysisis the only way you can be successful
is
losersall thinkmy approach
noticetimeandtime againthat the invariable
too muchworkandas a resulttheyfail. Youhavea choice!Dothe workor
fail- thereis no otherway.
Weekto Week
24
Section3: Chapter-2
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[c] Bryce Gibnore2004
Tuesday 2ndSeptember 2OO3:

A WEEKMAKES.
WHATA DIFFERENCE
Lastweek the marketdeclinedfor two daysand then found its feet once
again.
Thetwo daysdowndid not violatethe uptrendeventhoughthe 3-dayswing
didturndown(seemy rulesin 51:C8).
Todaythe S&Pbrokeout into new territoryand the DJIAbrokeabovethe
page.
levelshownon the previous
retacement
50o/o
of the marketrightnow.
Thiscanonlyleaveuswith a bullishconclusion
S&PsBB
date 638582
hi
rnz.sg
Cgclelrader
TuasdoyZnd Saptanber 2OO3

qfler o LongWeekendlhe morkei
shruggadoff the consolidotionperiod
railh a nice break lo a new high.
la
date
?Bfi.5B
&3831?.
Lookingbackat the positionof the marketon the closebackat August22nd

DAYyou can seewhy it paysto remainflexible
REVERSAL
andthe OUTSIDE
in youropinionandnottry andbe a forecaster.
callmeearlylastweekandaskme if I had
FunnythingI hadan acquaintance
positions
on Fridaythe 22no.He saidhe was goingto
seenthe PIANETARY
in the DJIA
take a long-termshort positionbasedon the 50o/oretracement
planets.
I wonderhowhe is feelingthisevening.
and
It doesn'tbothermethat the markethasmadea newhighafterthe signalsI
wasworkingoff a weekor so backas I wasflexibleand revertedto the long
DAYto turn backup on
REVERSAL
sideagainwhenwe madethe OUTSIDE
Tuesday
August26s.
Follow
Do the worK followthe rulesand thingswill lookafter themselves.
will
it
do.
what
whatthe marketdoesanddont try andforecast
Weekto Week
Section3: Chapter-2
SectiOn 3l chapterg:
ContractRollover:
TheE-Minitradesthe followingdeliverymonths:
1. March- CodeH
2 . J u n e -M
-U
3. September
- Z
4. December
The tickersfor the variouscontactmonthsthis year are ES03H,ES03M,
ES03Uand ES03Z. ES is the symbol,03 denotesthe year and the code
denotes
the deliverymonth.
(U) andtodaythe
the current1* monthwas September
Up untilyesterday
(Z).
activecontractis December
The exchange
rulesdeemthat the activetradingvolumeroll to the forward
on a Thursday.
month1 weekbeforethe deliverydate,it usuallyhappens
The reasonfor this is to supposedly
defusethe volatilityon the lasttrading
anddeliverable
daywhenyou havea triplewitchingwhereoptionscontracts
futurescontractsreachsettlement.
Retrccementlevelsare ofthe recent decline sver 3 doy!
They SOLD the 5O on a lxl
retest
Theyhought
the retest
CONTRACTROLLOVERinto bacember
Thisis the December

contractES03Zin 5 minuteinteruals.
Youwill obserue
from the chaftthereis negligible
volumein the December
contractthe day
beforerolloverandthentodayit lightsup.
ContractRollover
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Trading to WIN Coune - One day at a time
Just so you c;;tnseethe differencehereis the expiringSeptember

contract,
the ES03U
andit stillhas5 tradingdaysuntilexpiry.
l,lardly ony VOLUAIEtodoy but it is still troding
Theseare the total volumeand openinterestfiguresfor yesterdayand the

weekaswe wentintothe rollover:
Therearetwo thingsto notein thesefigures:

1.
2.
Howthe OpenInterestin December

is buildingup as we headinto
the rollover.
The volumein December
is not all represented
in the additional
openinterestfigures.
ContractRollover
I saidto my studentgroupthe otherdaythat I hatethisrolloverperiod- the

reasonis that whenwe comeinto the rolloverthe heavyplayerscomeup
withall sortsof schemes
thattheythinkcanmakethemmoney.
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Theproblemis,youneverknowwhentheywill strikeandsendthe marketup

or downseveralpointsunlessyouhaveeyesin the backof yourhead.
Let'stakethe buildup in the December

openinterestfirstas it isjust a simple
matter.
Theseare the positionsbeing taken by either new trader'senteringthe
marketthat knowthe rolloveris comingor theyaretradersmovingtheiropen
positions
intoDecember.
fromSeptember
Evenwith the rolloverapproaching
increase
therehasstill beena conslstent
in overallopeninterest.Nowwe knowthat meansmorenewsellersentering
the market,and buyershaveaccommodated
them. But up until todaythe
previous
two daysweredowndays.(Seethe chartS4:C1:P39)
"Whyis the volumegoingintoDecember
Youcouldaskyourselfthe question,
notfullyrepresented
in the OpenInterestbuildup in December".
Well the simple answeris that arbitrageis taking place betweenthe
September
contracts
in thistimeframe.
andDecember
If you look at the low priceyesterdayin the Septembercontractit was
1009.25
contract
1007.75.
andin the December
Yes,a discount
in December
of 1.5points.
Nowunderstand
this:
The reasonfor the discountin a forwardmonthfuturescontractagainstthe
currentmonthis that SELLERS
haveto OFFER
LOWER
sotheycanget buyers
to transactbusiness.
It reflectsthe factthat sellersarethinkingthe marketis
heading
for a downturnandwantto makesuretheyget intoposition.
Thenthereare the guysBuyingDecember
thinking
and SellingSeptember
that comethe day beforeSeptember
contractwill fall
expirythe December
into linewith the September
contractandtheycan pickup the 1.5 pointsin
the spread.
Youalsohavethe realheavyplayerstradingoff positions
in the September
contractagainstoptionspositions
at thistime.
I will be muchhappiertradingwhenthe September

contractgoesoff the
boardandI knowtheseguysareout of the way.
ContractRollover
28
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Here'sthe problemI haveduring rollover week.

0charts ESU
1835.66
Sepietnber Controcl:
ffi36.48
1033.60
Herc's tha problan I hoveduring

rollover uueak:is the irend bock up
or not???
1839.SE
1AZ7.Ag
rgz4.86
13
r0zt.Ea
10^4
1618.69
ffi15.04
IALZ.BE
uag.BB
69,/I?,/Z$g'3
Thecurrentrallyhasoverbalanced
both lxl's but it is wedgedon the 50o/o
retracement?
Theoverbalance
of the 1xl's wouldindicatestrengthyet the 50
possible
retracement
indicates
resistance.
ficharts f,SU
1838.SS
ESBSU_38
1032^6
1831- BB
1026.BS
tgzt.g6
1816.BB
1811.06
1468.Ag
1841.AB
ss6.BB
Is this o 5O% relrocanreni reversol?
9S1.00
986.48
gig/EE/ZBE3
(wellit brokeit
The September
contractis rallyingfrom a 50o/oretracement
by 2 ticks).
I knowin my mindthat the 982^4 low andthe 1032^6highweremadeon
pointsof force.
geometric
highvolumetradingandwerelegitimate
It's the December
levelswhenyou go backthis far that becomea mental
problem
for meastheywerenot madeon highvolume.
ContractRollover
29
Tradineto WIN Course- One dav at atime
u34.AB
1831.08
DECEMBER
CONTRiCT
taza.sE
1025.BB
Ig2Z..BB
1019.BE
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1S16.AB
1413.68
10u.Ea
168?.BB
Bg/lz/zw3
All the rangesare identicaloverthe pastcoupleof days.It is whenyou go

backa bit theyvaryslightlyandI am continually
wondering
whichcontractis
leadingthe otherduringthe rolloverweek.
1831.AB
L6Z6.W
LEZL.gA
1S16_
sO
1811.48
1086.00
1901.09
![|6.BB
!t!t1.00
s86.BB
DECEJIABER
CONTRACT
aS/ffir?$Tt
It maybe nothingto worryaboutbut the reasonI worryaboutit is because

pointby over2 ticksis causefor
in my bookany breakof a stronggeometric
concern.
At the lowtodaythe December
E-Minicontractbrokeifs 50o/oretracement
by
over 1 full point.Nowwhenit happened
it lookedto me like it couldkeep
goinglower,but whenit brokebackabovethe low of yesterdayI calledit a
buy.The problemfor me at the timewasthat I couldnot buythe 50o/o
level
"lost
geometry.
withanyconfidence
dueto the
motion"in the
you reallyneedto referto the pit contract
Whensomething
likethis happens
andseewhatit did.
ContractRollover
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Qcharts

sPfftz-68
CSU
1g3s.0g
lffiB.AB
Igz5.w
tgzg.BB
1615.BB
1418.E0
1010.5
1885.AB
lgw.gg
gss. BE
9SS.AS
985.44
gs/Ea/zBBs
Youhaveto askyourselfwhy the Pit cantradeto a perfect50o/oretracement

ESoverruns
sometimes.
andthe Electronic
deviation
of 2 ticksmaximum
Nowif youwereusingmy accuraryparameters
from perfectgeometryyou canhavecompletefaiththat we hadmadea 50o/o
retracement
andacton it.
I haveseenrepeatedinstancesof deviationsin the ElectronicESto the PIT
in a
retracements
in the past.The lasttime it happened
tradedpriceat 50o/o
bigwaywasbackat the March31st2003lowwhenthe EStradedat 840and
hadcalculated
to 841.5retracement
the SPtradedonly841.5andthe 50o/o
boughtit whenjust
ScottManyalertedme to it on the dayandI immediately
a minuteor so beforeI thoughtthe 50 hadcomeout.
ContractRollover
Another way to possiblyresolveany dilemma is to inspectthe CASH

CHART:
5&P5OOCASHINbEX
LO32.4t
ffi33.49
L0,2E.EE
LBZ3.8g
1818.BB
1813.ES
1BBg.gB
ua3.ss
9glB. BS
s93.08
s88.08
a9/98/?ffi3
NowI havelookedat it underthe microscope

saythat we
I canconfidently
havemadea 50o/oretracement
at the lowtoday.
The next issue becomesthe lx1 correctionsupwards.The ES has
overbalanced
but the SPhasn't.The SPhasjust brokenthe 50 backup yet
the CASHandthe EShavenot. Pointis we are righton a criticalMOBat the
endofthe day.
Anotherissueis the discountin the December
contract.The CASHlow today
points
was1007.71so the discount
was2 full
in the futures.Thisis a bearish
signnota bullishsign.
In anycasethe onlyconclusion
I canarriveat is if it breaksupwardsI should
pointI shouldbe a seller.
bea buyerandif it staysbelowthe balance
Thebiggerpictureis interesting
whenyoustandbackandtakea goodlookat
whathashappened
in the past8 tradingdays.Themarkethasgonesideways
to downwith a strongfinishon Fridayafternoon.
The Bloomberginteruiewsare all decidedlybullish,the main comments
comingthroughare blamingthe currentsluggishness
on a marketthat has
goneto far to fast.The majoritythink that as soonas the currentsetback
resolves
itselfthe buyerswill return.
I'm not entirelyin agreement
with theirviewsbut I don'thaveto worrywhat
the marketdoesin the longtermI am onlya daytrader.
The marketcango anddo anythingit likesfor all I care.I will knowhowto
handleit.
ContractRollover
32
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If the marketcomesbackdownand breaksthe largerdegree50 I should

expectsupportat the major1xl level.If the lxl failsthenI canbe a happy
that will happenare remotein
bearandselllike crazy,althoughthe chances
myeyesat the moment.
LikealwaysI haveto wait untilthe markettellsmewhatto do. I keepsaying

on a onedayat a timebasis.
hasto be handled
thatthisbusiness
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Mondoy 15th Soptember2003

LEZ6.g8
1 0 1 82
1A18.58
I1'L51DEbAY
1gr?.06
1815.54
1914.60
1812.58
1611.OB
1BOS.5B
1688.BB
1086.58
Bg/15/ZBA3,
E5
Sep-03
Dec-03
ll
6g/a1
Eg/tg
BS,/LZ
gg/tz
Eg/15
Bg/15
ol
Volume
6/17E 52[ffi1
1ffi
Total
Deha
ES OI increosed lOOk
SP
Sep-tl3
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-O5
Total
7142
2757
Delta
Todayturned into a lacklustreaffair with a downwardbias.The market

openedbelowthe balancepointon our chartand beganto retreat.Overthe
previoustwo tradingdaysthere has beena substantial
build up in Open
newsthe marketjust groundout the
Interestandwithoutany encouraging
day.The mainnewsstillaroundthe marketis the $140millionpaypackage
H(CHANGE.
STOCK
awarded
to the CEOof the NEWYORK
ContractRollover
JJ
NOWWHATHAVEI NOTICEDOVERTHEPASTFEWDAYS?
Outsideof the buyingFridayat the 50 levelof largerdegreethe playersare
sellingintoany50o/o
retracements.
Theydidit onThursday
andagaintoday.
The S&Prallyfrom Fridaycouldnot sustainitselftodayandthe big 6 point
correction
wasoverbalanced
slightlywith the marketfinishingthe daynearly
on its low.I mentioned
the significance
in a reviewof
of the 6 pointcorrection
Friday's
dailyrangein 51:C18:P112.
The continuingbuildup in the OpenInterestis comingfrom the Fundsand
the Commercials
sellinginto the NonReportable
sideof the market.If this
trendcontinues
something
hasto giveone-wayor the other.
Thereis ongoingtroublewith the occupation
with
of Iraq andthis combined
the Israeland Palestinian
conflictis not addingany confidence
to the stock
marketsituation.PresidentBush'spublicopinionpopularityhas dropped
significantly
as the costof the Iraq invasioncontinues
to growand increase
budgetdeficits. Continued
talk of moreterroristactivitycontinues
to deter
peoplefromflying.
Althoughthe economic
figuresreleased
overthe pastfew monthsindicatea
recoveryof some descriptionthe employmentfiguresshow little to no
improvement.
The progressof the recoverydependson consumer
spending
whichhas beenvery good in recentmonths,now if it stallsor consumer
confidence
fallsthe marketwill be susceptible
to sharpsetbacK.
5&P 5OO lsf Month ContinuousFutures Prices
High
Lotrt
Ege
tg3z.7g
958.50
74.2A
4 Hfl1
taL5.z8
18 I,IRZ
1471.24
50 llfi3
996.11
Bcck below old hiqhs
Trend Indicotors ore oll funting down.
Youonly haveto reviewthis dailychartof the S&P500'sprogressin recent

monthsandyou canseewhy the FundsandCommercials
areaddingto their
positions.
short
ContractRollover
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lst MONTHCONTINUOUSFUTURESCHART:
Now that we are in the rolloverperiodand the activetradingmonthis

pricesto our continuous
the December
December
we shouldbe appending
futureschart.
technical
analysis.
Thischartis the onewe usefor all ourLONG-TERM
an active
TheS&P500
futuresbegantradingin 1982andI havebeenkeeping
recordeversince.
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l^lave Trader
1558.88
lst ,l,ilonthConlinuous Futures
bISHTHLY
nErnffcEt{f,ttrs
1560.69
8.888
ft.333
E.3jBZ
a.447
8.4S6
8.508
B.577
6.618
8. EE?
E.?AV
8.786
1.008
ffi50.48
120i8.86
ffi59.88
SOB,BB
?50. 88
649. BB
"-'---?6"7.50
1836.86
la?s.s8
trzE,BL
1153.46
LL7g.?5
1232.8s
12ffi.92
1385.44
fi37. ?E
1491.41
15?4.88
456. A6
3Bg.BB
lsE.AA
s.ss
30Jul8Z
3OSep86
3fll,ecg8
Z8Feb95
ZSla999
Whenyou examinethe currentmarketpositionrelativeto the bearmarketof

2000-2002
we haveyet to retrace1/3'dof it. The38.2is a wayoff at 1075.5
(see:S2:C2:P18)
duringthe
(1068on SPX),if you recallfromearlierchapters
Onewas50o/oand
Bearmarketthereweretwo very impoftantretracements.
equalin length,(alsosee:
the other 38.2o/o
and eachwere approximately
52:C3:P23).
Fromthe low in October2002we havenowbeenup 265whichis 25 points
largestcorrection
on the waydown.Thiscouldmean
morethanthe previous
we aregoingto go higheror it couldmeanthatwe haveonlyjust movedthe
if you believewe arein a
wavecountup intoa higherdegree.Nevertheless,
recovery,
onewouldexpectthe marketto makeit backto the 38.2or the 50
beforeit ranintoa brickwallfor a time.Wellthatis the theoryof ElliottWave
if youbelievein it.
arealsothinkingalongthe same
Mymainpointis this,100'sof otheranalysts
If we indeeddo continueup
linesandadvising
theirclientsof the possibility.
the 38.2levelat 1075(SPX1068)
in thistimeframewe will haveto negotiate
problem
for this marketwith the current
and that couldcreatea technical
stateit is in.
ContractRollover
35
youshouldkeepa correctrecordsoyou
In anycaseno matterwhathappens
areworkingoff.
will knowthe preciselevelsthe professionals
Tuesday15s September2003:
Anotherdayanotherdollar!Marketshiftsup a gearasthe buyersreturn.Now
theonlybarrieraheadis a testof the 1031high.
1834.Bg
1631.EB
The someold things continueto tell the story:
1031
1028^2
LBZE.EB
1825.99
tilzz.SE
[ni
#
t}1'rt
Overbaldnce13x13
Bullish :
1819.BA
1016.BB
1013.08
1418.AS
LOET.eA
0i$/Bi8,/ZBB3
ESB3Z-14
FO#iC
Raies
Unchanged
3 DaySuing
bockUF
Bg/16
andtodayas a
I wouldexplainthe changein sentimentbetweenyesterday
The early morning
combination
of no bad newsand technicalbreakouts.
Afterthe
breakoutof the 50 only left the 61.8andthe 13x13as resistance.
testof the 61.8the marketcamebackto the 50 levelasthe marketdigested
the FOMC
Theoldclich6sayingis, prior resistancebecomesnew
minutes.
suppo$ sotheyboughtit andoff it went.
of the NewYorkStock
Thecontroversy
DickGrasso
the Chairman
surrounding
Exchange
is an oldstorynow.
Thismarkethasits sightsset on the 1075levelrightnow.The3 daytrendis
positiveonceagainas the bearsare gettinghoseddown.The bearshavea
smallchanceof a doubletop at 1031but judgingby the finishtodaythe
buyersshouldkeepcomingfor the timebeing.
mayget a
Withonlytwo daysleft untiloptionsandfuturesexpiryconditions
rightnow.
littlevolatile,that is the onlythingto consider
It's timeto remindyouonceagain:
If the market is going up you buy it - If it is going down you sell it.
Youcan keeploadingthe gun untilyou run out of bullets.Whenthe SIGNS
will act in their sameold
are clearyou can be surethat the professionals
ways.
ContractRollover
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Thereis nothingnewunderthe Sun.Themethodologies

I havetaughtyou in
this coursewill keep you on the correctpath if you continueto do the
preparation
workandtakeit onedayat a time.
I recommendTTW traderc to keep a continuous 1$ MONTHSWING

CHARTof significant market swings:
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Thisway you will havea properperspective

of wherethe markethasbeen
andan ideawhereit maybegoingin the future.Youwon'tbe guessinglike
mostof the otherswhowill be losingtheirmoneythroughlackof knowledge.
Theswingswilltakeon the appearance
of wavesin lesserandhigherdegree.
:+50r2
i+15 10t'1"6-Glob.x Hiqh
'103?'6
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:fiv
: 9821.4
.45^5
Thischartis currentrightnowandcontains
the swinglevelsof the active1s
period.
monthEScontracts
overthe
It is an EsignalES#F continuous
chart
and was preparedby one of my TTWcolleagues,
Yigit Balligilwho livesin
procedure
Turkey.We haveour own automated
for Esignal
to produceswing
thesecharts.
Higherhighsand higherlows meanthe trend is UP.
Lower highsand lower lows meanthe trend is DOWN.
If you maintaina longer-term
biastowardsthe medium-term
trendyou can't
gowrong.
ContractRollover
J I
as the trendunfolds.You
or over-balancing
Swingswill be under-balancing
levelsof priorrangesasyourguide
usethis information
andthe retracement
to tradersentiment.
Theonlythingthat changes
of
as the marketmovesforwardis the DEGREE
larger
degree
TREND.Largerdegreemovesbegetlargerdegreecorrections;
swingswill unfoldin 3 to 5 wavesof lesserdegreeswingsasa generalrule.
llain
ffiA?14
BE;W?4
E3BBBE
trt0819
9369ff2
mAS16
Anothereducated
colleague
of mine,SteveRifkinwhoyoushouldall knowby
now as Steveis runninghis own day tradingeducationprogramfor S&P
my own chaftto
traders,sent me a chartthis morning.I havereproduced
illustrate
hispoint.
pricesas a meansof identiffing
It refersto alsousingthe Globexcontinuous
geometry
at importantswinghighsandlows.
with
corrections
Stevewasableto tie in the 1:1 geometryin the consecutive
low
the
1005^2
the
other
an exact38.2 retracement
of the entirerangeat
day.
I thinkthe pointStevewas makingto me, wasjust to saythat you should
examineeverypossible
angleandthe answerwill betherein morewaysthan
one.
Thereis no doubtnowthat after yesterday's
buyingspreethat anyonewho
that we
mattershasseenthe relevance
of the 1005^2lowandwill consider
haveat the leastonemoreleg up in similardegree.Thisshouldat leastget
us upto the vicinityof the 1058/1060
area.
ContractRollover
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Anothercolleague
from California
hasalreadypointed
of ours,PaulBonanno
group
so
outto ourTTW
thatthe nextCASHINDEX1:1comesout at 1056.55
betweenall of uswe havethe marketcovered.
I am very proudof theseguysthe way they havetakento the educationI
haveprovidedandthe way they can nowwork it out for themselves
without
anyhelpfromme.
WhenI retireI knowthat the effort I havemadewill be remembered
forever
asthe wordspreads
to thosefewwhocanlearnto thinkfor themselves.
Tuesday17u September2003:
lffil.48
1031
1428.A6
1gz5.E0
razz.g6
1A1s.00
1916.O0
ffi13.88
1S1B.40
LgB?.gg
ES03Z-16
urh:15rh:16rh
Eg/L?/2g63
Eg/oB
B/99
guidance,
Anothersmallrangedaywith no purposeful
I watchedfor
technical
a whileandwhenit couldn'ttest the old top at 1031I left it alone.Nowwe
have only 1 more tradingday until the September/December
rolloveris
complete.
Tradersarewatchingnot onlythe ES-Zchaft,but alsothe SPX,the
SP-ZandSP-Uchartsandit is becoming
confusing
dueto the rolloverperiod.
DickGrassohasresigned
fromthe NYSE
todayat the requestof the boardso
nowthat newsis out of the ainruaves.
Anotherdistraction
rightnowis the hurricane
off the EastCoastof the USA.
Stillin general
termsthe marketshouldbe heading
up.Thereis nothinggoing
on that saysit shouldn'tbe excepttechnicalsellingby the fundsand the
commercials.
andthe buyers
Seehowthe OI went up on the riseyesterday
absorbed
it.
ContractRollover
Tradine to WIN Course - One day at a time
5P - 0I
5P
871n1
Sep-03
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Total
246217
+8-'".
824181 I
Something else to think about:

Cgclefrader
TLTI{E& PRICE ;
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11&EXERS
rsl
EBA3Z4
1552.8?
u
s
t0
tzt
azLBLg
?68.63
TII,IECYCLE
dags
S3B
degree
913
ueeks 13Z.tl
mths
38.6
Uears Z,536
RffHGE
[0uE 78'4.24
t
58.5
Sqrlld
Z.IB3
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a
z
k
EXISTINI BE/4Ri,IARKET
zaaaa324- zBmBsaB
tHlhelp, [+]Scrsll,
tEsclExit
2003:It couldbe impoftant.

Tjmewillbe"square"
38.2on 30hSeptember
2003:This
Thenthereis anothermajortime fallingon the 23'dSeptember
just
yet,
that it is
I
am
aware
but
couldalsobe importantit is hardto say
something
I needto watchon the day if we are makinga higherhighthan
recently.
40
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we needto be
time and priceconjunction
As we get closerto this MAJOR
just
mean
to
anything.
it
out
in
case
turns
its
consequences
awareof
ContractRollover
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Cgclefrader
HflRHENS
I5I
EaA3Z4
L552.8?
S+P 5ffi
CffSH
This is onotheriechnicolopinionI hoveof
the morkot - I hovamentionedthis ogesogo
ond why I thought ltliner & Plechier v.rere
on lhe wrongtrock.
ru
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a
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AZg?24
??5.6'8
TII,IEIYCLE
rlags
852
derree
trft
ueErs LzL.?
nths
ZE.A
gears 2.325
RAHGE
ItouE 777.15
I
50.4
Sqr9rl
?ffi6
a27
u
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BEARMARKET
just warningthattheseare
Justbearin mindthat I am not makinga forecast
in the pathof this marketin the nearterm. BTW
the two biggestobstacles
Minerand Prechter
werecallingthe marketDOWNall the way up fromApril
in myopinion.
knowledge
2003:it'sa sadindictment
of theirself-professed
Oneshouldneverrelyon egoaloneandignorewhatthe marketis tellingyou!
Youknow,I can be the cruellestcriticknownto manbecauseI alsohaveto
acceptanycriticism
thatcomesmyway.
in yourtradingcareeris goingto be deciphering
Oneof the biggestobstacles
whoknowswhattheyaretalkingaboutandwhocanproveit works.Manyof
the thingsI havetaughtyou in this courseare not originalin any way
whatsoever,it is just the way I combinethem that makesthem the most
effective
tradingtoolsyouwilleverlearn.
comeout with.Or
The marketdoesnot listento the thingsMineror Prechter
"Guru"
he wasbadlywrongfromApril
for that matterArchCrawfordthe Astro
on aswell.
on July2nd2003:
Justgo backandreadwhatI wrotein S2:C4:P39
Pleasenote:
thesefuturetimingdatesand pricepricelevels
AlthoughI am mentioning
thereis no reasonto believethey will actuallybecomefact.The dateswill
comeandgo andthe marketwill dowhateverit wantsto at the time.
guidelines
to beawareof that is all.
Theyaretechnical
Whenthe time comesthe marketwill showits handin a varietyof ways
whichwe will be ableto identifywithandactaccordingly.
ContractRollover
41
Thurcday18h September2003: IASTTRADINGDAYES-U

Todayyou will seethe reasonfor takingeachdayas it comesandnottrying
to forecastmorethanonedayin advance.
f,sa3z-15
Qcharts CS$
1848.80
LA44.AB
High todoy
1038^4
ONE bAY AT A TI,l,\E
18ih
+16^2
tB4g.Eg
1436.BB
6. 1034'6 hi
u3z.a6
'--'--'jKEV
ffi28.49
tsz4.sg
Lgzg.Ba
ffilE.gA
LBLZ.EE
1S88.BB
g9/LB/?gtrJ
Bg/95
69/49
gg/tl
09/15
gg/t?
gg/18
Todaythe marketwent exactlythe oppositeof what the average"Joe Blow"

in the street expected.Maybethe triple witchingwas what we neededto
breakthe overhead
resistance
the marketwasup against.
Nowall thosepeoplewho havebeencallingthe September
8s Highthe final
getting
highfrom Marchhaveto eat Crow.Theymustbe
usedto it by now,
the flavourof CrowI mean.But you knowthe stupidthing?The lazypublic
will continueto buytheir newsletters
andadvice,followthemand losetheir
hardearnedmoney.
Thismarketrallyfrom Marchhastarnishedmanyreputations
sinceit began,
but if you studywhatI havebeenwritingoverall thesemonthsyou will see
that it wasn'tveryhardto stayon trackandkeepmakingmoneyallthe way.
All you haveto do is takeit ONEDAYATA TIMEandforgetaboutforecasting
whatwill happento far out.
To makemoneyall you haveto do is just tradefrom levelto levelin the
just keepaddingup. It is easierto make5
smallerpictureandall the pennies
to 10 pointsa daythan hit a homerfor 50 or 100pointson a mediumterm
trendfollowingposition.
Therewill be dayswhereyou catchthe volatileruns
you
either up or down if
keepenteringpositionswhen the opportunityis
signalled,
thesearethe bonusdays.
Youjust haveto treat this business
of makingmoneyas a job and always
remember
the basics.
ContractRollover
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Section 4! chaptert:
The PsychologicalAspectsof Trading to WIN:

a
Perhaps
the mostimpofiantadviceI cangiveyouto assistyou in becoming
on
winningtraderin the futuresmarkets,is sayto you to only concentrate
in it totally.
onemarketandspecialise
Youneedto developa specialinterestin the marketyou selectto tradeand
youneedto understand
its habits.
who maketheir living
Eachindividualmarkethasa hardcoreof specialists
"Jack
of all tradesanda masterof
tradingonlythe onething.Youcan'tbe a
none"andbe successful.
my tradingcareerI havemovedfromonething
Fromtimeto timethroughout
to another.I first begantradingSilverandthenmovedontoGold.Whenthe
After
equities.
Goldmarketwentintothe doldrumsI begantradingindividual
sometimeI movedintoequityfuturesandthe localSharePriceIndexfutures
I havetradedUST-Bondswhen it was an 8olo
as the volumesincreased.
to a 60/o
the contractspecification
couponbut droppedit whentheychanged
currencies
overthe yearsbut foundthat
couponcontract.I tradednumerous
myselfaroundovermorethanonecomplexI wasless
whenI wasspreading
effectivein keepingon top of anyof them.Youwill seeby my writingsover
the yearsthat I havefollowedandtradeda widerangeof marketsand my
techniques
canbe appliedto mostof them.
marketbut whenI couldsee
Fora time I hada loveaffairwith the Soybean
platformsbecame
in
electronic
the increasinginterest the S&P500after
available
I madeit my newhome.
On a week-to-week
basisI often lookto seewhat someof my old favourites
I do not strayfromthe
aredoingjust out of interest.Butfor tradingpurposes
S&Pnowdays.
I haveseriously
studiedthe habitsof the S&Pplayers;this givesme a clear
you makemoneyfrom, it is by going
It is not the professionals
advantage.
thatmakesyoueasymoney.
withthemoverthe top of the inexperienced
News
I getthroughthe Bloomberg
TheS&Psuitsme because
the information
act on news and
seruiceis all I need to stay informed.Professionals
prominent
provides
with
traders.
constant
interuiews
technical's,
Bloomberg
the pointis
Youcannottradeeffectively
unlessyou havecurrentinformation,
tradersthinking.
newsmayquicklychangethe professional
newfundamental
Psychological
Aspects
not just the

It's no joke believeme and it appliesto all tradingoccupations
futuresmarkets.
Psychologically
whenyoutakea tradein a marketwhereyouareawareof all
the outsideinfluences,you take the trade basedon knowledgeof the
technicalpositionand your personalbeliefin how the tradershaveacted
edgeover
in the past.Thisgivesyou a massive
undersimilarcircumstances
the restof the field.
As longas you understand
that you havethe edgeyou are morelikelyto
handlethe management
of the tradea lot betterthanif you wereworkingin
thedark.
If youcanjust understand
thismuchyoucanlift yourtradingresults10fold.
STAYFOCUSED:
to adjust
Marketconditions
are alwayschanging
and if you are not prepared
withthe marketyouwill nevermakea consistent
success
of trading.
You alwaysneedto havea clearopinionon whichdirectionthe marketis
mostlikelyto go. If you don'tthenyou are betteroff to standaside.
I'll giveyou an idea- I didn'ttradetoday,I did on Tuesdayand hada good
day but the way the marketbehavedtowardsthe end of Tuesdaywas very
mixed,sotodayI tookthe dayoff. Therehavebeenno neweconomicreports
the pasttwo daysand the next are due tomorrow.Thereappearsto be a
perception
but therehasbeen
in the marketthat manystocksare overualued
no followthroughto the downside.
The3-dayswingis stilldownbut we have
just hadtwo insidedaysin a row.The marketis poisedto go one-wayor the
otherandI am not surewhichway.Themarketis yet to tell me.
Q2 Eorningsreporting seoson{SECONb WEEK)
993.A0
gg1. B9
98S.60
ss?.Bg
Wednesdoy
iAonday
, Lexmsrk&
i High todoy is a l:l
Merckcome
, of lwger degree.
outwith
disappointingQusayidUday
H u s s e ikni l l e d
figures.
in Norfi Iroq
985.A0
: No porticulor
goodor.
, bad newstodoybut .
1stdownthen
fuels golly.
s83.86
s81.S0
s?9.Eg
g??.BB
9?5.89 ESA3U-s
87/Z3/ZBaA
Hair-r
E7/18
PsychologicalAspects
Todoyis o bOJI doy .

/rtrork
of indecision
w/23
a?/23
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Therestof the weekwasno differentto the start- down,up,down,up.

Weaks Troding Ronge- 25 poinis
Motrday
Tuesdcy Wednesdoy Thursdoy
Fridoy
1886.A0
LAEZ.BE
sg8.68
g94.AB
s96.BS
S86.BB
982.AA
9?8.04
s?4-ag
67/a5/ZgtrJ
g7/Lfr
Hain
g7lzl
g7/22
tr7/23
W/24
87/25
If you v,rereto look ot o vreeklychort you would think nothinghoshoppened.
in the 1015
As I saidsomewhere
3 weeksagothe marketcouldgo sideways
- 960rangefor sometime beforewe havea clear-cutoutcometo the Elliott
WaveCountI put fonruard
backat S2:C4:P38.
Sofar my ElliottWaveopinion
is intactunless960comesout on a dailyclose.
The mostpositivethingI cansayaboutthis marketrightnowis that the 3dayswinghasturnedup again;so anybreakabovethisweekshighandI will
bea buyeragain.
ThisCHART
showsthe 3-dayswingssincethe 12hMarchlow.
w3
S&PsBB
High
Lou
Bge
1414.88
788.54
ZZE.38
a:a
Themostlikelyreasonwe havebeenexperiencing
of lateis
choppyconditions
W3
is
major
that manyanalystsbelievethat the highI havelabelled
a
bear
marketrallyhigh.It maywellbe but untilthe marketcanbreak960I am not
in thatcamp,although
I mustadmitI ambeginning
to wonderrightnow.
Psychological
Aspects
Tuesday29b July 2003:

You know it is becomingincreasingly
moredifficultto makeany senseof
wherethis marketis headingin the future.The past6 dayswe havebeen
stuckin a 27-pointtradingrange.Notwithstanding
therehavebeensomevery
good PATTERN
geometric
ratiosI am accustomed
to seeing
tradesbut the
havebeensadlymissing.
All I seein thistradingpatternis CONFUSION!
tlrhart'; [5U
rF1?.08
f,sg3U-t3
rs13.9g
tE89.Bg
r8U5. Bg
ieBt "[B
9:17.88
t
t
It5t, u6
gng_nB
:IE5-EE
g[1,06
s??,ffs
E.-?/21/2g,tr3
:1it i rl
The marketseemsto rallyon the flimsiestpieceof newsor rumourandthen

whenrealitystrikeshomeby wayof somefactualeconomic
newsthe market
takesa dive.
With the ConsumerConfidenceback down at a four month low and
unemployment
for Juneon a nineyearhighit makesyoubeginto wonder.
Commentators
keepinsistingthe USeconomyis in recoverymodebut you
can't see anythingreallypositiveto agreewith their forecasts.OK some
companyEPSare improvingbut the stocksthat are showingearnings
improvements
havealreadybeenbidwayup on thisexpectation.
Alsosincethe Junet6tr nighthe BONDMARKET
has beenon a consistent
downtrend.Usuallythere is an acceptedbeliefthat moneymovesbetween
the BONDMARKET
and the STOCKMARKET.
An old beliefis if bondsare
goingup the stockmarketwill go downandviceversa.
Contrary
to popularbeliefthe stockmarkethasbeentotallyindifferent
to this
accepted
beliefin recenttimes. As far as I am concerned
beliefslikethisare
onlyoldwivestalescirculated
In my opinion
by brokersto get morebusiness.
it is goodto remember
this so you don'tfall for the psychological
trapsthat
thesefalsebeliefswill causeyou.The samegoesfor any othertwo markets
that peoplelike to makethe samecomparison.Eachindividualmarket
marches
to its ownbeatandshouldn'tbeassociated
withanother.
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ffi3.88
1e1.m
1ts.ffi
lt7.m
115.ffi
113.m
111.W
18S.ffi
1S?.m
gvlzgtffia3
87/11
ll'r ! li
THES&P?
WHAT'STHEMESSAGE
IN ALLOFTHIS REGARDING
Whatdoyoudo whensituations
occurlikewe arein now?
PSYCHOLOGICALLY
YOUCOULD
BECOME
CONFUSED!
andtradeoff the
Wellthe onlythingto do is be awareof the newsreleases
PATTERN
WITHTIGHTSTOPS.
SIGNALS
was released
at
Todaywhenthe Consumer
Confidence
and Unemployment
10:00amon badfiguresthe marketbrokesuppoftand droppedlikea rock.
the
Hussein
hadbeencaptured,
Thena rumourstartedin the pit thatSaddam
the
early
rumourturnedout to haveno substance
andaftera doubletop with
reports.
morninghighthe themeof the dayturnedbackto the economic
ESEgI-5
Qcharts CSU
1883.BB
houbla Tnp
1881.flB
\rj rlh Ftgf n ing

Hlt.H
sgs. BB
sit?. EB
995.09
ss3.sE
991. BE
s8g.0E
9S?.BB
585. BE
983.88
9fl1. EB
Whcnevcr
lschnicolpricc lcvel:
kacpfoilingis uork RELY
0r'l FATTER]'|
PUEELY
6?/Z&
Psychological
Aspects
A?r?fr
E7/2fr
<- Eunour
Saddornis
Capturcdl
67r'u;|]
E7/Vg
ATW
Wednesday30u July 2003:

Todaydidn'tclearthe currentpictureup at all. The Fed'sBeigeBookrepoft
wasreleased
at 2:00pmETandheldnothingin it to inspirethe market.
[charts CSU
99?.58
ss6.B0
Some6EOfiIETRY for youl
ss4.5B
9S3.BB
ss1.5g
sgo.68
988.58
SB?.BB
s65.58
984.88
s8z.58
g7/3B,/aEE3
F'1*il
g?/zg
a?/zg
B7/zg
87/38
td?/fi
g7/38
The only thing constructiveabout today was the way the GEOMETRY
maybe returningfrom
unfoldedin a seriesof 1:1 reversals.
Thetechnicians
pointing
theirsummerholidays.
ThePATTERN
down.
is still
forces
Alsodailynegativenewsis comingout of IRAQas the USoccupation
are continuallycomingunderisolatedattacksby survivingloyalistsof the
SaddamHusseinregime.The whole thing is getting boggeddown and
causingsomepoliticalunrestas moreand moredeathsof US personalare
repofted.No weaponsof massdestruction
havebeenfoundand politically
this wasthe reasonfor the war, evenif the coalitionforceshaveremoveda
dangerous
dictatorfromthe worldstage.
Briefingdot comrepoftedtoday:
16:20 ET Dow -4.41 at 9200.05 Nasdaq-9.42 at 1721.95 S&P -1.63 at
987.65: [BRIEFING.COMJ
How long does it take to get to nowhere?
Apparently,six and a half hours- at leastthats how long it took todayas the
Dowand the S&P500 spentthe entiretyof the sessionuacillatingright below
the unchanged
line and closedthe sessionwithslightlosses.
Wth regardto today'seconomicnewq the Fed'sBeigeBookwasreleasedat
1400 4 but did not have an effed on the market.. Thereport indiated
that the economy"increaseda notch'!over the past coupleof months,but
that capibl expendituresremained "weak'. The market is marking time
waitingfor an abundanceof economicrepoftsdue to be releasedon Friday.
AnotherAchillesheelfor the marketrightnow is the OIL PRICE
at just over
US$30
a barrel.
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Tradins to WIN Course- One day at a time
Thursday31"tJuly 2003:
Positiveeconomicrepoftsor you couldsay more positivethan previous
endof month
Nevertheless
economic
databuoyedthe earlymorningsession.
profittakingtook its toll on the earliergainsand by the endof the daythe
S&Pwasbackto whereit closedyesterday.
p-l
tntenoal
,orl@--l]
F Atsessions
Price 0.00
Datr6 07Bt/03
Tirne 15:35:00
Open 99125
High 99125
Low 34725
Close 99t25
Csr% 0.0
t tsars37
141?.BB
It's octinglike o ship

v.rithoulo rudderl
1013.BE
10gg.BB
NOTHTNg
/I,TEAhIs
74?/o Rclrqcatrrent
1965.49
IEBL.bB
9g?. BB
sg3. B0
g8s.68
985.68
s81.08
9T?.gg
E?/31/?;0/9.3
f'{ain
E'l/11
g7/18
WlZL
E7/24
B7/29
B7/3I
Todaywasanothersoliddayfor the daytraders,yet nothingfor the position

traders.The buyerscannotholdany gainsand the longerthis goeson the
to buy the marketbut
weakerthey are becoming.
Daytradersare prepared
they won't hold it. Psychologically
the longer-termplayersare getting
progressively
It is periodslikethesethat makeyou
moreandmorefrustrated.
realisethe advantages
of takingit onedayat a time.
Fridayl"t August 2003:

The manyeconomic
repoftsreleased
todaywereat besta'tmixedbag"but
the unemploymenttrend continuedto increaseeven if the overall
unemployment
ratediddropdueto manypeopleleavingthe worKorce.
spu03l10l - s&P 500
LAST: 97
HIGH:gg3.OO
v 9.70
CHANGE:
LoW:gr/.oo
8Jll2O03
1010.00
,1000-o0
s90.00
s80.00
g70.og
s60.o0
.E
2g Tradinq Days
Increasing
Uncartainiy
s5o'oo
s30.o0
e20.00
910.O0
Whichever
wayyou lookat it the marketdidnt like it andthe bestdirection
for the daytraderswasto sell.The3-dayswinghasturneddownagainbut it
pattern.The currentsupportpointis still
meansvery littlein this congestion
960 beforeI woulddeclarethe trendhasdefinitelybrokendown.It ceftainly
lookslike the marketnow wantsto test the 960 levelbeforeit decidesone
wayor the other.
Practically
speaking
the markethasbeentrappedin a tradingrangefor two
monthsandall the longer-term
investors
havebeenmarching
time.Overthis
pasttwo monthsmassivecapitalinflowsbackinto investmentfunds have
suppofted
thismarketso it remains
to beseenif thisinflowtrendcontinues.
Wellright now I wouldnot bet on it andjust proceedone day at a time as
this is the bestcourse.Theonlythingbetweenhereanda 50 pointdeclineis
973and960.
As I saidyesterday
to
the chartpatternis lookingmoreandmorevulnerable
weakness
right now and it wouldrequirea "giantrally"and a breakabove
1015to provideanysustainable
strengthin the mediumterm.
pointof
It is goingto be interesting
to seethe finaloutcomefroma technical
view as we havebeenworkingalongwith this unfoldingmarketfor some
monthsnow.
Personally
I don'tcarewhatthe outcomeis froma tradingviewpointbecause
all I haveto do is tradewhat I seeand not what I maychooseto forecast.I
learntthat muchyearsandyearsagowhenthingswouldunfolddifferently
to
whatI hadat firstimagined.
Youhaveto learnto tradeonlywhatyousee.
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The past 4 days:

Tuasdoy
1886.BB
w--edry$gy-."......
--......,-.....
..Il':ri:y*-......-......-.1-::i*y-.
LBig3.AE
1600.BB
ss?.04
ss4.a0
ssl. sB
sB8.89
s85. A6
sBz.g6
9?9.BB
g8,/BL/z:B/8.3
Fia i lr
Monday4s August 2003:

TheMarketcameout of the chutetodayon a downerandevenwith a good
factoryordersrepoftat 10:00amdid notstopfallinguntil10:30am.
ESA3U-5
Qcharts ESU
1888.BB
1004
1804.BB
1804.B0
gs6.Bs
9gz.Ba
988.88
s84.89
gga. BB
9?6. Bg
g7?.EA
968.BB
g8,/a,4/zga3
g?aa
Butby the endof the day it hadrecovered

to closeslightlyabovethe Friday
all
closeaftertestingthe 50 retracement
of the past3 daysrange.Basically
you can say until we get more evidenceis that we just got backto the
BALANCE
POINTof the recentmarketactivity.But tomorrowwill offer some
moreopportunity
I amsure.
- Dayto Daychecksif youwant
I havewrittenmoreabouttodayin S3:C1:P7
to makereference
to it.
Tradinsto WIN Course- One day at a time
Tuesday5s August 2003:

-10:so nowI amgoingto review
I havecovered
the daysactivityin S3:C1:P9
the big pictureas todaythe 960 low I havebeenhingingthe bullargument
on cameout andthe futuresclosedon its lowat 959.4,a bearish
sign.
lst l$onih Futuras
s&P504
date 83961?
hi
1B14.BB
DoublaTop
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GgcleTrader
It is iimas lilte now where you hoveto

beliave in whot you scc and not rnhat
you ar hopingfor...........--..
llain
Mythoughtsare:The bucketis leakingandwe couldexpectit to get worse.

The S&Pmarkethas not displayeda lot of strengthlately(typicalWave4
behaviour).
Butif the currentdeclinecontinues
therearea lot of peopleready
to bailoutas lastyearis stillveryfreshin theirminds.
IEZA.Eg
1008.BE
998. BB
9S4.00
1014,75 6O rrinutE bors from iha JunE 17fh High

DoubleTop
AAAJOR
WEAKNESS
.'rlilllh
l l ': 1h
in patiern
'l t W :
s?z.gg
1:1fails -:>>
960. B0
s48. BB
Next 1:1
.
936. Bg
ES03U-68
945,75
f _ _ _ i l _ _ _ , , , , _ r r r r r { r l i l r l i l |
gE/13
g7/93
B?/tE
A?/6
EB/ffi
At timeslikenowit is worthrecalling
the doubletop in Marchof 2002as the
conditions
are vaguelysimilarin termsof investorexpectation.
Moneyhas
recentlycomeintothe marketat an unprecedented
paceasthe earlystaters
havebecomecomfoftable
thatthe worstis over.Wellwhoknows?I don'tbut
the signsaresayingto me- don'tbe an investorrightnow!
Psychological
Aspects
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ANOTHERPROBLEMON THE HORIZON:
plansarefindingdifficultymeetingthe
retirement
Companies
with self-funded
currentpaymentcommitments
from fund profitsas the interestratesare at
income
suchlowlevelsandthe
streamintotheirfundsareat verylowlevels.
Theirtraditionalassetsto backtheir fundshavelost billionsand billionsof
dollarsoverthe pastfew yearsandrightnowtheyareshowinglittlehopeof
recovery.
It is saidthat companies
withtheseplanswill haveto dip intotheiroperating
profitsto top up the outgoings
on the currentcommitments.
Anotherthing about the incomestream of the retired sectionof the
communityis that they no longerenjoythe benefitsof the high interest
will
Thisphenomenon
regimeandtheirdisposable
incomes
arefallingrapidly.
flowthroughto the consumer
demandsideof the marketandstagnatesales
andbusiness
incomes
fuftherin the future.
equationleadsoneto
with the increasing
Thisfactorincluded
unemployment
nowcouldbe with
conditions
we are experiencing
believethat the economic
has
run
up
an unprecedented
for
The
us a Iongtimeto come. USGovernment
habitthey
deficitthis time aroundand if they do not curbthe overspending
policies
of today.
havefallenintothe futurewill be mortgaged
by the stimulus
Futuregenerations
will have difficultieswhen it comesto socialseruices
entitlements
on the currentpath.
that thingscan only
You don't needto be a Rhodesscholarto understand
people
along.
improveif
havemoneyto spendto spurbusiness
Frommy part all I am spendingmoneyon right now is livingand business
expenses,
and indulgences
such as boozeand cigarettes.I
enteftainment
for it if
andI will be compensated
don'tneedto travelunlessit is on business
incomebut I have
I go anywhere.
I haveno debtandI havea considerable
no reasonto go out andspendmoneyfor no reason.
Theremustbe plentyof peoplein my positionbutthe majorityof peoplewho
want to spend do so by borrowing;the private debt level is at an
highlevel.Sowheredo we go next?
unprecedented
Notto far fromhomeI suggest.
Withterroristthreatsall overthe worldthere
your
neckout if youlivein a safeenvironment.
is no reasonto stick
Anotherthing the occupation
of Iraq is provingto becomeanotherpolitical
nightmare
as it dragsout andwith the priceof oil on the riseit addsanother
negative
economy.
to costof an expanding
Anyrruay
theseare onlysomeof the thingswe shouldgivesomethoughtto
whenwe thinkaboutwherethe marketcanfindanyextrabuyingimpetus.
Psychological
Aspects
tl
It seemsto methatthe stockmarketis runningon emptythe waythe indices

havebehaved
overthe pastmonth.
Stillit paysto be optimistic.
Therealestatemarketshouldbe slowingdownby nowandlet'sfaceit, it has
beenoverextendedmorethanI haveeverwitnessedin the past.Evenif your
apparentwealthhas increasedin valuewith the explosionin real estate
valuesyou areno betteroff realistically
asyou havenowhereto go exceptto
borrowagainstyour assetand plonkthe moneyinto someother form of
investment.
who
The only onesgainingare the governmentdepaftments
haveraisedthe landtaxesbecause
of it. I bet halfthe reasonthe stockshave
beenbid up so stronglyin the past4 monthsis throughborrowingagainst
real estateand investingthe moneyin the market.Now if the alternative
investments
dont peformthenit is cuftainsfor thosepunters.
If you reallywantto seethe stateof the nationyoushouldgo visita CASINO,
wellyou don'treallyneedto just havea lookat howthe dailyvolumeon the
E-Minihasgrownin the pasttwo years.Thegamblers
areall movingontoour
your
tuf thesedaysandit is asclearasthe noseon
face.
Thetrendnowin investment
circlesis to learnhowto sellshort.
I am alreadyan expeftat it so wheredo the peoplecomefromto buyadvice
from me. I can see it in the salesof the booksI havewrittenoverthe past
two yearsor so.
The worldis an amazingplacethe way it goesfrom brickwallto brickwall
andthenmakesmoreheadway.
Whatreallyamazesme is howpeoplefind me as I don'tadvertise
exceptfor
my web site and overthe pastcoupleof yearsI am sendingout booK to
placesI haveneverevenheardof. Oncethe majorityof my bookswent to
Australia,USA,HongKongand Singapore
whichthey still do, but nowthere
are increasing
numbersgoingto Sweden,Germany,Poland,Greece,Spain,
Ireland,Turkey,IndiaandevenRussia.
Italy,SwiEerland,
UnitedKingdom,
WorldWide
Neveftheless
the pointI am makingis that thereis an increasing
you
you
you
want
to take
BUY
if
canSELLbefore
trendto tradefutureswhere
advantage
of a fallingmarket.
Peoplewantto learnhowto tradePAPER
andyou haveto considerif that is
PRODUCilVE?
Maybeit doesnot matterso muchas the oneswho canlearn
will onlybe a smallpercentage
of the worldmarketsin any
to do it effectively
to be for moreand morepeopleto takematters
case.Butthe trendappears
who
intotheirown handsratherthanleaveit in the handsof the institutions
years.
havebeenon a summerholidayallthese
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the
Wellyou mightwonderwhy I persistin teachingpeopleto understand
players
players
with.
identiff
thatthe smaft
markets,
the
andthe mechanics
It's reallyprettysimple!
themto WIN.
I liketo seepeopleWINandtheypaymeverywellfor teaching
It's reallya WIN-WINsituationin my mind.
but
Youknowoverthe yearsI havewrittenmanybookson tradinganalysis
I havealwaysfelt I wouldlike
as I havegottencloserandcloserto retirement
to leavethe very best on the tablethat evena high schoolleavercould
understand
andfollow.
- I neverhavebeen.I havealwaysbeen
I am not partof the establishment
personsuitsmy lifestyleas I don'thave
my ownman.Beingan independent
to answerto anyonemostof the time.
reminded
of the futilityof the
I am continually
As moreandmoretime passes
systemas it standstoday.
The education
systemhaschangedso muchsinceI wasa kid at school.In
my daysif the teacherthoughtyou wereout of orderyou stoodin lineand
took a belting.Todaythe kidsare not allowedto be hit for any reasonand
is to saythe leasthopeless
astheydont havea cluewhatthe
theirdiscipline
real worldis all aboutuntil they haveto get out and suppottthemselves.
Theyonlylearnwhentheyhaveto getout andfendfor themselves.
The systemtodayteachesthemto cheatas besttheycanand not worklike
the olddaystaughtyou.The moderndaysystemis notteachingpeopleto be
boundby their word anymore.The new deal today is to get awaywith
It's a realdilemmawhenyou have
whateveryou canandhideyourmistakes.
in
companies
taking in universitygraduatesand makingthem specialise
foxholes
andnot knowwhateverelsegoeson outsideof them.
In normalbusiness
todaya persongoesout andgetsa job and is taughtto
do onespecificthingwithoutknowingthe effectof theirjob on the scaleof
the wholeoperation.It's a patheticsituationin my mindandit extendsto all
thingstodayin regularbusiness.
Youknowwhenyou go to the supermarkettodaythe kidson the registers
can'tevendo mentalarithmetic,they just swipethe bar codeswith their
machines
andwhenthe totalcomesup they punchin how muchmoneyyou
gavethemandthe machine
tellsthemwhatchangeto giveyou back.
Butthis is the newera andwe just haveto workwith it. I thinkthe longerit
goeson the greaterthe advantage
thereis to the personwho canbecomea
of
masterof all the facetsof the realworld.All it takesis an understanding
youaredealingwith.
the competition
13
Section4:Chapter-I
I have
I mightappearto be veeringoff trackat this pointbut psychologically
changein accepted
a perception
that we havebeengoingthrougha massive
valuesthroughoutthe past 20 years.The internethas made a major
is
as this sourceof information
is transacted
to the way business
difference
available
to everyonein the safetyof theirown home.Thingshappenmuch
fasterasa resultof it.
IN THEMARKETS:
You know that in the daily marketactivitywe have lots of optionsand
of success.
oppoftunities
to taketradesthat havea highprobability
I am not surewho believesme andwho doesn'twhenI declare
Sometimes
rightat the timethat the marketis a sellor a buy.I do it liveon my training
sitetime in andtime out. Butto my mindit seemsto me it is onlywofththe
valuewhenthe markethasrunits courseandmy calleitherwonor
education
lost.
AnythingI say in the heatof the marketcouldpossiblybe seenas purelya
guess.But I shouldassureyou it is not a guesson my paft, my callsare
inspired
froma wellfoundedbeliefthat I havethe oddsin my favour.I know
(prettywell mostof the time) what the otherplayerswill do underceftain
andI go for it.
technical
situations
whenthey seem
to act on technicalsituations
Psychologically
I am prepared
good
tradershave
that
all
trading
so clearto me. This is the one aspectof
learnt.If youseeit andit look realgo for it.
If youarein doubtleaveit go.
myselfoverandoveragainas I writethis manualbut
I am probably
repeating
canonlyhelpin the long
Repetition
it is importantthat you get the message.
run.
to trade
Overthe yearsI haveseenmanyotherpeopletry andteachstudents
just
can
think
they
don't
I
and the resultshavebeenfar from satisfactory.
traderwho
to anyoneother than anotherprofessional
explainthemselves
whattheyaretalkingabout.
to understand
alreadyhasthe experience
in manydifferentvaried
WhatI amtryingto do is provideenoughinformation
place
you may pick it up
point
in one
ways that even if you miss the
somewhere
elsein thistext.
whenI first studiedGann& Elliottworkyearsago,way
Youknowsomething,
backin the early80's.I hadto readand re-readmanythingsoverandover
again,pageby page,to get their ideasinto my mindandtry to understand
whattheseguyswereon about.It wasn'texactlysimpleby anymeans.
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Wednesday6thAugust 2003:
Howthingscanchangein oneday!
the marketopened
fromyesterday
Evenwith all the bearishsignalsapparent
going
to fall overbut
anddisplayed
somestrength.At first I thoughtit was
yesterdays
points
correction
1:1
with
a
whenthe impliedresistance
at 8
up on
cameout it wasobviousthe markethada fair bit moreupside.
9S0.BA
Wadnesday6th August 2OO3:
s87. BB
Today storted off with me looking

to sall but as foon ali 966.25 come
out I reversad inio a buyar.
984. BA
s81. O0
978.84
9?5.04
S?Z.EE
969.80
966.BB
966.?5 ->>
983.80
968.99
EE/816/?0/8'3
!f61.?5
g6e.Z5
959.25
961.00
gB/W
andas it went into

The highfor the dayterminated
on the 61.8retracement
is straightout of the
the reversalpointit unfoldedas a 1:1, this behaviour
lowandback
text book.ThemarkethasnowclosedbackdownnearMondays
below50o/o
of the daysrange.
after
The one thing that standsout to me abouttoday is the resilience
technical
breaking
the 960 Iow.In my mindthereshouldhavebeenmassive
jump
sellingfromthe
todaybut it didn'tappear.
s&P58S
date Glg617
hi
1aL4.8g
CgcleTrader
GEOIIIIETRIClcvels
The nexi AITAJOR
thot could oet os orpport in a fur{fier
llain
Section4:Chapter- 1
Thursday7s August 2003: INSIDEDAY

Thb Weeks Cirl+ndrrr
G? 5.7% 3.5%
Aug07 08:30Productivity-Frel
Aug07 08:30InilialClaims B8/il2390K 40CIK
Aug07 10:80Wholesale
Jun 0.0% 0.2%
lnventories
Aug07 15:00Consumer
CreditJun -$0.48$5.58
3g5K
u.0%
2.1o/o1.9%
393K 3BBK
-0.4%-0.3%
$6.08
$ 8 . 1 8$ 7 . 3 8
4.0o/o
The marketbeganthe day on a weakernotefor the first 15 minutesand

foundsupporton a 78.6retracement
of the previousimpoftantrange.Bythe
endof the dayit hadworkeditswayallthe waybackto a doubletop.
s?6.Eg
g?4.68
s?z.ss
S?8.BB
s68.BB
966.00
964.68
962.Ba
s66. BA
9/8,/97/ZAB3
88/95
Ag:38
:165.75
S6?.64
964.25
SEs.BE
Bi8,/97
goodeconomicrepoftsthe
Withthe absenceof any badnewsandreasonably
marketaimlessly
trendedup throughout
the day.Thepatternfor the daywas
mixedto say the leastbut at this point in time the markethas remained
abovethe 960breakfromtwo daysback.
It lookslikeeachrallyup as.itunfoldedhadthe daytraderssellingintoit. The
lackof followthroughon eachdeclineindicates
therewasverylittleconcefted
conviction
by the bears.Todayalsowasan insidedaywith a 13 pointrange
andthe time up fromthe low is two daysnowwith a rangeof L7 points,not
either.
an inspiring
example
of buyingconviction
Thefactswe havegoingintoFridayarethese:
1 . The3 daytrendis downandto turn up the markethasto tradeabove
982andeffectively
985to lookconvincing.
fromthe 958.25
2 . Todayis onlythe seconddaywe havebeencorrecting
lowso it is stilldebatable
if the lowis impoftantin the biggerpicture.
3 . Thecurrentmarketpositionis on a doubletop witha 61.8retracement
labelattachedto it.
Psychological
Aspects
Section4;Chapter- 1
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a
the 975.25doubletop it still hasto negotiate
4. If the marketbre.aks
at 981,
largerdegree38.2a littlehigherandthena 1:1 at 979a 50o/o
985.
high
at
a 3 dayhighat 982andthe sruing
levelsin the next10
resistance
of technical
5 . Buyersfacean abundance
pointsto the highside.Thecleargroundis onlyabove985.
If the marketcanget above985I wouldhaveto takethe viewthatthe lowat

negative
958.25has becomemajorsupport.If not then I am still basically
future.The wholebasisfor my outlookis basedpurely
aboutthe immediate
go throughthesesameexercises
nothingmore.I religiously
on probabilities
prepare.
The marketwill tell us soonenoughwhatis
onedayat a time and
goingto happen.
geometry
At today'shigh and the BD doubletop we had someinteresting
approach.
basismyX-ABCD
whichis worthrecording
Current Bange
13.25
prior ranges
cIl-EC 1. BB0
CII-RB B. ?86
8.508
clt-xft
Beuerse Eross
RIFBC L.ZIZ
Insiile Gross
CII-RII B. ?88
0utside Eross
BI}-ffI] fi, EBB
Ilouble Gross
HII-XC B.73S
Fetrace 2
9.57?
cFxu
AII-XR E, 836
If fhcy orc Aoingto noke on

effort to ssll this market down
this is tho plocefo do it.
X
985
gg./8?lZAE3
H ai n
8?/39
thingsI can seeat this stagefor the 958.25lowto be

The mostfavourable
buttheyareonlylesserdegree.
imporLant
aresometimingelements
Friday8s August 2003:
Todaythe marketopenedaboveyesterday'shigh on reportsof betterthan
normalretailssales,the highfor the daywas980 only 5 pointshigherthan
the previous
close.
The whole days trading range was 7J5 points as the market rocked
backwards
andforwardsall day,finallyclosingat 978.
Goinginto Mondaywe have980 as the 3-dayswinghighwhichwasalsoa
major38.2of allthe declinedownfromthe doubletop at L4t4.75.
on the marketpositionstillopen.
Theactiontodayleavesmy conclusion
[c] BryceGitnore 2004
Theonlythingthat couldbe importantif the marketis to reversebackdown

of thetotal
fromhereis the factthattoday'shighmarkeda 38.2retracement
declinefrom the majordoubletop at t0t4.75. Normallythis wouldbe an
importantgeometricretracementlevel; but the way the whole pattern
whatthe hellis goingon
evolvedfrom the doubletop leavesme wondering
here.
1s17.68
to14,7n
xs63u-68
1411.O0
1485.A0
sgg. BB
9S3.00
sE?.Eg
981.B0
s?5.09
s6g.06
sffi.aa
Cb = 70.7 of AB
a'J/0i5,/z;B,0'3
E7/89
Bz/LE
g7/ZZ
g?/?fr
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Eg/94
Thepatternis full of overlaps

fromoneendof the chartto the otherandthe
on the way down
currentleg up hasoverbalanced
the prior20.25correction
into the recentlow.Thishasthe hint of higherpricesbeingpossibleso you
canseemydilemma.
hazyto me I just step
At timeslike thesewhenthingsbecometechnically
picture
clear.I figurethat if
becomes
backandleavethe marketalonetill the
I can'tcomeup witha reasonably
no oneelseis goingtoo be able
conclusion
to either.
In anycaseI am off fishingfor 4 or 5 daysfromtodayso maybewhenI get
backI will havea clearersituation
to workwith.
s1.BA
s?s. o8
s??. B0
975.99
s?3.48
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9?1.44
s6s.9s
96?.B0
s5.09
963.SB
il
W$B/Zw,3
EWBE
ffilg?
0iE/A?
aa/6a
ffilffi
E8,/tr8
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Monday, Tuesday 11th/12th August 2003:

Qcharts ESU
ESA3U-18
Ilisplag
Bars
I$onduy
Tuasday
za4
PNICE,..
RRNGE
32.25
CHffHGE
3.378
SQN9
degrees
93
I didn'tmissmuchby takingsomedaysoff but the sell at 985 at the old

swinghighwasa legitimate
sellingpointand if you didn'tget that thenthe
breakbackthrough980 wasthe nextcaboff the rank.TuesdaylooK a bit
day.
moredifficultbutthe worst-case
wasa break-even
scenario
is nowthe
The only resistance
tomorrowof any majortechnicalimpoftance
(993)from 1014.75to 958.25,so goinginto Wednesday
61.8 retracement
this hasto be my mainfocus.If this marketattractssellingat this levelI will
sell,if it breaKthroughI willbuyit.
Qcharts 8SU
1AZ3.AA
ES93U-58
101?.B0
1S11.BS
1Ba5.aE
ggg.B6
gs3.E0
S8?.BB
981.BB
s?5. g0
s69.AB
still!
Business
Ifuarr.y
s53.86
BB/g5ragtrt
g6/13
w/98
g8/lz
NowI am goingto catchup on the newsand see if the chaft lookslike it

makessomesenseto me.Thetrendis up againby hookor by crook,
T9
Section4:Chapter-1
BeforeI go on to Wednesday
I shouldshow you why 985 was a solid
resistance
levelfor sellerson Monday.
g8g. gB
Prior SwingHigh985
985. BB
g81.Bg
;26;:5-
RevarseCross
2.000:1.OOO
S??.BB
g?3. BB
gEg.BB
965. BB
961. BB
Wednesday13s August 2OO3:

Easymoneytodayfor thosein the know!Themarketopenedon it's highand
madethe 61.8(993)highfor the dayin the first2 minutesof trading.
Thisactionprovideda HOOKTHEOPENSELLtrade.Whenever
the market
youcantakethe tradewithtotalrisk
openson a technical
levelof impoftance
controlas the stoplossfor thistradeonlyhadto be at 993.5.Thefirst burst
of selfingtook the marketbackto 987.25beforethe 10:00amBusiness
Inventories
repoftwas releasedand then the marketmade986 on a spike
volumeburstbeforesomeconsolidation
couldnot
set in. The consolidation
improveon a 50o/orecoveryand set up anotherSELLfor a 1:1 targetdown
onceagain.The first 2 hoursof the daywerehighlypredictable
if you knew
the implications
of the technical
signals.
9S4.50
993 816 61.8

9i3lam
gs3. BB
9S1.5S
.,,*n[ud
999.9S
988.58
SS?.BB
985.59
984.04
E:E3IF1
982.50
ffi,/LS.ZBSS
_
g8/lz
lii
l
Bg:31
r
Sn.sS
l
r
Sxl.BA
r
9S2.0O
r
rlrlill
g!U.ZS ffi/t3
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ESB3U-64
Ocharts ESU
razS.aa
taLT.sg
Wadnesdoy 13th August 2OO3
1014.75
fill.8A
1004
ffiBs.BA
Jr-lstas expected rigilrt

out of thc text book
gsg. B0
ss3.ga
s87.96
981. BA
9?5. BB
969. SB
963.6S
EE/9,5/ZgB3
after
Bythe endof the daythe retreatfromthe morninghighwascontained
of the total
with a 38.2 retracement
a 13.25pointdeclinewhichcoincided
would
(a
level
everyone
suppoft
moveup from 958.25 no-brainer
technical
havebeentargeting).
51.8oftotol
993.06
98!t.EB
t0t4J5 / 958.?5
3 Day SraingUP
ES93U-1S
985.06
981.68
'
s??.aa
s?3.BA
972.75
3 day low
s6s.00
s6s.BB
s61.86
9_79.75
supPorT
IlllOB'sare very
clcar os we movs
along intoThursday
-13,25
E8,/13/Zgg3
once
As we headintoThursdaywe haveto go throughall our preparations
again.The differencetodaythoughis I needto checkthe time ryclesfor
todayas the 61.8 of higherdegreecouldbe very impoftantin the larger
degree.
higher.
to the marketcontinuing
Justthe samethreethingsstillgivecredence
the 30.5rallyof
1. 993 highis 34.75up from958.25andoverbalances
similardegree.
2. Supporttodaywason a 1:1anda 38.2retracement.
3. The3 Dayswingis stillUP.
Psychological
Aspects
2l
of the 34.75pointrangeup
The3 day low is at 972.75andbeyond50o/o
fromthe 958.25low.
The earlywarningsignof a continuance
downhingeson the 6.25point
interlude
rallytoday.If the currentupswingcannotbreacha 1:1 of that
(986)andthe smaller
degree50thenthe lesserdegreetrendis down.
994.06
ss1.BB
s8s.50
s88.B0
986.59
Sffi.BB
s83-59
saz.E6
sffi.5s
gB/L3/Z@'3
BE/IZ
g/8/T3
BB/LZ
E8lI3
BE/L3
BB/T3
Youalwaysneedto understand
that I dont carewhat the marketdoes
tomorrowas I am prepared
onewayor the otherto readthe signsandact
levels.
on themat the appropriate
I only play the probabilities
day by day. As each day passesnew
probabilities
unfoldandthat is whatI needto keepabreastof.
TIME ??
ETBONACCI
rgL?.89
1S11.Bg
1Bg5.0B
99S. SB
!H3.90
ill
SB?.BB
:; l ll -l- -
981. BS
llr
$75.S4
t
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61,8
9gz.58
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g6s. a0
t
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s3.06
s57.BA
15JunB3 ?6JunB3
BSJultrl
19JulB3 3lJul&l
13AugB3
the factthat
8/13 = 0.618, 8/5 = 1.618soft of leavesroomto consider
sometradersusingthis technicalaspectcouldthinkthe time of this rally
hasexpired.Whoknowsjust yet anyway- betterto be prepared.
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Thursday14tr August 2O03:

rangetestedthe 1:1and
Themarketopenedjust belowthe 50 of yesterdays
lookedlikeit wasgoingto fall away.I tooka sellon the declinebackdownto
low.Thiswasa goodtradeas I closedout just
test the 38.2at yesterdays
beforethe testof the 38.2andthentherewasa falsebreakreversal.
E503U-5
61.8= 993
9!t3.66
s91.54
gs6.BB
sE8.5A
g8?. 86
s85.58
If fhis lineof support

onthe 50 lineholds
there is o potentiolto
remoinup butthe
marketneedsto
!m4.68
982.56
g81.AA
FolseBreok of 3B.Z->>l
9?9.54
BE/L4/2ffi3
aE/12
EB/IZ
BB/13
88/13
A8/14
[,
A8/14
The problemwith falsebreaksof this natureis that you canneverbe sureif

the falsebreakis a signof moreweakness
to comeor a reversalthat just
failedto holdthe levelit shouldhave.It doesnot becomeobviousuntilyou
haveretracedat least50o/oof the prior swing.I madeseveralothertrades
bothon buysideandsellsideduringthe nexthourwhichresultedin a small
lossjust on transaction
costs.I felt I wasgettingout of stepwith the market
whenit did not accelerate
afterit brokebackthroughthe openingprice;so I
afterthat it was
stoppedtradingfor the day.Lookingbackat whathappened
a wisemoveon my paft as the markettradedin a S-pointrangefor the rest
of the day.
The line of supportthroughoutthe afternoonwhere you see the triple
for Friday's
session.
bottomsis at 986.5so this is our ls pointof reference
the
resistance
and
high
low
are
and
today's
979.25
Outsideof that the 993
The50o/o
levelof the 2-dayrangeliesat 986.
supportMOB's.
The
Not muchto work with in my opinionuntil the directionis confirmed.
is goingto comeif the marketwereto breakup
bettertradingopportunity
throughthe 993levelasthat is whereallthe shoftstopswill besitting.
NEWSFI-ASH:
afterthe closethe marketwashit by PANICwhena massive
powerfailurestruckthe easterncoastof the USAencompassing
NewYork
and surrounding
areasall the way downfrom Canada.The first thoughts
werea terroristattackbutthat hasnowbeendismissed.
Section4:Chapter-I
/lAqjor powr shuidovlnson ihe Eqstern Seoboordofter the norket

closadfhe doy sessiontodoy - ot firsi they thoughr is wos tct'rorists
993.AB
s91.58
99g.AB
.-- Doy SessionClose
988.50
987.BB
985.54
s84.46
g8z.s6
s81.64
9?9.50
a8,/L4/ZggA
PonicSallingon newsof
g7g.?51' POWER.FAILURES
BB/14
16:45
gBA.5B
97tl.Z5
6LOBEX
978.?5
!|?9.?5
A8,/L4
Anotherimpoftantlessonin the life of a traderas panicstrikesthe fragile

stateof the market.
of the marketas nowit is unsure
Thiscomplicates
the currentcomplexion
for the Fridaydaysession.
whetherbrokerswill befullyoperational
Latestnewsis that a lighteningstrikeat a powerstationin NiagraFalls
tookoutthe powergrid.
in the confusion,
the marketdivedand hassince
Lookat what happened
why you cansleep
bouncedback.At timesliketheseyou canappreciate
you
don'thaveto worryaboutwhat
easywhenyou area daytraderand
goeson whenyou are not in the market.Beinteresting
to seewherethe
all tradingdecisions
Globexis Fridaymorning.As far as I am concerned
for
now.
areon hold
lrternational Edition I lletscape.com
Lights coming back on

across blackoutarea
. Power slowly comingback afier massive blackout;rnetroNew
York could have power by 1 a.fi.
. Officials not sure what caused outsge across 9,300 square rniles
trom Detroitto New York to Canada
. Canadianofficials say fire at a power plant in NiagarsFalls,New
York, is suspecled cause
. New York Gov. Patakisays half of state affected
lhe Empire Stde &rildng remaire dark *

buildirs are lit bybackup gensdors.
Aspects
Psychological
oths
. Video: * New Yorkers react I Mavor: Normalbv mornino

. Galler iesr Suotes I lmasesI Blackout oreo: Map I Elgllg
. Conlrolledchaos as liqhts oo out in New York
24
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FALSEBREAKS:
I'll just put this in hereuntil I decidewhereit needsto go in the contextof
the coursebut it mayjust end up stayingherein the end, psychologically
thesesituations
aredifficultto dealwith mostof the time.
Thefirstthingwe needto defineis whatconstitutes
a falsebreak?
1. Is it just a breakof a priorlowor highor doubletop or bottomby 1 to
3 ticks?
2. Is it a breakof a mathematical
levelof extremeimportance,
saya 50,
61.8or 38.2 by 1 to 3 ticks?
3. How far is far enoughto considera legitimatebreakand then a
reversalnotto be considered
a falsebreak?
4. When is a false breaka failed signalthat makesit an important
reversal
signal?
Allthesequestions
needto be answered
in the contextof the currentmarket
action.
In consideration
of the guidelines
we needa planof howto actwhenwe see
whatwe consider
to bea falsebreakout.
.A
Jlity DEF1NIl
mctl,.O
-'
i i'-.
.,/
tl
\
'I'
.Pl
i l : i
|-QQ
l-r'l -i l
\
\
i,lir 9et
lle'e'
..ffi
/\,
,ilL E , BIEA
]
t
1
{"
t:
\
\
[ '
il;c
\t I '
lro
..,:.:1.:.
4,,Ft C ER AK
rl
I5. l F t LSt B,RT

A:K
To my minda falsebreakoutcannotoccurwhilstthe priceis still strivingto

geometric
reacha legitimate
targetas that targetwasin my opinionalways
achievable.
But shouldthe targethavebeenpreviously
achievedand then the market
makesthe "FALSEBREAK"and reversesalmost instantaneously
it has
exceeded
the geometric
targetandFAILED.
Sothe questionis howdo we dealwith situations
likethis as theycanoccur
whenwe leastexpectthemto!
Psychological
Aspects
Let's staft with points #L and #22

Is it just a breakof a priorlow or highor doubletop or bottomby 1 to 3
ticks?
In the strictsenseanybreachof a priorlowor highby 1 to 3 ticksthat does
not proceedcouldbe seenas a false breakoutthat did not succeed.
The
reasonthey dont succeedis becausethere is no followthroughbuyingor
sellingpoweras the marketteststhe new level.This situationshouldbe
viewedas a sign!Themarketis talkingbackto youat the timeandif youare
youcantakeadvantage
listening
of the situation.
But more importantlyif a false break occursat a level that would be
recognised
levelof resistance
by manyas an impoftantgeometric
or suppoft,
saya 50 levelor 38.2or evena 61.8and breaksit by 3 tickswith no follow
throughyou shouldimmediately
view it as a FAILEDSIGNALand cut any
breakout
tradeimmediately
andlookto tradebackthe otherwayat the next
signthe markethasreversed.
If you ignorethesesignsyou couldbe missing
a lot of low riskentryopportunities.
Youdon'thaveto givethemmorethan
you
oneshotbecause
theyshouldbe definitiveif theyareworkingotherwise
just takea smalllossandstandaside.
Therearenumerous
instances
whereyouwill encounter
thesesituations
on a
dayto daybasisbutthe betteronesarewhenthe markethasbeenmovingin
reasonable
ranges(larger:say 8 pointsor more)priorto their occurrence.
Falsebreaksin a 5 pointrangearenotwofththe botherbut if youget a false
breakreversal
whentheyoccuraftera 10 or 15 pointrangeor greaterthey
havea lot moreriskrewardfor youto trade.
YearsagowhenI wasstudyingthe GanncoursematerialGannusedto refer
to the phenomena
he called"lostmotion".Thatwaswherethe markettraded
pricelevelthat technicians
up or downslightlyaboveor belowthe geometric
like us wouldtarget.It did not seemto botherhim that the marketcould
breachlevelsslightlybut it took me a long time to cometo gripswith it
personally.
But as life goeson andyou becomemoremarketsawy you will
seethat you haveto dealwith thesesituationsall the time.Theyprobably
occurbecause
the marketis gettinghit with a lot of orders"at market"andit
driesupthe bidsor offerson the priceexactgeometric
ticklevel.
Theoddsof a falsebreakat an impoftantgeometric
levelcouldbe as highas
you
50/50but they shouldneverexceed3 ticks.If
takethis possibility
into
accountyouareonlyriskingat maximum5-6ticksby tradingfor a reversalin
trend.Whenthesetradesdo workyou canoftenget a runnerbackthe other
wayfor a muchlargerreturnthanwhatyourIosses
will everaddup to.
Whenthe markettestsknownimportantgeometriclevelswhereit hasthe
potentialto reversedirectionremembera "failed signalis the strongest
signal".This meansif the breakoutfailsthe trendis goingto reversefor at
periodandmoneycanbe made.
leasta temporary
Psychological
Aspects
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Points#3 and 4#:

breakandthen
a legitimate
#3: Howfar of a breakis far enoughto consider
a reversal
notto be considered
a falsebreak:
In my mindonceboththe ES& the SPbreaka levelby morethan1 full point
redundant
levelbecomes
to myfutureanalysis.
thatgeometric
#4: Whenis a falsebreaka failedsignalthat makesit an impoftantreversal
signal?Usually
whenit falsebreakson a spikevolumeandis followedby a 5minutereversal
bar.
backthroughthe originalbreakpointby morethan
Oncethe marketreverses
signal.
1 full pointon a reversal
barpatternit is givingyoua reversal
to confirmthe situation.
will continue
EachS-minute
barfollowingthe reversal
Friday15h August 2003:
Hereis a goodexampleof what I havebeentalkingabout.Righton the
10:00am5 minutebarwith no repoftsreleased
at the timethe marketbroke
yesterday
from
by 1 point,touchedthe 50%
downthroughthe triplebottom
retracement
on a 1:1andrebounded
backthe otherway.
Fridoy 15fh '4ugust2O03
ss4.Ba
9S2.50
1 0 r 3 5h i g h
q9?,5
12,!up
7 POINT
RAN6E
sg1.BB
98s.50
SBO.BB
9E6.sB
s85.SS
9S3.56
+'25 SpikaRavarsolon5o
drlwn
*d o t,t
AB:5.?5
g8e.6a
CD:5.25
1 3 : 4 5- 1 4 : 3 0
OPEN
989.5A
g8,/L5/z:0ig.3
wL4
9:30
OUTR,AgE
PER.IOb
EB/14
g8,/L4
Bi8,/L5
BE/15
68/15
The low was 985.5 and one of my novicestudentsmanagedto SELLat

985.75probablynot beingawareof the 50 there at the time. He sayshe
His mistakewas
closedout at 987.5for a lossof 3.5 pointson 2 contracts.
not reversing
longwhenthe marketcamebackinsidethe break,if he did he
wouldhavegot hislossbackandmademoney.
A seasoned
traderwouldhaveknownthe riskof the 50 and1:1 beforetaking
thetradeandboughtwitha Stop& Reverse
orderbelowthe 50 level;
Psychological
Aspects
1:1 with the alternate

The 50o/oretracement
of any rangeand a coinciding
wavearethe basictoolsI havebeenteachingmy studentsto be awareof for
years.I wouldneverhavesoldthat breakif I hadseenall the impliedsuppoft
belowit.
Whenyou considerthe situationin retrospect
the buy signalwasa stronger
signalthanthe choiceto sellthe breakin the first placeandalsoa buyright
at the 50 wasevenwarrantedor the sellshouldonly havebeenmadeon a
breakofthe 50 andnot before.
In any caseI havediscussed
the matterwith him on the phoneandhe has
realisedthat he jumpedthe gun by only lookingat the triplebottomas his
signto takethe sell.My adviceto him wasto alwaysthinkonestepahead.
Askyourselfthe questionbeforetakingthe trade,"Whatwill I do nextif my
tradedoesnot workout?Andthentry to workout all the thingsthat cango
wrongbeforehand".
As for the day I was not tradingbecauseof the POWER
OUTMGEon the
EasternSeaboard.
Lookingbackoverthe day (afterthe close)my datafeed
showsan outrageor systemclosurefor 45 minutes.Everything
shouldbe
backto normalby Monday.
The closetodayat 990.75hasthe marketpoisedfor an assaulton the 993
(61.8high).Oneway or the otherthereis a tradingopportunityloomingas
we go into nextweek.
THISWEEKEND
I HAVEBEENWRITING- the WEEKTO WEEKchapter
whichexplains
the largerdegreepictureof wherethe marketpositionappears
to be.SeeS3:C2:.PL4
gg!t.86
6oing inlo the ltlondoy doy sessionthe overnighl

6lobax hod olreody brokcn through lhc 993
resistoncelevel:
:tg?.5a
996.Bo
gtt4.5a
gs3.a0
s91.sa
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ssg.86
s80.50
9B?.BO
,
985.58
E8,/1g./Zgg3
g8/15
gE/Ls
Globcx SessionSundoy17rh July

g8./17
g8/tg
g8,/18
Priorto Monday's
day sessionopeningGlobexhadtradedabove993 - the
signsfor Monday
aresignalling
dayat the veryleast.
a shortcovering
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Qcharts ESU
1401.04
9S?.9S
s93. BB
98s.68
g85.AA
s81.08
s77.98
g73.BA
s6s.BB
s65.BE
961.60
gg/tlrzwS
v8/a4
a8/86
8S/68
gA/lZ
ge/I4
B8l15
Monday 18thAugust 2003:

1000leveltraditionulncturolobstocle
1BBB.86
g9g.BB
998.08
gs?.68
995. A6
9S5.0A
sg4.o0
Open
g!|3.BA
lsl
99Z.gE
-3^6
filondoy lSth ,Augusi?O03
s91. AA
g}/tf,/7flPjs
F______--__illulill
B8l18
66/18
B8/1S
B8l18
08/18
88/18
The marketopened993.5 retestedthe 993 by 3 ticks to staft with then

signalled
a HOOKbuy backthroughthe opening.Thisadvancedidnt attract
the softof volumeI wouldhaveexpected
andwhenit wasn'tgoinganywhere
I bailedthe positionfor a scratchtrade.Thesecondtest of the 993 breakout
madeit backto 992 and couldnt go downany further.On the breakup
throughthe 993 the volumestaftedto rise a little and there were good
indications
that it wouldstayabovethe 993thistime.I didn'thangaroundto
findout asthe breakouthadbeentoo sloppyfor my liking.It looked-like
short
you
from
2
minute
coveringratherthan new buyingto me. As
can see
the
chaftthe wholedaywasa grind.
The reasonI didnt worryaboutit wasthe limitedpotentialbetween995and
my 999target.Untilthis marketcanbreakabove1015(if it can)the buyside
nowis goingto befairlyfragile.
29
1015
High 101.+
. 75
Lor,r 9 5 8 . 4 5
Hge
56.50
998,75close
1-<-
I-u+.
-r'E--gzgzi
S
P
Doily is heodinginfo
overboughttarritoryl
n
E
R
T
I
n
R
$
Y
:100
Ronge
tevels
Averoge
boily
Ronge
is fEr
from
inspiring
:75
t4
7
25
z
x
0
B3B7B1
838711
g3A72I
B3B?34
B3A8B7
Thereis a timingfactorI cannotignoretoday.It maymeansomething

and
then it may not but it is strongenoughto meansomethinguntil it proves
othenrvise.
Time Cyclestodoy in Colendar& Solor
1.000
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The more news I watchthere is a growingbullishsentimenton the US
markets,I tend to worry that they are talkingit up! Especially
when the
marketis struggling
alonglikea swimmerwitha rocktiedaroundits neck.
Factsarethe USmoneymarketsneedto attracta billionanda halfUS$a day
you lookthe European
fromoutsideof the countryand everywhere
markets
seemto be stillin recession.
Wellso it is, what'sit matteranywayif I just go alongone day at a time
settingmy guidelines
andmakingsureI dont overlook
anything.
I knowone
going
give
thing
into tomorrowandthat is I am goingto
a test of 1004 a
SELLshotwitha tightstoploss
anda breakbackthrough993getsit aswell.
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Tuesday19s August 2003:

ESB3U_5
1885.BB
Tuesdoy19th Augusi 2OO3:
flr:ierhish.
l.lll .{sly.-=-1-9---o--{
1083.08
1881.OA
99S.OB
ss?.08
sss.BB
ss3.aB
ss1.66
IIBS.BB
98?.60
g8,/Lg,/ZEB3
08/15
B8l15
88/18
88/18
A8/19
Theysoldit andthenthey boughtit. Afterthe strongfinishtodayall you can

Theold highat
sayis this rallyis resilientandkeepsmakingsomeheadway.
1004is underattackonceagain.
ESB3U-15
[charts CSU
LBLZ.W
140?.SB
The plot thickensl
1003.5
1882.AO
S9?.BB
99Z.AB
s0?.60
9SZ.Ag
g??.m
97Z.SA
s6?.as
IIEZ.BB
87n1/z9/0.3
B?/Zg
ge/EL
ai8./ffi
fiE/It
all the way up to 1015if

overhead
Thereis a bunchof technicalresistances
rightnowon
the 1004highdoescomeout.The marketis clearlyoverbought
grinding
now
until 1015
right
and
up
the dailychart.IMO this marketis
down.The timingI had
comesout it is susceptible
to a sizableretracement
sothe plotthickens.
a reversal
for yesterday
hasn'tlookedlikeit hassignalled
patternsincethe 17thJunehighneedsto be resolved
Thiswholeconsolidation
beforethe picturefinally clearsitself up. I wonder how all the other
professional
arefindingthe goingrightnow?
tradersandanalysts
Psychological
Aspects
31
with L0t4.75to 958.25so

BTW - 1004hasa 0.809retracement
relationship
it holdssomerelevance
in termsof ElliottWave.Afterthata 1:1withthe rally
backto the doubletop July1-14comesout at 1012.5just belowthe existing
doubletop.
Wednesday20h August 2003:
situotion
is nov.r11.5points - Avary compressed
3 DAy R./41'l6E
1Ba3.aB
1081.50
IBBB.OA
9s8.56
99?.BA
sss.50
ss4.as
R,AFI6E5
8.25
7.5
ggz.59
BB/Zfr.ZEE3
:
r--
BB/18
08/18
t:
00/19
0Sl19
:t
g0,/28
,r il t l t l l t t l
BA/ZB
Todaycameandwent prettymuchas it stafted.Thereweretradestodaybut

the opportunities
werelimited.I managed
a gainof 6.75grosspointson 6
I
tradesin the 7.5 pointrange,in fact the rangeI was in was lessbecause
didn'tbeginuntilthe doubletop. I couldhavedoneslightlybetterbut I made
a mistakeandmisseda shorttradein the lasthour.
Thetotal rangefor the past3 daysis downto 11.5pointswith the midpoint
at 997.75- thls is something
I haven'tseenfor a while.The tradersare all
focusingon the 1003.25high then the 1015areaand tryingto keepthe
marketabove1000.
Anotherissueis that dailyvolumesin the EShavedroppedbackto halfthe
normalactivemarketlevels.Thiscanonlymeantwo thingsandthat is either
no one is homeor a lot of peoplehavelost moneyrecently.Not surprising
because
veryfew peopleknowhowto tradein tight markets.
Mythoughtsaftertodayarethat if the highat 1003.5doesnot get takenout
in the next day and the 1015 high within a week we couldbe in for a
pullback.
substantial
All it is goingto takeis for somebig playersto recognise
the opportunity
andcomein sellinghard.
This marketappearsto be hangingaroundjust waitingfor somegoodnews
to primeit up.If it doesn'tget it soonimpatience
amongthe bullscouldsetin
as the mediais now tellinginvestorseveryday that we are in a new bull
market.I wonderhowtheyareso sure?
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Thursday21* August2OO3:
ES03U-3S
flcharts GSU
LgL?.gE
30-2
tBa?.gB
Nlotquitc o 1:1
rgaz.6a
ss?.Ba
ssz.98
98?.BB
g8z. a6
97?.BB
This is thE closest geometry

I con sce for todoy thot is
onyihingcloseio morkingo
s?z.gE
96?.EB
962.BB
Bi8,/ZtlZgE3
g8./94
tn*s
1B:66
1008.50
1AA5.56
1066.50
tggT-a5
g8,/21
Themarketopenedat 1004.5andretested1003.25slightlybeforemakinga
highof 1009.5at 10:08am
andsoldoff. Aftera rumourhit the pit sometime
therewasa panicselloff back
laterthatsomebrokerhadsold30,000E-Minis
(998.25).
lowof yesterday
downto a doublebottomwiththe lateafternoon
afterthe 12:00am
backto 1006.5at 12:14pm
Otherthana 73.3retracement
Index (whichcamein at
Manufacturing
releaseof the AugustPhiladelphia
22.L on a consensus
of 10 and a prior of monthof 8.3) all the waves
until
relationship
as the marketrangescontracted
followinghelda geometric
the end of the day. The closewas back belowthe open and belowthe
previoushigh 1003.5so it remainsto be seenwhethera highof impoftance
wasmadetoday.A declineof over 13.75pointsfromtoday'shighis required
to overbalance
the waveseriesin forceto date.Volumewasgreatlyimproved
todayalthoughthe marketwasspookedprettyeasilyon the rumourandan
interuiewwith a floortradershowedthat they didn'thavea cluewhat was
goingon. It wasalsoprettyclearfromthe priceactivity.
Qcharts f,SU
ESB3TFl
1418.68
Bf, = 0.618Xd
CD = 0,786 BC d 0,486XA d 0.667AB
AD I BC INSIDE REVERsECRO55
1BB8.58
LgE?.W
sA
1AA5.
1084.gB
IEsz,.fi
1861.08
g9g.5s
a8,/21/z8/a3
Psychological
Aspects
JJ
Tradine to WIN Course - One day at a time
Friday22ndAugust2003:
WELLIT HADTO HAPPEN!!!
The marketwent into Fridaywith a strongrallyto new highsvia the Globex
session
not longbeforethe daysession
openedin NewYork.
The reasonwasa pre-market
by INTELthat they hadrevised
announcement
for Q3andthiswasthe newsallthe"blind
theirturnoverandprofitestimates
wasit came
Freddie's"
werewaitingfor. Theproblemthey hadto encounter
heavy
whenthe marketwas showingsignsof exhaustion
and approaching
technical
levels.
resistance
6AP Outsidc Reversol
S&P5AB
High
Lor,t
nge
1414.m
958.5B
56.34
4 I'tR1
sgs.18
:LB na;i:a
385 E.q
13.41
OVERBOUGHT sroctl
1BB
75
TX
tIl
25
I recognisedit for what it was worth immediatelyand had it in mind earlier

this weekthat 1012.5(a lowerhigh than the doubletops) was goingto be
the linch-pinthat would hangthe bulls.Well they coppedit from the open
and couldn'trecoverall day.
Qcharts CSU
1413. Sg
ffias.Ea
1BB?.gB
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1885. BB
ffia3.BB
1881. SB
99S.68
s97. B0
gg5. Ba
993. B8
t
t
tot?^2
1811. AB
EBr'-ZZ/Zgg3
Lau.:s
88/19
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Bg:38
1811.58
tgIa.zs
34
1889.?5
1:A1:O.6 AB/ZZ
1
Section4:Chapter-
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Todoyv,roso perfoci exompleof the things I hovabeen

teochingyou in this TRl4DIl.lG To Wllrl Course.
Qcharts CSU
Curent Xarrye
4.25
prior
ranges
3.25 1.388
?.aB 8.687
z.?5 1.545
z.?5 1.545
2.75 1.545
6.56 8.654
3.BA L.4L7
3.25 1.388
3.8
1.388
4.?s 8.895
3.8
1.388
9.BB 8.472
2.75 1.5f15
6AP OUTSIDE REVERSAL

Rctge 2O.5 poinis
SELL
l'fo corrcction exceoded3.25pts
ESB3U-Z
B8/2?.rz:0o3
Fiair
The way the day startedand the obvioustreatmentit got by the localsas
theydigestedthe INTELnewsandfiguredit wasnot goingto be enoughto
breakthe marketup abovethe 1015level.INTELitselfwastradingat a PE
ratioof 35/1alreadyandthat wasthe cueto just SELL,SELL,andSELLevery
time the marketcouldnot breakbackmorethan 3.25 pointson any rally.
Therewasno moreconstructive
newsto comeout throughthe dayandbeing
a Fridayit wasalmostcertainas the dayworeon that no onewantedto go
homewitha longposition.
38.BB
IHTC-II
up r25e6 --l-$2e
---*"---------t--"-
z8.aE
26.80
I
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zg.aa
z4.aa
zz.Bg
18.84
ffi.aB
14.88
,
r
l
E/13
l
l
Wl/16
i
|
86119
l
l
g8,/ZZ
In one sessionwe haveturnedthe 3-dayswingbackdown, had a GAP

REVERSAL
DAYandclosedon the lowfor the day.Anyonewhotook
OUTSIDE
weekend.
the dayoff andis stilllongwill be havinga sleepless
Well anotherFridayhas passedso we mustdo our weeklyreviews. See
53:C2:P22.
The next thing to do is to calculatethe next day'sMakeor Breaklevels,
Levels.
Balance
PointsandPriceRetracement
3s
andwillgo overwhat
to finishoff thatchapter
I havedonethisin 53:C1:P12
this chapter.I wouldhateto
happensin the comingweekor so to complete
if you are studyingthis manualin yearsto
leaveany readersin suspense
come.
Oneweek on:
ls83u-18
Qcharts CSU
1815.BB
L0LZ.Bg
; tltrondoy , Tuesdoy ' Wadresdoy, Thursdoy
ridoy
1609.BB
1886.BB
18S3.BB
raBg.gs
99?.AB
2
sg4.0B
ssl. B0
s88.EB
1185.
BB
, Only Tvlo doys down
0,8,/ZZ/Zgg3
Thedeclinefrom L0t2.25onlylastedtwo daysandthe markethaseffectively

this
repoftsreleased
beenrecovering
for threedaysat this time. Economic
is not
thatthe recovery
weekhavebeenfavourable
overallwiththe exception
jobs.
producing
We havea holidayon Mondayandthe marketwill be
new
closedso Fridaycouldbe a mixedbagastraderstakethe dayoff.
Friday29thAugust 2OO3:
The day beganin a mixedmoodand aftera goodrepoftat 10:00amthen
barandthe
whipsaweda little.The 1005^6highwasmadeon the 10:25am
1000^2lowonthe 12:50pm
bar.
nsmu-s
Qcharts CSU
TALZ.EB
Thur;sdoy
I.ALA.SE
Lost troding doy of fhe rtdonth

Fridoy
+9
Lgog.?5
m88.AB
ffi05.84
TAUL.BA
LEfiZ.AE
Lgga.as
ss8.0B
slE.0B
SIH.AB
leis l1.ooo
Lobor Doy Holidoy tltlondoy

,IJ\AR,KET
CLOSED
ssz.BB
sgo.zlL-lY,-'sifft
st
aa/za
8/8/28
36
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At the end of the daywe are onlypointsawayfrom a test of lastweeK high

andthen a test of the 1014^6majordoubletopsfrom JuneandJuly.The
hightodayhasbrokenabovea largerdegree1:1 andthe 3-dayswingis up
sothereis no reasonwhyan attemptat the old highsshouldnot be made.
the WINDOW
Todaywasa very lowvolumeday,whichwasto be expected,
DRESSERS
had an easy day for the end of the monthpaddingup their
portfolios.
the
The largestcorrection
sincethe 990^2 low is 5^4 so that nowbecomes
yesterday.
not
does
long
the
9^4
as
first benchmark
So
followedby the 9^4
overbalance
the upwardtrendis stillintact.
which
the economy
regarding
Thisweekwe hadsomegoodfiguresreleased
has everyonetalking of a better than expectedrecovery,all we needto
happenis for it to translateintostockbuying.Thenon the otherhandmaybe
the marketanticipated
this and it is all factoredin rightnow.Myviewis the
with a breakout of 1015andthe
bullishcaseoverallneedsto be confirmed
thismarket.
largerdegreerectangle
has
that
beencontaining
Thissideways
movement
hasbeengoingon sincethe lune 17urhighandthe
markethas beentrappedin a 54-pointrange.It is alwayspossibleit could
stayin the rangefor a whilelongerbut not realylikelynow.
Onlytime will tell, so as I havesaidso manytimesbeforelet'stakeit ONE
DAYATA TIME.
But nowwe havea chanceto proveall the bearishpunditswrongand have
themrunningintohibernation.
Tuesday2ndSeptember2OO3: Hello!Wave5 begins..,....
Qcharts f,SU
1026.68
ES63U-5
LEZZ.g6
1018.OB
161{.0A
For myElliottWnveCount
Referto 52:C4:P38
W5 confiruned
W3 high from Mqrch 12ih

t0t4.75 Doubls To_p--_......._..*.____.._
-->
CleorBneokout
1016.OB
IBBE.EA
I9|BZ.BE
Tuesdoy
ss8.00
Todayslowretroced38.2 in the
CurrentImpulseonddid not over
s94.BB
990.28 balancethe previous9.5 correction,
ssa.B0
s8E.8B
New odvoncebeoon8/26
a/9/gz/Zgg3
ffi/25
Psychological
Aspects
as it wasan
I havewrittena repofton today'spriceactionin S1:C18:P110
interesting
day.
The focal point of today'slow was the attemptto breakthe 38.2 and
overbalance
the currentwaveseriesthat begana weekago,this failedand
indicated
the marketwasgoingto attemptto go higher.
Withthe breakoutto newhighsabovethe 1014.75Wave3 highswe havea
confirmation
that we are in a Wave 5 of largerdegree.This is pretty
the bearshavebeenkickedin the teethby the
importantstuff now because
bulls.
Psychologically
the bearsare goingto haveto rethinktheir position.They
went into todayfully committedaftersellinginto the rallyall lastweek.The
similarto
is somewhat
net shortpositionof the fundsand the commercials
whereit wasbackin midMarchwhenthe S&Pwas230pointslower.
The nexttimezoneof any impoftance
I canseeaheadwill be 1800fromthe
March12frLowand that is right on the contractrollover.I haveto write a
chapteron the contractrolloverperiodfor this courseso I will coverwhat
Thiswill be chapterS3:C3.
happens
fromnowon in this newchapter.
By goingbackover and over this chapteryou shouldbe ableto learnthe
It is not difficult
correctapplication
as eachdaypasses.
of my methodologies
your
rulesall the
to remainflexibleandfollow
but it doesrequirea discipline
time. If you do thesethingsthe marketwill continueto tell you what it is
doingandthenall you haveto do is isolatethe pointswhereyou caninitiate
lowrisktradesto be a winner.
WednesdaylOthSeptember2003:
at the highon Monday.
I just hadto showyouthis patternwe experienced
Qcharts CSU
1035.B0
I just hod lo showyou this.....
1032^6
1831.68
1826.9B
razl.Eb
1418.gA
I
T
T
t
I
I
Old DoubleT
1411.EB
1066.BB
1001.a9
gs6.68
This lop pallern nrds(1sign of ihings to

come.When cmorkel sfarts overboloncing
prior correclions ond mokingfolsa
breokouls the nedr lefft trend is chcnging.
s91.BB
s86.60
gg/Ig/zBg34
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A breakout which failed to go on. The markethad been experiencing

weakness
from Wednesday
of last week and madea final gaspto forge
ahead,it just couldn'tdo it. Thisis whatI calla failureof largerdegree.
You mustseewherethe low todayfinishedas it leavesa solidfootprintto
workoff tomorrow.
ffi35.A
1832.BB
IBZS.Ag
1826.B0
LAZS.gB
lAeA.O0
1617.04
1814.AA
1811.08
gg/EE/zgg3
Eg/95
Bg/BE
Bg/08
Bg/Bg
6g/tg
69,/tg
ag/lg
El perfecto!
you.
I havebeenteaching
Thisis onceagainlivingproofof the methodologies
this
Youmustalwaysremember
the geometrykeepstellingthe storybecause
is all the tradershaveto guidethem,all they havebeentaughtto do in the
last100yearsis to tradeoff the geometric
levels.If you knowthisyouwill be
predict
will
Long
ableto
howthey
act next.
asthereareenoughof themlying
in waitat the obviousretracement
levelsthe marketwillturn.
I suppose
if therewasevera placeto enda chaptersuchasthisoneit would
be now.Duringthe pastmonthI havebeenwritingthesepageson a day-todetail the technicaland the
day basis.I have explainedin reasonable
psychological
tradingplan.If I havenot
aspects
that are paft of my personal
mademy innerthoughtsknownoverthis time then it wouldbe impossible
thatI evercould.
I thinkthat you shouldalwaysremember
this chapteras a phasein my life
where I didn't know what the marketwas possibleof doing, but as I
approached
it on a dayto daybasisit wasnot that difficultto stayin frontof
the crowd.
Eachday is a new day and with the newsand the currentactionsof the
playersyou will be influenced
on howyou shouldhandleit. Youwatch,you
plan,andyoukeepyourdailyandweeklyanalysis
up to date.Dothisandyou
you
get
thatyou understand.
cannever intotroubleif
onlytradesituations
Pleaseremember
life is not a dressrehearsal
this is the realthing,makethe
mostof it. It canbea lot of fun whenyouhavethe moneyto spend.
CHECKLIST YOU CAN PREPAREEACHDAY:

INDICATOR
Readino
Overbouqht
Oversold
Neutral
High
Low
50% Level
Swing
uP/down
Davbefore
Avq 10 days
Risinq/Fallinq
Down
Reversal
?
Trendinq?
Higher
Major
Medium
Maior
Daily
Stochastic
DailvDMI
3 DavRanoe
2 DayRanqe
1 DavRanoe
DailvRanqe Yesterdav
DailyPattern UP
Yesterdav
1:1 MOB's
Deqree
Lesser
RetracementsLesser
38.2
s0
61.8
Siqnificant
MOB1
MOB2
MOB3
Pattern
REPORTS
ForTodav
Levelsof note Suppoft
Resistance
Tme released
Notes:
I adviseyou to checkall thesethingseachdayandyou will educateyourself
to get prepared!
Overtimethesethingswill become
secondnatureto you.
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A little stoly for you on my trading psychology:

I was at the golf club for a few cooloneslast night and nearlyeveryonehad left exceptfor a
coupleof closedrinkingmatesandthe barmanwho is alsoa friend.
Peterone of the guysI playgolf with is an air traffic controllerwho I knowwell and enjoy his
companyand he was quizzingme aboutthe markets,andhow to take advantageof them.
Mattieis the bar managerand Johnworksfor the GoldCoastCityCounciland managesSouth
StradbrokeIsland(A resoftislandnot far from here).
Well unbeknownto me my reply shockedthem becauseI started off talking about just
playingpoker with the other tradersand trying to read their minds in so far as what they
were likelyto do next with the chartthey had in front of them.
This at first didn't make a lot of senseto John but Peter works as a traffic controllerat
BrisbaneAirport and saw the rationale.That is what he has to do every day when he is
watchinghis screens.He has to work out if the pilotsare followinginstructionsor havethey
missedthe plot!
Anywayafter a while of e:<plaining
the mechanicsof how I makea decisionto buy or sell at
the time I impressedon them that every positionwas neverany good if it didn't go in your
favourimmediately.
Petersaw immediatelywhat I was sayingbut Johnjust rambledalongtotally confusedand
drank some more, but they kept askingquestionsand wouldn't let me go home.They just
keptbuyingmoredrinks.
In the end John said well what about all that stuff you wrote in the DT&PAMTbooksyou
gaveme someyearsago.
I said,John that is informationon the theory of marketsthat traders use to makedecisions

from and that is all. They have beentaught all this stuff in ohe form or anotherfor over 70
yearsor more.They know nothingelse and they are obligatedto use it for whateverresult
they canget from it.
BUT,What I do know becauseof it is what they are supposedto do and I just go with the
flow. If the stuff fails to work I just go the other way becauseit is not working.
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THATIS WHYI CALLIT POKER.Nowdo you seemy F..,.........point?

The deckis dealinga new handall the time and you haveto readit for what it is.
Peter understood.John was confusedand Mattie the barman had no bloody idea, all he
knowsis how to hit a golf ball!
I hopeyou get this messageas it is importantto realisethat the guys trading againstyou
only have at best the same tools we do, and if they are not working you discardthem
immediatelybecausesomethingelseis goingon.
Whenthe theory is workingyou embraceit and playthe samegame.
That is why you must cut any lossesvery quicklyif you wish to be consistentlyprofitable.If
you don't the loserswill eventuallyoutweighthe winnersbecausepsychologically
it is easier
to holda loserthan a winner.
Truefact :-))))
4I
My thoughts on how you should approach

this businessof trading:
Youcannotafford
if you wantto succeed.
is everything
Moneymanagement
andkeep
from
the
beginning
play
game
lead
You
have
to
frombehind.
to
this
kickinggoalsor it is betterto leavethe field.
The firct rule of businessis to presentecapital:
you tradeat a time if you end up down(5)
No matterhow manycontracts
a lossof 5 points
S&Ppointson anysingledayyou shouldquit.Quitbecause
is easyto recoverthe next day,what you don'twant to do is dig a holefor
yourselfthatyoucan'tget out of easily.
You will makeyour biggestmistakesin this businesswhen you become
greedyor desperate.
It isjust notworthputtingyourselfin that position.
Theret an old saying known only to experiencedtraders.
*Better to loseyour opinion than loseyour money!"
The secondrule of businessis to take only what you know you can
getr
Remember
that smallbiteswill add up to a meal.Only trade the regular
patternsI haveoutlinedfor you that havea greatchanceof success.Don't
try andreinventthe wheel.
Dont setyourgoalsto high,it is muchbetterto aimfor 5 pointsprofita day
andmake10or 20 acceptit as a bonus.To manytraders
but if you get luclqy
try and get everylastdropout of a positionandend up givingprofitsback.
Takewhatyou knowyou canget fromthe marketandbackoff. If the market
is tradingin largerrangesexpectlargerprofitsfrom your trades.If the
marketis movingin smallrangesthentradefor scalps.
lust thinkaboutit.
Thereare 250tradingdaysin a yearandif you onlytraded100of themand
you madean averageof only4 net ESpointsperdaypercontractovera year
trade10
that is 400 pointsor $20,000.Trade5 lotsandthen it is $100,000,
you
make
a
could
50 lotsand
lotsandit comesto $200,000,
$1,000,000.
If you studythe patternsI havegivenyou in this courseandonlypickedon
the mostreliableonesto tradethe resultswill astoundyou.
My Private Thoughts
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The third rule of businessis to never enter a trade unlessyou have

two very good reasons:
If you makea killingearlyin the day,myadviceis to takethe moneyandrun.
abouthowmuchwas
Letsomeone
elsehavethe restandneverbeconcerned
lefton the table.Onceyou havewhatyouwantget up andleave.
Timesof the day to trade:
Setyourselfa planto tradeonly whenthe marketis active.Youcan often
trade betweenthe openand 10:00amand makegoodprofitsif thereis a
at 10:00am.
repoftsto be released
trendin forceandsignificant
andwait untilthe markethas
Stayflat whenreporGareaboutto be released
plenty
of timeto takea positiononceyou have
absorbed
them.Therewill be
allthe news.
I wouldrathertrade eitherthe morningsessioninto 12:00middayor the
from 1:30pmETon.
session
afternoon
earlyin the dayandexits
Thesmartmoneyaswe knowit oftensetspositions
in the laterstagesof the day.Volumesin the morningwill usuallybe the
highestfor the day.Theywill taperoff between12:00and2:00pmandpick
by 3:00pmyou will seeif thereis
up in the last2 hoursof the day.Usually
goingto be potential
movein the lasthourof trading.
for a significant
Therearealwaysgoingto be dayswhenyoucannotworkout whatthe smart
moneyis doing(maybeon thosedaystheyjust don'tevenknowthemselves).
In caseswhereyou feel likethis it is betterto quit for the day.Neverpushit
if it is notgoingyourway.
In lots of wayssuccessful
day tradingis the equivalentof a job as a top
jockey.Firstyou studythe form, then the field and selectyour ride.The
staftinggateopensand the fieldjumps,it is eithera goodstaft or a false
break.If the raceis on you manageyourrideuntilyouseethe winningpost.
Figureout whattheyareup to andyoucant miss.
CONGESTIONS:
phasethat lastsfor an houror
Whenever
the marketgetsinto a congestion
players
time to thinkandthey will staftto planwhatthey
moreit givesthe
aregoingto do if it breaksout eitherway.
range.Your
Thisresultsin a buildup of stopson eithersideof the congested
job is to figureout if theyaregoingto buythe lowerendof the congestion
or
phase
could
the highendof a congestion
sellit andpushit down.Conversely
the
Usually
to
the
upside.
if
it
result in sellingor them buying
breaks
preceding
will beyourbestguide.
activitybeforethe congestion
My PrivateThoughts
Section4:Chapter-2
LEVELS:
OR RESISTANCE
SIGNIFICANTSUPPORT
Thesecouldbe priormarketreversalpointswherea doubleor tripletop or
bottomcouldform. If the marketis strugglinggoinginto them expectit to
rapidly
whenit reaches
haltfor a correction
them.If the marketis advancing
goingintothemexpectit to breakthroughwithoutmuchtrouble.
in S1:C18
Go backand reviewsomeof the dailypatternsI haveillustrated
andyouwillseewhatI mean.
LEVELSfollowed by a higher low or a lower
50o/oRETRACEMENT
high:
of the
andthe predictability
Thesearesituations
that everyone
canrecognise
lling.
marketbecomes
self-fulfi
LEVELS:
RETESTS
OFSIGNIFICANTBREAKOUT
whenthey don't
Theseperhapsresultin someof the besttradesbecause
to reversebackthe otherway.
worktheygiveyouthe opportunity
GAPOPENINGS
TO A NEWHIGHOR LOWfor the week:
If the marketopensto a newhighor lowfor the weekandthenimmediately
reverses
backto fill the gap and breakbackinsidethe weekstradingrange
highor lowit is tellingyouthat all the stopsaboveor belowthe previoushigh
or lowhavebeentakenout andthatsideof the marketis exhausted.
Takethe appropriate
as it will oftenresultin an excellent
actionimmediately
trade.
TRENDS:
STRONG
ESTABLISHED
Buy or sell the breakoutsinto new territory if the correctionsare not
The trend shouldbe clear as a bell to everyoneso the
overbalancing.
shouldsucceed.
breakouts
CHOPPYMARKETS:
overlaps
andtight
As soonasyou recognise
a choppymarketby the continual
rangesstoptradinguntilthe marketfindssomedirection.Betterto just take
the dayoff insteadof beatingyourselfup.
LEVELS:
GEOMETRY
AT REVERSAL
Makesureyou alwaysinterrogate
the marketwavesfor signsof significant
geometry
to be havingdifficultyaftermakinga newhigh
wheneverit appears
onceyou knowthe
or low for the week.I can'tstressthis enoughbecause
going
in the existingdirectionit makesit
reasons
whythe markethasstopped
easyfor youto adaptto whatwill happennext.
MARKETS:
OVERBOUGHT
& OVERSOTD
Although
Alwaysmonitorthe positionof the marketrelativeto the indicators.
marketscttn remainoversoldor overboughtfor long periodsof time the
LEVELhavean
RETRACEMENT
chancesof a reversalat the next CARDINAL
extremely
highprobability.
My Private Thoughts
Section4: Chafier -2
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SOMECLICHfS AND RULESTO NEVERFORGET:
Thesearesomeold clich6sI useto keepmyselfon track:

1. Tradewith the trend.If the marketis goingup buy it, if it is going
downsellit!
2. Oldresistance
becomes
newsuppoft.
newresistance.
3. Oldsuppoftbecomes
limit up usually
4. Everystrongmovewill be followedby a correction,
resultsin limitdownandviceversa.
5. Trendlinesaremadeto be broken.
6. Nevergo to bedwitha losingposition.
7. Believe
whatyouseeandnotwhatyouthink!
B. Whenin doubt,stayout.
9. Donottradeunlessyouhaveprepared.
10. Alwayshavetwo verygoodreasonsfor everytradeyoutake.
in your favourget out and
11.If the tradedoesnot moveimmediately
staftfromfresh
Mark Douglasexplainsit beautifully.
"The market will never saveyour you haveto saveyounself".
I get out and start
If I entera positionand it is not workingimmediately
again.Thereis no roomfor hopeI ameitherrightor wrongstraightaway.
You haveto learnthat the marketis an evolutionof fact. As the facts
become
clearertraderswill acton massandmovethe market.
patternsandthe
Youcantell whenyou are on an easyday by the S-minute
waythe marketis adhering
to allthe thingsI havetaughtyou.
If the signsare difficultto readthen standaside- no one is forcingyou to
trade.Nevertradeon emotionaloneyou mustalwayshavea cleartechnical
andfundamental
reasonfor eachnewtrade.
Expectthe unexpected!
Stayout of the forecasting
business!
You have to think smaft to last a long time in this business.Trade
for the "NOW" when everything appears clear and forget what is
possibletomorrow or next week.
If you studythis courseand followthe advicecontainedhereinand you
it is not for
cannotbecomea winnerthen get out of the business
because
you.
My PrivateThoughts
BeforeI finish I just want to leaveyou with some words of wisdom

to considr..........
GAMBLING:
Theaveragegambleror non-professional
To startwith gamblingis a disease.
to lose.
he knowsno better- heentersthe gameexpecting
is a loserbecause
gamblerscan win at the gamesthey know;only if they have
Professional
studied the odds and they continuallywork on the correct money
management.
gamblersshouldonly playthe odds
To win consistently
seriousprofessional
theycanrecognise.
on oppoftunities
NOIll|...rrrrr,
to bet
losebecause
theydon'tplayit safeandcontinue
Mostnovicegamblers
theylikethe IUICEOFIT.
on anything
theyfanryjust because
you likethe threatof the riskyou
Alsoremember
that if you betjust because
willeventually
lose.
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TOWIN:
treat your
You have to maintain a strict discipline,
gambleslike a repetitivejob in a way that it often
becomesvery boring.The point is it no longerbecomes
fun.
If youwantto win youjust haveto learnto be a mechanic
the rewardsis
Spending
and to get your fun elsewhere.
fun!
I have learnt these basic home truths over the years by watching
the faults of others. Continually remind youltselfof them if you get
on a losingstealgthen go back to squareone with the right attitude.
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Blyce Gilmore
18s January 2OO4
My PrivateThoughts
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3:
Section 4: ctrapter
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S&P500- SomeHistory:
I have beenfollowingthe S&P500amongstother
You know something?
years
now.I haveseenit go throughmanyphasesof
thingsfor well on 20
evolution.
it cameaftera
I remember
the crashof 1987realwell.Whenit happened
progressively
strongeractivebullmarketthat beganin 1982.TheS&Pfutures
begantradingin 1982andas the bullmarketunfoldedbecameprogressively
morepopularwith tradersandtradingfunds.In thosedaysthe pit contract
was$500a handle(1 point).
It took the S&P500 indextwo yearsto recoverall its lossessufferedin the
1987crash.In all the time between1987and2000the marketreallynever
Therewerea coupleof periodsof L2 months
hadanylongperiodsin decline.
did not last
wherethe marketwentsideways
anysharpdeclines
but generally
longerthan90 days.
the bullmarketfrom1991to
Theonethingthatsticksin my mindthroughout
namespredicting
a top
were
many
famous
2000is that all the way up there
guiltymyselfbut whenI did I usually
everymonthor so. I wasoccasionally
the S&Pwasnot goingto
In 1994I realised
onlygot the top of a correction.
stopgoingup butasthe marketrosehigherit wouldbecomemorevolatile.
llaue Trader
1??8
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3BJulSZ
310ctBE
31Jan91
Z8ftpr95
3BJul!l!l
that the year2Kwas

At the endof 1999whenwe hadall softsof predictions
goingto confuseall the computers,
and interestrateswere gettinghigher
I knew.
againI couldseethe writingon the wallandwarnedeveryone
S&P Review
bull marketandthe
The NasdaqIndexhadgonethroughan unprecedented
as
publichad beenon a feedingfrenzybuyinginto everynewIPOavailable
justiff
the
they cameto market. It was difficultfor any sanepersonto
valuations
astheyweresofar out of linewith reality.
It wasno surpriseto mewhenthe marketrolledon its backandgoingdown
techstocK.
withthe biggestlossescomingfromthe overualued
I thoughtbackto the crashof L987andhowthe goldstockshada goodrun
afterthe 87 crashandhowthe realestatemarketwentintoa boomperiodas
investorsmovedmoneymadefromthe stockmarketinto it.
hasoccurred
againand
the samephenomenon
Strangely
or not so strangely
nowwe arefacedwithan unprecedented
boomin realestatevalues.
Have frader
11?48
l4[F{THt?
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with the
It againsurprisesme now that so manyanalystsare comfoftable
valuations
andthat pensionfundsare buyingup everybit of paperfromthe
existingloans.
fundsto refinance
banksastheycontinue
to advance
I oftenask myselfwhereall the moneyis comingfrom. Butthe truth is the
moneyis createdout of freshair andthishasbeenso sincethe goldstandard
wasdroppedin the early70's.
Nowthe first thingto remember
aboutstockmarketindiceslikethe S&P500
listedon
is that it represents
valueof the top 500companies
the combined
go
come
and
as new
stocks
This meansthat
the NewYorkStockExchange.
ones becomeworth more,as a resultthe downsideis prettywell limited
as it did in year2000.
ridiculously
over-valued
unlesseverything
becomes
jr. hadan Elliott
I remember
backin 1987afterthe crashthat RobeftPrechter
Wavecountthat he reckoned
wouldtakethe Dowdownto a levelof 400.Its
previous
highhadbeen2746.Howhe dreamtthat up I don'tknow.
S&P Review
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thinkingin somecases.The
It just goesto showyou the lackof intelligent
stocksin the USAso therehadto be another
DJIAis the top 30 INDUSTRIAL
the valueof the existingonesif theyfell out
100or morecapableof replacing
insane
is notgoingto ceasejust because
of favour.Weall knowthat business
investors
havebidstockstoo high.
indexgo to in
wheredoesthe S&P500
Soyou canaskyourselfthisquestion,
the future?
it will move
up. Notwithstanding
It can only go one place,progressively
reach
extremely
it
long
doesn't
way
as
as
throughtradingrangesalongthe
onceagain.
levelsbasedon madness
over-valued
is to havethe S&Pcompanies
in a healthyeconomy
Theaccepted
benchmark
Ratioof between15 and 25 to one.If
tradingbetweena Priceto Earnings
get
themto be a yearor so back
thingswereto ever as badas we assumed
the accepted
lowerendcouldbea PEof 10-1.
index,but it is hardto
go up sotoo doesthe valueof the S&P500
Asearnings
a boomsimilarto the 1990'sin my lifetime
imaginewe will everexperience
possible
afterwhatwe haveseenrecently!
again.Maybeanythingis
In anycasewhatI am leadingup to is that in my opinionthe bearmarketin
in October2002whenthe valueof the
S&P500
stocksmusthaveterminated
in valuefromits all time high.Nodoubtwheneverit
indexhaddeclined50o/o
asthe March2000valueit will havemany
doesget backto similarvaluations
newnameson board.
in the upperendof the accepted
valuations
Butrightnowwe areapproaching
envelope.The only thing that can propelthe S&Pmuchfurther upwards
Thatdoesnot appearlogicalto happen
in earnings.
wouldbe improvements
overnight.So to my way of thinkingit will pay you to keepan eye on the
as a guide.The
companies
for the S&P500
earnings
beingreleased
estimates
stimuluspolicies
of the FEDandtax cutset cetera,haveturnedthe economy
aroundin 2003 and most of the largestcompaniesin the USA have
restructured
to reflecton the bottomline.Buttheyhavedone
theiroperations
can
to
dateby cuttingstaff.
much
they
aboutas
as
at:
is througha membership
earnings
A goodplaceto monitorthesecompany
hftp:/ /www.briefinq.com
It's beenan interesting20 odd yearsfollowingthe risesand falls in the
that hasbeenappliedby othersover
world'sstockmarketsandthe rationale
thistime.
2003:Therehavebeensome
As I am writingthis it is the 31* of December
continuingexamplesof bad newseveryso often mixedin with the good
news.Butthe marketis stillclimbing.
economic
S&P Review
It seemsthereis
debtlevelsarestilla concern.
Unemployment
andconsumer
in the systemthat
andbankruptcies
stilla bunchof legalclaims,prosecutions
There
needto be resolvedbeforewe can lookto the futurewith confidence.
I
heard
the
other
the
blue.
hick
of
still hasto be a few more
upscomingout
daythat UnitedAirlines,whichwasoncethe biggestairlinesin the world,is
equityamountsto nothing.The same
effectively
worthlessand shareholders
fatecouldstillbe in storefor manyof the old highflyers.
bearmarkethas
So rightnowit wouldseemthat the baseof the 2000-20A2
not yet been fully establishedand somewhereup towardsthe 50o/o
retracement
bearmarketrangethe currentuptrendwill run
of the 2000-2002
intoobstacles.
Wehaveexceeded
somelevelswhicharemajorindustrydecisionpoints- the
38.2retraceof the entire2000-2002
bearmarketin S&P,the nextmajorSPX
levelaheadis the 50o/o
whichliesat 1161andjust belowa doubletop with
importantthe
technically
the lanuary2002high.This couldbe something
tradersmaytake into accountas a signto takeprofitsfrom the bull market
originating
in Marchof 2003.
Nevertheless,
I am a realist.I adaptto the dailycurrent
I am not a forecaster
marketconditions.
It's the onlywayto tradein my book.
Eachdaythe marketgivesme reasonsto form a planbasedon whatwent
before.I only needto knowif traderswill decideto buy and sell,nothing
moreand nothingless.As long as I continueto believethey will act in a
similarmannerto the way they have done before,when the signsare
obvious,
I haveeverychanceto be profitable.
I knowall the patterns,I alsohavethe newsandas longas I knowhowto
preparefor eachnewdayin advanceI am so far aheadof the fieldyou cant
believeit untilyoudo it eachday,thenyouwill knowfor yourself.
The majorityof marketplayersarejust a bunchof turkeysin my book.They
will neverknowwhatI know.My methodsarelikehavinga gunto shootthe
feathersoff themeverydayI wishto if I makethe choice.
Tradingcorrectlyis just a matterof attitudewith me now and if you can
well- with oneprovisodevelopmy mindsetyouwill succeed,
andsucceed
you mustquit everytradeentrywith a minimumlossif it doesnot movein
yourfavourimmediately;
this is my number#t rule.You betterbelieveme,
or youwill sufferthe consequences
andI don'twantthat.
SomeFinalthoughts:
Throughout
writingthis courseI havestressed
the impornceof readingthe
motivesof the otherplayers.
S&P Review
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Tradins to WIN Course - One day at a time
It is importantin this tradinggamefor you to havean ideawhat the big

patterns
in
playersaremostlikelyto do giventhe seriousness
of the unfolding
the intra-daymarketmovements.
professional
I wouldliketo remindyou beforefinishingoff thatthe individual
tradersare all doingthe samething.Theyknowonlyto wellthat the market
to
is madeup of so manytypesof tradersthattheycannotallowthemselves
patterns
a
different
telling
them
are
takea view and stickwith it whenthe
story.This allowsthem to remainflexibleand in tune with the market
movement.
Thereare so manyfundsandCTA'stradingfuturesmarketswith very basic
modelsand thesedo causea lot of noisewhenthey havelargeordersto
execute.The primaryreasonwhy the marketruns when a suppoftor
is brokenis orderflow.Oncethe orders
resistance
levelof somesignificance
beginto flowintothe marketthe marketwill rununtiltheyareexhausted.
Intra-dayreversalsoccur mainly becausethe market reachesa strong
technicallevel essentiallyin an overboughtor oversoldcondition.Those
playerswith a winningpositionmaychooseto take profits,and unlessthere
are ordersto absorbtheir profittakingthe marketwill reverse.You must
a zerosumgame.
that the futuresmarketsare essentially
alwaysremember
Whena sharpmovein any directiontakesplaceit will havehalf the field
losingon it and the other half winningor retrievingprior losses.Human
natureis suchthat moveswill onlyextendwhenthe trendandnewsis fullyin
thatare
agreement
andlargepositionholdersareforcedto liquidatepositions
causing
extremepain.
thatwill propelthe marketfromonepricelevel
Beingawareof the mechanics
and the Parabolic
The Stochastic
to your success.
to anotheris paramount
is
chaftthatthe equilibrium
(SAR)aregoodwarningindicators
on a S-minute
out of balance.
Youwill seewhatI am talkingaboutif youalsowatchthe volumebarswhen
indications.
indicators
areshowingpotentialreversal
nothingmore
intra-daytradingis all aboutidentiffingopportunity,
Successful
or less.As the marketweavesalongthe signsof wherethe professional
playersare buyingor sellingbecomes
fairlyobvious.Forinstanceif theyare
levelandholdingthe marketin a rangeandcannotget it
buyinga correction
reversepositionandtakeit the otherwayalong
to movetheywill eventually
in the afternoonperiodwhen every
the line of leastresistance;
Generally
pieceof newsfor the dayhasbeenevaluated.
Eachday you mustpreparebeforeyou trade,andthen whenthe bell rings
you obserue
signalsthat mayhavesome
the priceactionrelativeto technical
players.
impoftance
to the professional
S&P Review
Whenthe technical
cluesdon'tappearto be workingyouthenhaveto resoft
to the moodor feelof the marketas yourbestguideandjust movewiththe
patterns.
If the marketstagnates
in a tightrangeyouarebetterto waiton the sidelines
for guidance
ratherthanto try andguesswhatit will do next.
Overa daythe marketwill providenumerous
set-upsfor youto maketrades.
you will
As longas you get straightout whenthey don'twork immediately
alwaysbe readyfor the nextone.
Thereis an old saying,'The marketalwaysappearsto be climbinga wallof
worry".
Thisis true mostof the time because
how
the puntersare neverconvinced
far it can rise beforeother traderswill come in selling.And you must
remember
thatthe professional
sideof the marketrealisethisandat anysign
of weakness
to sellto makequickprofits.
areprepared
Sellingat the correcttime in an up trendingmarketis an aft onlyknownto
professional
players,the publichavevery little knowledge
of marketlevels
andtendto enterpositions
at anyold place,mostlywhenit fits closeto some
indicator
readingtheyhavespentmonthsstudying.
The publicare basically
inconsistent
whereasthe professionals
areconsistent
and giveyou the leadmostof the time. Professionals
useclosestops,the
publicandfundsusewidestops.The fundshavedeeppocketsand mostof
the timetheywill hangintoa positionuntiltheirmodelstell themto exit.This
is why on mostoccasions
a reversalbaron a S-minutechaftcanbe marked
witha highvolumespikeasallthe ordersin the flowareexhausted.
Foranyfastmoveto continuethe volumemustkeeprisingas onesidekeeps
pushing
the otherthroughtheirpainlimits.
To be successful
day tradingyou haveto teachyourselfto onlyfocuson the
"Now"andforgeteverything
on
else.Youhaveto lookat whatis happening
the dayor the hourandthinka few stepsahead.Youmustlookbackacross
yourchartand observepriorsuppoftand resistance
levelsthat couldact as
futuresupportor resistance
andwhenthe marketteststhemact immediately
if theyholdor break.
Don'twait untilthe marketgetsawayfromthe decisionpointbecause
if you
do you cannotadequately
controlyour stop loss and withoutthe correct
youwillfail.
moneymanagement
If I wereyou I wouldreadtheselastpageseachdaypriorto tradingso when
you enterthe ringyou will havea clearandconciseviewof whatyourdaily
job is allabout.
S&P Review
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AsI havesaidso manytimesbefore- Believe

whatyouseeandnotwhatyou
thinkandtakeit onedayat a time.
Anywaythis is aboutall I haveto say right now,I can'tdo anymorethan I
havedoneto prepareyoufor a lifein the tradingarena.
I wishyou well,I hopeyou succeed,
but it is still up to you to do it, nobody
elsecando it for you.
Recently
on December
14h I had a devastating
experience
whenI crashed
my car into a steelelectriclight poleandtotalledit, I wasin ICUfor 5 days
andI was luclqyI didnt die but if I did it wouldhavebeenmy fault,I know
that much.Nowthat I am 90olorecovered
andslowlygettingbetterI wantto
tellyouthat my long-term
goalnowis to enjoymy life.
I alsohaveothertradingtoolsI cansellyouto makeyourllfeeasierwiththe
process
tradingdecision
butyou mustbe a workerto usethemeffectively.
As
you learnmoreaboutthe marketsyou canalwayscomebackto me andask
me questions,
I mightbe onlyworking2 daysa weekin futurebut that will
keepmy interestup.WhenI feellikea weekoff I willtakeit.
I hopeyouguyswho buythiscoursewill embraceit for its true meritandgo
on to biggerandbetterthings.
I am sure you will if you follow my rules- if you don't well I can't be
responsible
for youractions.
BryceT. Gilmore.
Thisis the wreck:
53
Tradingto WIN Course - Oneday at a time
4r
Section 4= chapter
EsignalRoutines:
It is nowthe 13hMarch2004andit hasbeennearlysix monthssinceI first
completed
the originaldraftfor thiscourse.
of 2003the S&Pindex
Sincethe originaltext was completedin September
hashadsix monthsto forgeits way aheadsomemore,but rightnowit has
sincethe lowof
the staggersup asthisweekhasseenthe deepestcorrection
a yearago.The futureshighlastweekcamein at 1163.5andthe SPXcash
levelof the SPXBear
high terminatedat 1163.23,the 50%oretracement
to 1160.75.
marketfrom2000-2002
calculated
Thisweekhasseena rangedownfromthe highon the futuresof 42.75 and
from March2003by
on the advance
exceeds
the previouslargestcorrection
impliesat this timethat a top of somemajor
5.25points.Thisoverbalancing
wavedegreesimilarto the June17h2003top is in place.
Edtr+
O t D c O 1 5 O 6 0 e c E i r yO T i ( k
J E q u i n e s ' J o h s r l n F r e b -@ e s - c o N
S&P50fLbryini FqrurF - 6lobEx.W

HIGH 5th frlarch
How
Volume
<<
tlidc
!i1!9$!-o,ira11!9!-q!:!19:!99-cjl-!!-8*a-o*ru:
Jul
2mr
seD lfov
Jan
lttr
ttrv
Jul
Sep l{ov
atr2
Jao
llar
tlty
JulAlq
2003
ortNw
Jan
zlot
llar
as I found
I havenowchangedmy livedataseruiceto ESIGNAL,
Incidentally
problems
back in
Some
when
I
encountered
Lycosvery uncooperative
thoughthe wassmartbut nowthey will
October2003.Theirrepresentative
is sosweet.
of me.Revenge
because
Iosethousands
of dollarsof business
a formulaadd on to
we havedeveloped
Sincemovingentirelyto ESIGNAL
each day on my
save
time
live chartsso we can
work within ESIGNAL
geometric
price& trendanalysis.
It is calledBryce'sX-ABCDsystem.
ESIGNAL
54
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S&P 5OO- lst Month Continuous PIT DAILY

+ J E q u i r i s s -J o h e r t n s y 6 b . G e s - c o l r @ l n c r
)oo Qoaih rict
'El't'+r""
,snp5flPtT.F.ltru8E$
,
Volunle
clt0.30
H:1tt8go l:ttold
{t 29
7 215 1529
In six monthsthe net gain is aboutB0 pointsor about8olofrom a chartI

postedin S3:C3:P42
whenwe rolledoverfromthe September
2003contract.
Fromthe beginning
of January2004we arebasically
at breakeven.
Thisweekwe wentintothe rolloverfromMarch2004to June2004.
- . t E q u i t s s J- O h s r l f , b . G b . & ' e + C o l rO r , :
EEf+
;
.
SS EOo eoiify OTick
:
.
fbf,lf !-"..r-.qplq$.i9lFj!.$r!{
oflhl$ XC ranqc ar 1096-95
Thiirougltly{pnBponilsros38.2
froniftr388ldw al1m.5
'
:
i
lt it breut; 10{5 lba neri oppors

sill'Gqme frcfi ih8 958.5. 11635
range.
|
47.04
aa-50
t0 , 54.30
;|{ll
,51.00
308
s{il
llsn
,0fr,i10
'55.10
The qrnem mow doh fiom fte high i.s

lrs orreclioD eas
of 3l polht*
:
Ard rle
the olheE ot5l
exEeedrd the pwioG
aDd 56
.Qi!lqr1q- "t!i1!.!qqQ,
-!:11.-0139.,q:,!!-i"-slg
, 2 9 1621 7
Jun
Jul
1219262 I
2004
The only logicalconclusion

you can reachlookingat thesechartsis that the
S&Pis losingsteamandthe profittakersare movingin. Therewasa feeling
all alongthat the professionals
only expectedthe S&Pto reach1170(the
levelsof the 2002highs)but with PE'shoveringin the 2511and higherzone
onthe Bluechipstheyarefindingit harderto findgrowthstocksto buy.
ESIGNAL
55
i'
Tradingto WIN Course - Onedayat a time
ESMarch Day session- Hourlyover the past two months:

gs
+ J E q u i i i B s -J o h 8 r l n s ? e b ' G , e s ' ; r u o l o e e t
2 - S8P 5m E-mini
gm'v )t't
960
3 Priyef.loI mqtl
2
ttst rt
xleco@
'ttrkr*ttraoxpiiinguaicn oini,"aori, *oniittt.
r1:q:.r!::@l
._-
-,-"-- -- :--:-.*:---f
tt045o - - - -'. -- - -" -'
Tberah6 ben plnly of SIGHSro rsll b8ing LONGw6lryR0ncj

Volrmf, ,- _.-. gat ltdo -!iL0!.4- -!:!q4g--r:
Therehasreallybeenno excusefor not knowingwhatwas goingon lately'

The lasttwo breaKto a new highfailedwithoutgaininghardlyany.ground.
3.zs pointsabovetop #1 andwasfollowedup with
Thetop #2 onlymanaged
points
a seriesof triple tops] top #3 did a little better breakingout by-5
beforefailing.But look ai the sidewayshesitationafter the 1163.75high
beforeit fell out of bed.Themarketwassayingthe writingis on the wallthat
it couldn'tfindthe buyersto keepit goingup.
Nowthe onlyproblemcomingup is that we arein the rolloverperiodto June
and the priorswingpoints6n ine Junecharthavebeenmadeat different
levelson low voturie.But the SIGNSare all thereandthey weresayingto
youLONG
WASWRONG.Lookat the IUNEESbelow'
AEr+
J E q u i t j s 5 -J o t t s l n E r Y a b - g a " c c "
Ot"t
Ot
gs
g0o
lli+2 'SEF
Bryce:eX
-t14.$Nr:(6*
8rakofTrnd Line
-t'J\ooAt
t:1
sll
s:l
'rt72;0 AA t:l6n
READ TIIE SIGNS

lre rhle period of th; mllNer
11JS
I don't llkF mch-
t00m
'U!rc,--[iCe--."":t-,- zt-,.1
O!r.d.ct@3d.nr
votuF;
-;Ao
H:ttro?t L.!ro,s c: tltryo.ffi
uBEhilbt ;36;i(;';il:;Gili:;;il
ESTGNAL
56
Il
I
Section4: ChaPter- 4
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After evaluatingthe currentweeksactionand the reactionup on FridayI

havemappedout somelevelson the lune ESwherethe trendshouldconfirm
downagain.
Wewouldhaveto go up for anothertwo daysfor meto thinkthatthisweek's
downturnwasonlytemporary.
Ef+
J E s u i r i s s .J o f B r l n t s r 7 6 b . @ E s { 3 N @ r o c @ r 6 s
@eo e'ts,V OTic!
" r riilX?;fdrt t'tr6r

t5m
Srcl
30?l
fi000
fiot.25
5091Relrrcemenl
t05m
r00m
Thi$ iswhat
I se
at lhe moment
TRIilD tS DOS[{
Vnf0be
_o:J!g!!-o_ t!-rl!_3,?,3_ r119l$__!::lj
:00ll:m t2:001U0 1410 15fl16fi
!q.
18t019fl 20fl Zl:Il0

puHishedby sbn:l (www.si9nel.(om]
Themaximum
uppertargetlieson the 38.2at 1125.If it breaKabovethatI
wouldbeginto consider
again.
buysignals
EEf+
J E q u i r i s s -J o t t s r l n F v a b ' @ e s - c o l r O l D c O t
OEo eoairy Orict
6s
Brym'e XiBCO@
r1f6tl8ll
.......................:1131lgAr
$riri,ii
tryhllethe ES ls bal@ 1125lr

is ln a wsk DaCtion-
soFF
Volunn
T.Oil
11
. t:d )1t0 5l2l

,ta7t--
OIIEOAYATA TIIIT
g;"1!q!,o tr:!!!3_lt !;-110-1@

!: r.r1B@
ol/il
03.r't2
0f,'t3
Alwaysmaintaina flexibleattitudejust in caseyour technicalopinionturns

outto bewrong.It hasbeenwrongmanytimesin the pastbefore.
ESIGNAL
JI
Now for tomorrow:

Whatyou mustrealiseis that the S&Pmarketis just an ongoingAUCTION,
whereeachday newbuyerscomealongto buyandold buyersor newsellers
comealongto sell.
The BIDquotesare buyersandthe ASKquotesare sellers.Eachsidehasa
perceptionof their own positionstrengthsand weaknesses
basedon
whatevervaluesthey useto guidethem.Theythen placeordersthey believe
to besuitableto theirownneeds.Theycouldbe rightaboutthe marketgoing
upor downor theycouldbetotallywrong.
Aseachdaypassesthe marketmovesalongwithinlevelsthat satisfywhatwe
FACILITATION.
referto as MARKET
is a fanry namefor the willingnessof buyersand
MARKET
FACILITATION
sellersto meetat a pricethat satisfiesbothsides.
If the buyersare not willingto paythe currentpricesellersare asking,the
pricewill go down,as sellerswill haveto reducethe LEVEL
of theirASKING
PRICE
to makesales.On the otherhandwhenbuyersare keento buy and
the buyershaveto BID up the priceto
thereare limitedsellersOFFERING,
by the actionsof
meetthe sellers.Thereforethe marketis alwayscontrolled
it
comes
downto this,if
words
willing
In
other
the willingor not so
SELLERS.
If they are
to quit positions
the marketdeclines.
the SELLERS
are URGENT
not urgentto sellthe marketit eitherstayswhereit is or it risesasthe buyers
areprepared
to payhigherprices.
as
In the futuresmarketthere is a differencethat needsto be considered,
you don't haveto own anythingto be a seller.Youjust haveto havethe
perception
buyersthe market
that if yousellnowwhenthereareno apparent
will go down,andthenyou will be ableto buy backlaterandmakea profit.
This is probablythe main reasonmost downwardmovesare usuallyfast
to collecttheir
affairsandendabruptlyasthe phantomsellerscoverpositions
profits.Yet in a sustained
wherethe sellingis comingmorefrom
downtrend
the ownersof stockit won'tfindthe samesuppottin a hurry.
that causethe sellersto take action,and
If you understand
the conditions
wherethe sellingis comingfrom or not comingfrom,thenyou will havean
trendcouldendurefor.
ideaof howlonga downward
50%in valuefromits bearmarketlowsand
Currently
the S&Phasrecovered
of 2000to 2002
asa resultholdersof stockwhohaveriddenout the declines
past
severalyears.
overthe
theirbooklossesencountered
arenowrecouping
for themto sellout now.
Myopinionis that it wouldbecome
attractive
why anyonewho hasheldstockthrougha two
I'm sureyou canunderstand
yearbearmarketfeelsrightnowwhentheymaybecloseto breakeven.
ESIGNAL
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AlthoughI am goingto reviewthe nextfew daystradingas it unfoldsin the

what happenshourto hourunless
S&Pyou will neverbe ableto understand
youwerethereto experience
it. I will try andgiveyou an accurate
of
account
what I seehappening
overthis comingperiodandthen you maybe ableto
learnfromit.
No matterwhatdoeshappenyou hadbetterunderstand
that I am goinginto
prepared
with
from
my
Thethree-day
thiscomingweek
a bias
analysis.
trend
is downandFridayappears
to be onlya shortcoveringrally.Yetif something
changesand the marketdoes not flow with the trend, I will changemy
opinionveryquicklyif certainpricelevelsareexceeded.
My mainpointrightnowbeforewe seewhathappensis that to convince
me
we havelongliquidation
in this S&Pmarketand not just speculator
selling,
this marketwill haveto stay belowthe 38.2 retracement
of last weeK
That
level
is
1125.
decline.
around
I havea clearlydefinedplanin mindandI havecontrivedit aroundthe logicI
understand
to motivatemarkettrends.
Thechances
LONGLIQUIDATION
from theselevelsarequite
of a prolonged
realin my mind,yet onlytimewill tell.The lynchpinto me at the momentis
the 1100level.If it breaK, the immediate
futurefor the bullswouldlook
ratherbleakandattractmoreselling.
Cgclefrader
u63.5S
HIGH
G
a
r
t
I
e
I
Low to High : $75
s
1!
i
n
s
u
z
k
L0l.l
?88.58
This is hou.rI leod ii froro lha Morch 2OO3 low

aEA3B3tZ
Thisis the pictureeverytechnical

traderhasof the S&P500 positionas we
transitthe weekend.Forthe first time in twelvemonthsthe movedownlast
weekhasexceeded
all priorcorrections
by a significant
amount.Thiscoupled
weakness.
Thereis no other
with a breakof the uptrendline is signalling
youcancometo.
conclusion
Onlya rallybackabove1125wouldgivethe bullsone morechanceto get
out,andthe logicalthingfor themto do is takeit.
ESIGNAL
My longer-term Elliott Wave perspective:

Way backin June 2003when I was writingChapter3: Section2 of this
manualI outlineda proposition
on mythinkingof the ElliottWaveposition.
Nowthat the SPXhasmadethis March5h highof 1163.25it is puttingit to
the test.The percentage
declineinto July 2002w?s 50o/odownfromthe top
up fromtheJuly2002low.The1163.5highis also
andthislatesthighis 50o/o
590daysfromthe July2002low- that is 1.618years.
In Gann& Elliotttermsthiswouldbea terminalsignal.
I just wantedto pointit out to you at this time, becauseit is thereand it
makesplentyof technical
senseto me.
CpleTrader
S+F 5BB EffSH
5PX
PRITE CYCLE
tfft
BBa3z4
Pr
1552.fi?
TB]
AZB7Z4
Fr
??5.68
fR-j ?-/?lrl
tz,
5a.8zl
TfiETtrTTilF_
i[]
Pr
TT]
Fr
gzg?24
??5. SS
B4B3B5
1163.ZE
tR"s 3Br,sfl
58.Bz
17,
I
ETiTi_
Pr
6.58S
B.4SS
irr
X
L.WE
s.ss8
i50% declinefrom /rfiorch2000
Whetherit will meananythingto youjust yet remainsto be seenbut if the

to
marketcontinues
in the currentweakstateit is in it will meansomething
youin the future.
the lowin October2002
Thereasonwhy I favourthiswavecountis because
"false
wasa
breakaffair".Thedayof the lowthe marketmadea gapopening
wentto the new lowfor only minutesandthen madean outsidereversalon
the day.
of the current
Nowyou can seethe detailI havegoneto with my analysis
marketposition.This is what it takesto remainin controlof your personal
I doubtveryfew peoplewouldtakethetroubleor
in thisbusiness.
destination
for that matterevenknowhowto go aboutit.
you needto learnthe thingsI am teaching
If you want to makea success
you,you mustlearnto analysethe marketwith a fine toothcomb.
I always
in my book.
strivefor perfection nothinglessis satisfactory
ESIGNAL
60
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Monday15fr March 2OO4:

Thedaybeganwithan openingprintof 1115andmadea highof 1116from
thereon the marketjust beganto slipaway.Throughout
the morningsession
thereweremanyinteruiews
withanalystspredominately
on Bloomberg
saying
the marketwasa sellat theselevels.
The only ray of hopefor the bullscameafter the marketdoublebottomed
withthe daysessionlowof Fridayandralliedback38.2o/oof the 16.25point
legdown.Therewasno clearindication
to sellthe firsttimethe marketcame
backto 1110buton the second
it
was
test
a sellwhenit reversed
at 1110.25.
EEf+
JEquiries- JofisrrnrFTab- @scoN @loc O1
g5
e60
gDsil,y erick
Thc d8y rianed silh I sll

thii.iipuiiing piinl"
fron
0t:00 0?:00lDf, olln l[i:00 S:00 0rtr001trO02fr 03:000l:00 05:00l]6il0 0tfr01fl 02:80Ol:00Da:ttrDSlXl06fl 07:lD
03,/l2,IIt
mfi'il
O3".t6i't
@
03fi6 Itr00
Therewereseveraleasysellsto be hadfromthe openingprintrightup until

the 1103.5reversallevelat X on this chaft,as the corrections
on the way
points
went
downwere3.25and 3
respectively
8.5, B
andthe wavesdown
and6 intothe doublebottom.Another2 pointsdownwouldhavegot it to the
1101Globexdoublebottomand madeit a and8.5 - 8 - B or 8.5 downso
therewasnowayit wasgoingto break1101on the firstattempt.
Shortll14 Out1118' il
Shonll09 Out11ll7^6r1^2
Shortllqt Out1llx4t, +3^4
52t tt0{.00
?50 fr03.75
6l
The low for the day was 1101.5forminga doublebottomwith the 1101
Globexlow from earlytradingon Friday.Thislowwasmadeverylatein the
intact
afternoon
anda shortcoveringrallyfinishedoff the day. 1100remains
once again and today was effectivelyan insideday with the trend still
pointing
down.
Aftertodayand the staft to the weekthe bullswill be nervouscominginto
to
tomorrowas we havean FOMCannouncement
fromChairman
Greenspan
be released.
Speculation
is, theywon'traiseratesbut thenwe alreadyknow
they won't lowerthem anymoreeither.Therecouldbe a surprisecoming,
whoknows?
Tuesday16h March2OO4:
The marketopenedup and went to the 61.8 retracement
of LLL9.75and
1101.5at 1113,madea doubletop over 20 minutesand startedto go
sideways.
Sofar I havemade5 trades.Theresultswere+1, scratch,-L, -^4
and+1^6. I shouldhavejust soldthe 61.8andput a stopaboveit andwent
to bed.Greenspan
thisthing
is not speaking
until2:15pmETso the chances
patternsofar the
will do muchuntilthenis remotenow.Withthe established
suppofton the downside
lieson the 1:1 at 1108^2if the 1109.25double
bottomcomesout so there is no valuein sellingit to gain half a point.It
wouldneedto breakbelow1108to confirma sell now.The other pointis
so thereis
50%of 1101.5
to 1113liesat 5.75downfrom1113or 1L07.25
verylittleroomto movebefore1107is takenout.
Edtr+
J E q u i n s s -J D b $ r n t c . ? e b . r E s - c o N
OlDr O1s
Ci60 OoaiF Ortt
8di0"x
Srfr/AsKDfFTII
s-oFF TOlt I
250
*r|ow *[!r!s--13_
:
c.r.dr.@itt;i.r
6t.s
Oul lltl^f
^l
out tt09i$
..t^6
lZolt
-.=- -1
Itm
5;11rrru-oo
l..ir
-7--tr
6{?tr'10'25i
I
&
}5:
ttro,on l
Volume
Published by esignal (www.6igml,com]
The biasis definitely

is limitednow
downin my opinionbut the oppoftunity
untilwe get below1101.I won'tbe bothering
to tradeagainbefore1101is
get
is
broken,that the all clearsignfor meto
backintoit. Somedaysyoucan
to run
knowwhatit is doingbut it is difficultto maketradeswith a potential
just
far andyou
haveto keepscalping.
ESIGNAL
62
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12:15pm ET
E8F+
J E q u i i j s s .J o f t $ t n E r . / 6 b ' @ e s - c o l r@ D c O r
6s
O o o @ c \ r i t yO T i t k
t20ttr
t18m
fl6m
fi{m
Ir?00
t10ttr
togn
fo2 lt0&.50
717 lt0625
02:00 03{0
0{:00
Thefirst breakof 1109.25wasarrestedat 1108with a rallybackto 1109.75

beforethissnapwastakenwith the markettestingthe new61.8at 1105.75.
I haventtradedanythingsincethe 1109.25doublebottomon this move
because
I recognise
that I shouldhavebeenshortfrom 1112.5whereI took
myfirsttradeandjust heldit all day.It just showsyouafterthe factthatyou
don'tneedto havefeathersto be a goose.
JEquitisr- JOhrinB./ab.
E6+
IESIt4-2 . StP SlXlE-mini Futurr
Bryce!x{AC!@
BID/ASKDPTHJEI
@ e S . C c t ' te D i
01
Dynamic,O:0024110
e5
O60
Ooaitr OTick
t6m
14tr!
iztn
113{
10m
:l
51107.594n1,'.618
61tl
r0600
t04m
Y'
*,75
t
I
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fft:00
06fr
,rorr5iT65l o2r roToo

I tjo 1196.z5
07
PuHislrcdby e9rgnal(www*igmkm)
12:30ET and the GAPhas beenfilled- that'sa buy signfor floor traders
especially
in the luncheonperiod.Yetthe trendis definitelydownon the day
and it doesn'tseemto be havingany troublebreakingshort-termtechnical
supports
in thisperiodleadingup to the FOMC
announcement.
Myconclusion
nowis if the FEDcomesout withsomething
the marketis notexpecting
it will
fallapaftsoa breakof 1100willbea goodtrade.
ESIGNAL
63
1:3opmET:
It neverceasesto amazeme.The marketcomesand goesthroughoutthe
and
day.Someminutesago it cameright backup to the 50o/oretracement
withthe 1109.25breakout to the downsideearliertoday.I let it go
coincided
thenbut nowit is a betterchanceto reverseheresinceall the suppoftswere
you arealwaysa chanceif yougo
negatedearlier.Astheysayin the classics
potential
hereif I don't get stoppedout is 7.75 downto
to a dance.The
1101.5 we willsee,I thinkit is a chancebutI willonlyholdit if it is winning
announcement.
untiljustbeforethe FOMC
Edtr+
- - i r q u i u e s ' J o h s l n E r a B - @ e c . : o i . l 1 r c O r
Ooo ODaiF OrEk

tam
liJ0pm Stongll00.s
nStr!
fi{[
il200
fltm
llow
Hldc
<< -_
>>
7orrro8.25
m
Volume
mfl7,ll{
03r't6[{
The
I scratched
that tradefor breakevenbeforethe FOMCannouncement.
went
the
market
as
UNCHANGED
and
announcement
at 2:15 ETcameout
what can happenon dayslike
crazy,havea lookat this andjust remember
today.It rocketedto a dailydoubletop and then fell like a brickto neara
dailydoublebottomin the spaceof 5 minutes,thenwentbackthe otherway
madesomemoney- butwho?
again.Someone
6Er+
J E q u i r t s s .J o h s r l n B ' / a b - @ r g c o r . r@ l D c @ l s
O o o @ o e l r y@ r i c t
re .!9.srqe!e le ?sieI: sJP.?gl9la.{3v.le.tser.rrp:
8rycebX
BID/ASK
t20m
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FEOHAtt. [O $tAr6E
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.tt5*JE-[f_-_*
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fi05.25
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.7&zr'
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03rl6rI),1
ESIGNAL
PuHishedby eS'qnal(ww,esignalrom)
64
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2:4opm ETBusinessas usual:

Now the feathersfrom the Turkeyshavesettledit is time to get on with
business
as usual.Thetrendwasdownso I soldit andit just plunged,
it was
goodfor a quick5 pointsbackto the 1101area.
EEF+
OIoc {D1 gs
J E q u i r i s ! -J o h s r t n B b ' @ s s - c o l t
S 6 0 E o a i r , rO r i q l
Lo_b" .Sg{e!o be il|re ir'! Sl Patrlek3 day.!o.tlgl.q!y-
EryeeisxIscoEl
B|D/ASKDfpTltlE|
fi800
FEDNATE. IIO CHIIJ{GE
t1{m
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-ttusoortr trt
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fi5m
fi12.t6
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n
. ror;11ofrl 5?2 1lt2,5o

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, . t , , 1 , r i , ,I,. , . , , , 1 ,
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llw
lU:00 05fl
03d6JlI1
03fi7 B9:il5
m/1t0t
PuHisH by eSiqnal(www,uigoal,com)
Amazingday reallybut it couldgo backwards

and forwardshere unlessit
breaks
below1100.
THECLOSEOFTHEDAY:
EEF+
J E q u r u s - J o h s r t n B y a b - @ E s - c o rO' rl D a O 1 5
O 0 O o a r y r i c r
- Globsx,S)
tlou do yoo flgu{e lils out ln advase?
rBut I gd a llece of 1t...-.---.
f0 ftATE.llo O'lAfiSt arys rt 1l:
tfiagg
tr.J0
7112.75
ttr200
crrl?51&i11
lsd.>>
:fl!&tt
q**>>-"-i
titr6t8
.r2.N
t101.&
ttit"oo
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o o.oo
01fr
Puilished by e5Qnal(wwwcigml.com)
Wellanother
dayis overandwhatdidyoulearn?
It paysto take everyday one at a time is what I think, that is the best
approach.
ESIGNAL
65
Tradinsto WIN Course- Onedav at a time
Wednesday L76 March 2OO4tSt Patrick's Day

goingintotoday?I'm not exactlysurebutone
yesterday
Howdo youevaluate
thingfor ceftainis thatthe 1100levelis the support.1113andthen1125is
Thisat leastleavesus a lot of optionsandthat is all we
the upperresistance.
needto knowto workeffectively.
but it is
In thiscourseI havegivenyouthe meansto outwitthe otherplayers,
you.
for
excuse
is
no
you
now
there
to do it. I cando it so
stillupto
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for usto
Eachdaythe marketopensanddoeswhatever,but it leavesSIGNS
takeadvantage
of. Whatmoredo youwantin life?
tomorrow?I don't.
Whocareswhathappens
is just a Merry-goRound.The
Youwill reatiseaftera whilethat this business
contesteachday is to readthe tapecorrectlyandoutwitthe otherplayersas
the daygoeson.
You shouldgive this somethoughtif you want to succeed;it is the best
adviceI cangiveyou.
6Etr+
OTjck
J E q u i t i s s .J o f i s . l n s ' / a b ' @ e s + o l t g l D : O 1 E 5 O , 5 0 O o d i l , Y
ll?-45rlu5 tlahr 38, - SELL
_----_ _ __:rgoll!rol ts 5c 6x aDlo

-|:iJ
tmf
:r: r{ r 7 rf,l1
n,lt m
S{ppo.t 7-one
stLt_
Eqq-[!{c---_
<<_ -ii-
-i
+rs fi21.00
726 r1m.75
The marketgot off to a goodstarttodayopeningabovethe 1113resistance

a pausein the rallyas
The old high at 1119.75heralded
from yesterday.
the hypothetical
levelnowbecomes
sellersmovedin for a while.This1119.75
nowwe are2 hoursintothe
suppoft. Mytargetfor todayis 1125maximum,
we haveteena highof It22.75,whichhassomeratio.I wouldstill
session
signalbefore
solidlikethe 38.2andgivea reversal
liketo seeit hit something
throughthe
come
back
I sellit. If it doesn'tmakeit to 1125it will haveto
support
zoneto signala sell.
ESIGNAL
66
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1:15pm ET:
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EgF+
reb- @Es-coN
JEquir,Bs'JobsrrnE
OlDc @1 gs
O 6 0 @ c u i pQ r r r t
1i21.5/11?5lllrlor38J - Sell
'{il
tm75
Suppod Zotre
Er"t
t.50
Omn
ir.*
It iEvqrking
10 3 poiot qlflsgtionr
-1,t5
soFF R{}N
_!log- llidG i
3.0O
I
<<
>> I
2m il20"50
rllt
tt20r5
I '
,1, I
rltt'1,1,
ll,r.u,,.
r
PuHirhedby eSignal(www.esigml.com)
Thismarketis a buy rightnowoff the 1119.75

Potentially
it could
supports.
goto the38.2at tt24.5 fromhere.
Obserue
the 3 pointcorrections
on the way up. Alsothe 1119.5highthis
morningwas 1 tick fromthe old highof 1119.75and 2 ticksshortof a 1:1
(1lx11)up.
A breakbackthrough1119.5wouldsignala sell.A breakbackthroughthe

nextlowercorrection
lowis at 1116.5andthat is a definitesellpoint.
3:45pmET.
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EEF+
060 gcs'ry OTi(k
J E q u i t j s s -J o h s r r n r r v s b ' @ e s - c o l l O I D J O 1 E i
IESU{-2 . SIP 500E-mini Futur8 - Glob.ro

BID/ASKDEPTH1!lI
8tuetIIECO|EI
Dinamicll:oo2a
sFt.l
t12'l5tl25 Hajor 18, - Sell

To be sa -lo be sre P8lflc*
Aeumulatloni'l
Open
h bwortlng to 3 poinl mrEctlons
s4rF RoH
I
3.00
_!!.qrt __,!!{c_.__:1 -_.,__ri_,1
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a ttEF
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o:ut8.oa
puHishedby esrqnal(www.aigndrom)
Nowthis is the momentof truth, only problemis that we are gettingreal

closeto theendof the dayandwe groundourwayup hereon lowvolume.
Makes
mewonder,butI soldit andputa stopon at 1125^2.
ESIGNAL
67
4:15pm ET:Closeof Day Session.

EEtr+
- r E s u i t i B sJ- o h e r l n s v a b ' @ e + c o n O D c O r
Ooo @oriF @rier
AIDIASKD
1 la5/11fi Uajot 38? - Sell
lo ts srre "lo bs srfB Ptlricl
Aftuorulallon+t>
f-so
YtS SIR lhalb ry boby

.NOSn ! qqfrl rlqr.n !!taJb9
THATS rdY AAgl t{OW..-...-..
Olen
1t,oo
4flpm Balled 11?15

h ls sorliag
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to 3 polnl corrcctloB
t05tI,
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10196
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Pubfishedby esnnd (ww,uignal,tm)
The tradewas there but the latenessof the day killedit. Still I shouldn't
- neverlooka gift horsein the mouth.Thereis something
elseto
complain
"what
if the marketwentup
be learnthereas you couldhavebeenthinking,
1:1withthe previous
6.25pointmove?"Theanswerto that oneis the larger
overthe minordegreewaves.
levelstakeprecedence
degreeretracement
Wellwe will haveto waitandseewon'twe?
Nowwhatabouttomorrow?
Buttomorrowis the lasttradingdayfor the MarchEScontractandwe have
the triplewitchingwith the optionsexpiry.Therecouldbe a war breakout
betweenthe bullsandthe bears. OnethingI do knowgoingintotomorrow
for sure,"for surePatrick"is thatabove1125is a buyandanythingelselower
is a sell.
@Esccil tcc O 1 g5
EEf + J Equines.J Dherlntsfzab.
e60 eosity OT.rt
IESrSF- SEP5m E-niol FuturB - 6lobEx.60lDynaDic,oflin$
broiasroennrfil
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l6t H6nlh Contiiltoc60
minutP
t13::pito
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Hldc
ESIGNAL
<<
,rg,t5
1$t.40
>;
68
1to1.aqoo!o,
3r rrz:d)
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Tradine to WIN Course - One dav at a time
I sawsomewhere
somehowthat the sharingof knowledge
wasa gift - then
the phonerangandgot meoff trackso my originalthoughtwaslost.
Thursday18s March 2004: Last trading day MarchSP& ES:
+ -lEquiriss- JDhrliEtr./ab- @eS":Clt lO3
(.41 5
(960 EOait" )rict
t12&A{
c
r500
38.2 ldrgat dcBree
l_osT t$oTloN EnEAI{

not ll.e.kJB2
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PuHkhed by eSir3nal(wwsigml.com)
Turnedout likeI figured,a battlebetweenthe bullsandthe bears!

Theearlymorningeconomic
indicators
released
at B:30amhadthe Globexon
the run and set the marketup for a slidein the day session.It wasn'tuntil
12:00thatthe Philadelphia
Fedmanufacturing
indexwasreleased,
andcame
in muchlowerthanforecast.
The marketdroppedsuddenly,
rallied,
then
then
gradually
proceeded
(1113)retracement
downbreaking
throughthe 50o/o
low
of the range1101up to the 38.2 highat 1125.The tradingthroughthis
periodwason relatively
lowvolume.
SP
+ JEquirjss- JOhstnHrab@ E S - C O H@ m
Dtmamic.0tO:{:m pElryed)
@r
OAO @Cs'U Orirt
brye'sxleco@
.zr.or,o.rlorl.l#
tl&tr
SP PIT COIITRACT
Ordlrlt/lt
Took lheD ages lo conp@

ihemelv6
tfr er ihe whlplsd!-
nd dow
t16m
r{m
tarlyvatning
6ign ol ! rcvecrl
11Sl
I t?00
gttllp
t rrtaes t,rtrrn
c,rr??aow
13.1FSltrelrars??l
0{:00
ESIGNAL
05110
It000
06:m
69
At 12:30ETfroma lowat 1111.5,withoutanygeometrythe marketstarting

aideof Osamabin Ladenhadbeen
movingup on newsthat a chiefal-Qaeda
troops.As this newsbecamemorewidelyknownit
corneredby Pakistani
(1113.25)
retracement
fuelledmorebuying.Thebreakbackthroughthe 50o/o
which
broke
The
12:50
bar,
low wasthe first signof a strongrallybrewing.
high
backthroughthe 12:00Otlockhighsat 1116wasmadeon extremely
to runall
volumeindicating
a BUY.It didn'ttakelongas the frenzycontinued
the ES
in
its
tracK,
but
dead
stopped
the
SP
way
up
to
1125
where
the
back
brokethroughto 1126.5on lostmotion.Thenin the following4 minutesthe
marketwhiplashedbackdownwipingout mostof the gains.
sellingas
The markethadgonefrom newsdrivenandthen backto technical
profittakersmovedin.
It's funnyhowthesethingshappenbut youcanguessthattherewasa WALL
OF SELLordersthat went marketat the doubletop of 1125basedon the
Therealsowouldhavebeenplenty
resistance
of yesterday.
38.2retracement
just
of ordersto buy
above1125for a breakout, but whenthe SPnevertook
quickly.Whenthingslike
out the doubletop theywouldhavebeencancelled
of the ratioswe useandalso
on youthe importance
this happenit reinforces
usedat the CME.
H(ECLIflON
SYSTEM
thefragilityof the ELECTRONIC
ONEMINUTEBARS
Eotr+
JEquiriss'JohErlnF/6b@
. e + c c l t 1 c , 3 S 1 C 5 0 6 0 e o t i h O T i ( t
l:llDm fr
r24m
rzal|
t?0m
I Idil;
t15m
Show
Volume
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031t0
to get out andthis

Theguysthatwerecaughtlongat the top hadto scramble
wouldhaveaddedto the floodof sellingoverthosenext4 minutes.It wasas
if the marketwascaughtin a downdraft.
close.As
onlyonetickfromyesterdays
Nowthe markethasclosedat LL22.75
after the close anyonenot followingthe
one of my studentscommented
marketcloselyduringthe day,and who loggedon afterthe closeto check
howtheir401'sweregoing,wouldhavethoughtthatthe marketdid nothing
ontheday!O
ESIGNAL
70
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Trading to WIN Cowse - One day at a time
Far from it, fortuneschangedhands.Now we can ask ourselves

the next
question.
Wheredoesthe marketgo ontotomorrow?
I havethe sameanswer
- just prepareproperlyandseewhathappens.
to thatoneI hadyesterday
So here is the preparation:
SPChaft
6+
JEquitjss- JOfiBrlntsrtdb.@ES{CN
Frlure3,SlDtmamic.DfrJ4lL
('DC
Or
OOO 6Oait' Orict
TriplE lop
o[ iraroR RATto
-?o-Titl
lfffi 9o bac* to toda/s naln srlnge
yoo o se thal ll25 ls the obstacle
Etri 1ltl l$ the $upport.6J
6t,8
1tl6:5
finBl
lleve.theles lherc le r qood chrree

it 1!25 hm@ lops teCed rhe lth rlne
wlllslhrfAlt
o, ffitA( THROUGF:
Thy donl t.ppsD wry often but it
qttr CTrgltr?E 'fp ilyt!! lgll q :.hg.q
9r-111S!ff:firu
ut{10 (Ftr
07:00 01fl
0311&,Ot
C:rtao nlm-
5-rrrit
fl2m
fifin
flEa7
r0800
106u,
tt7tro
PuHishedby eSignal(www.eignal.com)
The1125levelis the RESISTANCE,

butat the sametimeit couldbe brokenas
all the bearsknowthat, that is theirvulnerable
pointor theirAchillesheel
rightnow.Thethree-dayswingis UPandthe marketis in a two-dayposition
so that if it takes out 1125 it signalsmore upside.To makethe bears
comfortable
the marketneedsto go below1121first andthen 1116.That's
myfeelings
for tomorrow
andI willworkaroundthem.
Friday19h March2004: Settlementof MarchOptionsand Futures.
EEf+
J E q u i t i B s -J o h s r l n B . / a b - @ E s - c c i lO t o c @ 1 5 O 6 0 6 o a i v O r i *
Globsx S6ion
SP
EirysFwB,e irbld lo tdks l$d mdlkel ahrough lho

l|?s fIl.2j in lhe Globex ffiion.
I don'l thlok llret rneans muclr w$ah li happe.B
on low volumc.
O:r1A
07fr09fl0
ESIGNAL
X;1124
lltr0
L:ltGJD
t1:00 15fl
71
One of the questionsI am regularly asked is how do I deal with the

Globex session when it makes a higher high than the day session
and appearcto negatethe geometry in force at the time?
above1125whichwe
In today'scaseGIobex
madea highof tI27.2 breaking
haveasan important38.2fromearlierin the week.
My view is that the SPX(CashIndex)overrulesthe futureswhenit comes
picture.
the largerdegreetechnical
downto assessing
sPx
EEf+
J E g u i t i s s -J D h s t l n F v a b . @ E S { o N g l D : @ r s
ISPQ),60!Dyftamic.0fl2{:00
Oeo 6oait" Oricr

:
t100,ut
r!94-St
TMDIIIG RAII6EFORTIIEWf EI(
Publishedby esrgnallwww
Witchingtherewas
the fact that we weregoinginto Quadruple
Considering
boundto be an effort by vestedintereststo rampup the priceon one side
andfor othersto try andpushit down.
openedthe marketwasbackdownbelowthe 1125so I
Whenthe daysession
still wouldhavefiguredthat to be my decisionpointto confirmthe market
was goinghigher.Whenyou look backat the earlierpaft of the weekthe
1100but couldnot rally
marketfoundsuppoftjust abovethe psychological
abovethe 38.2of the priortwo-weekdecline.
front.TechstocK
on the employment
Thetalkall weekhasbeenof concerns
aresaidto be overvaluedandhavebeenin decline.AsI pointedout a couple
The
of weeK ago the insidershavebeenbuildingsizeableshoft positions.
moredifficultto find growthstocKthatthey
fundsarefindingit considerably
beenrange
Theoverallmarkethasbasically
caninvestin for the longer-term.
of February.
boundsincethe beginning
we haveto go on is the market
information
Andthe mostimportanttechnical
to the
retreatover the last few weeK is comingfrom a 50o/oretracement
entirebearmarketof 2000-2002.
ESIGNAL
72
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Friday's
trading:
I wentout for dinnerand didn'tcomeinto my officeuntil5:00am(2:00pm
ED.
My thoughtsas I studiedmy chartswerethat the marketwasexhausted
to
the upside,andas it was late Fridaythe bullswouldwantto bailout before
the weekendclose.It wassnowingin NewYor( so manyof the WallStreet
traderswouldleaveto go homeearly. Therewasno newsleft to comefor
the weeksothe marketwouldworkitselfto the technical
signals.
At 2:30pmthe marketreversedon a 50o/oretracement
of the daysrange
givingthe 2ndSIGNit couldgo downfromthere.The lst SIGNwasthe falae
breakof suppottat 1115. I just figurethat anyotherprofessional
traderwho
wasthinkingalongthe samelinesas myselfwouldsellthe 50o/oretracement
andas the lowsfor the daywereon shakygroundit wouldn'ttakeanyeffort
for themto break.
Nevertheless
the safesellwason a breakof 1115,as that wouldbe a good
confirmation
that the bulls had given up on the day. The next technical
suppoftbelow1115was at a doublebottom1111.5and a 1:1 downfrom
1118.5- pretfysimpleto work out. If afterthat if 1111.5cameout the
marketwouldjust slidefor the restof the afternoon.
ES
Ed+
J s u i ( i s s -J o h s r l n r g ' / i b - @ e s - c c u O l D g @ 1 e s
@ 6 0 G l o a i r ,Oy T i c k
E-miniFutur3
FR,IDAY
5c Hl I
?i 4r r
a
1t20.25
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*1it3
,l2L0A
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4io
5o% Retrocemanf
2:30pmET
fl\
eii- | llltl{llll JXUIIIII,Jfu,
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t1600
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lxfttl
lIi:00
Published
by eSignal(ww,sigml.rm)
Whenyou seewhat happened

after this it will explainto you why LOGIC
playssuchan importantpartin yourtrade
togetherwith technicalknowledge
process.
selection
Onceyou know how the moneyplayersthink on mass,tradingto WIN
becomes
easy.
ESIGNAL
t3
1111.5-Target
E5dl+
tcJ
r{r-4
J E q u . r i s s -J o t E r t n r ! r , 3 b ' @ e s - c o N O D :
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=, ,,
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for a shorttime
the 1111.5targetI hadthe marketstabilized
Afterachieving
pointing
downand
and rallieda smalldistancebackup. The signswerestill
by now it was3:38pmETandgettinglate.Therewasvery littlechancethe
buyersweregoingto comebacknow.
1111.5- BREAI(S:
EEF+
J E q u i r i s r -J o b s r l n r " 6 b '
@ E g c o t tO D c O 1 e s
060 Ooeitr @Tick
{EIrr{.
Brys!
<r<<- THF 50* nETRACEIIEilT

FRIDAYAFTERIIOON
1 nhrute baF
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8,9!! .B:9!ri
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Hidr
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-o:.!!.4ep_,tt:1!40E *!i 1E6.{,.,c:j,19l2,t--t
Voluma
Pubahhsl bY eslgnal (wm
Thebullshadpackedtheirbagsandso it wenton downintothe closemaking

lowerlowsand lowerhighs.It neverlookedlikerallyingitselfout of trouble,
retracement.
the 50o/o
asit hadto rallymorethan3.5 pointsto overbalance
Nowwe will havea coupleof daysbreak,refreshour minds,andthencome
andkeepon doingthe sameoldthingswe do eachday.
backMonday
game.
it isjusta disciplined
Nothing
changes
ESIGNAL
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Stafting point for Monday:

SP
EEf+
J E g u i r i B i . J D h e r l n t - r ' / i k t . @ e g + c u@ t o c S r
(SPHl|{-2- StF sDDFutu.s.l5l DFamiE.Dfl:4fl

Bryee! Xi.BCDlq
{Deloyed}
| J s@ o o f 3 c B i t lO T i r l i
l30m
fp{.80
fiZn rO
A
1?,t8t
FfOS
*trrr.ToAn
xt
ll
1r11.70
Grirlelinw tor lloodiry

TREIIDN OOwlI
s.r.rEs*!!.,r,9--uj9rys -q]llEclllllll
PublGhed by esignd lwwsigml{m,
I'll be usingthe SP levelsfrom the day only tradingas my guideto the

technical
signals.Noticehowthe marketwhenit camedownFridayhadno
levels.I thinkthe reasonfor
obvioussupportat the 50 and61.8retracement
thiswouldhavebeenthat mostof us werenot confidentwith the 1125high
as the market
whenthe ESday and SPGlobextradedhigherintermittently
paft
wastestingits highsthroughout
the latter
of the week.
The thing one has to rememberas we go into next week is that all the
distractions
of the expiringcontractsand optioncontractswill be out of the
positionand
way.The largerplayerswill haveto assesstheir longer-term
renewbuilding
in thatdirection.
up positions
Personally
I don't know what will happeneachday or in the
beforehand
eachday I will know
available
longer-term.
Butas new information
becomes
youwill alsoknowhowto handle
howto handleit. If youfollowmy approach
it.
Thetruth is it takesworkand if you don'twatch and listen to the market
youwill nevermakea success.
the market
Youcouldsaythat understanding
predictable
wife,
at timesand
is notunlikeunderstanding
a highmaintenance
you
is actingin
find
the
market
When
mostof the time.
totallyunpredictable
manneryouonlyhaveto standasideuntilyoucanget back
an unpredictable
or an
in stepwithit. Themarketis onlya bunchof peopleactingin a rational
irrational
manneron masswhenit is allsaidanddone.
The moreyou studythe marketactioneachdayandseewhattheydo when
or keyto WIN.As
all the technical
signalslineup you will havea passpott
longasyouapproach
the marketeachdaywitha clearheadyouwillbeOK.
ESIGNAL
75
From Briefing dot Com

Weekly Wrap March L9,2OO4
If you didn't count Mondayand Friday, it would have been a pretty good week for
the market. However,when those two days are thrown into the mix, the balance
of power quickly shifts back in favor of the bears. On those two days alone, the
Dow, Nasdaq and S&P were down approximately 250, 70, and 30 points,
respectively.
The retreat on Monday was attributed to concerns over al-Qaeda's reported
responsibilityfor the Madrid bombings. Meanwhile,the retreat on Friday, which
was a quadruple witching options expiration day, occurred largely in the
afternoon trade. Presumably,the expiration activity contributed to the late selloff, along with some frustration on the part of speculative accounts that were
banking on confirmation that Osama bin Laden's right-hand man, Ayman alZawahri, had been captured. Reports on Thursday indicated that it was likely
that al-Zawahri had been corneredby Pakistanitroops.
Whateverthe motivation might have been, Friday'spullbackensured yet another
down week for the market. The losseswere most pronouncedamong the big-cap
technology issues and small-cap stocks. With the market in corrective mode,
their underperformancestands to reasonas they had the biggest gains last year,
and thus, have greater vulnerabilityto profit taking activity.
Comparativelyspeaking,the Dow fared the best among the major indicesfor the
week as it declinedjust 0.5olo.Gainsin 3M (MMM79.76), which increasedits Q1
and FY04 guidance,Caterpillar(CAT 76.30), AT&T (T 19.65), and SBC Comm.
(SBC 24.62) underpinnedthe blue chip average. Microsoft(MSFT24.63) was a
notable drag, though, as it withered in the wake of reports that it failed to reach
an agreement in settlement talks with the EU. Shares of MSFTnow stand just a
little more than a dollar above their 52-wk low.
From an industry perspective,the employment services,Internet software, steel,
home entertainment,gold, householdappliances,machihery,footwear, managed
health care, and oil & gas equipment were your relative strength leaders. On the
other end of the spectrum, the department store, systems software, computer &
electronics, health care equipment, home furnishings, commercial printing,
semiconductor,and semiconductorequipmentgroups were the notable laggards.
Semis were particularlyweak, as evidencedby the 4.5olodecline in the SOX Index
and the utterly disappointingIPO of SemiconductorManufacturingInternational,
which fell L7o/ofrom its offering price.
Commodities,once again, had a strong showing as the CRB Index was up 3.2o/o
for the week, driven by ongoing supply concerns. Oil prices, which are the most
watched of any commodity, tacked on another 5.2o/oand ended the week at
$38.08/bbl. Gold prices,meanwhile,postedtheir biggestweekly gain this year,
shooting up 4.3o/o to $4L2.7O/oz on persistent safe-haven buying interest
followingthe Madridbombings.
The yen was a star performer on the week, too, as it gained 3.7o/oagainst the
dollar with Japan making waves with its declarationthat it will be backing off its
interventionefforts to weaken its currency.
The Treasury market was pretty much flat for the week with the yield on the 10yr note at 3.77o/oby Friday'sclose. That was off its best closing level of 3.680lo
earlier in the week as traders booked some profits from the overbought market.
A stronger than expectedPPI report for Januaryfacilitatedtheir efforts as did the
speculationthat al-Zawahrimight soon be captured.
ESIGNAL
76
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The FOMCmeeting on Tuesdaywas largely a non-event as the fed funds rate was
maintained at 1.00o/owhile the directive repeatedthe stance that the Fed can be
patient with its accommodativepolicy. Some added attention was given to the
slight change in wording of the directive with respectto the lag in hiring activity,
but for all intents and purposes, there was little that was new in the Fed's
stance. Economic data this week was mixed, but generallysupportive of a
reboundingeconomy.
There was nothing in the way of substantiveearnings warnings and the earnings
news itself was solid with Lehman Bros. (LEH 85.19), Bear Stearns(BSC 36.86)
and MorganStanley (MWD 59.61) highlightingthe action with blowout reports.
General Electric (GE 30.14) announced it was acquiring InVision,but more
importantly,indicatedQ1 and Q2 earningsshould be at the high end of its target
ranges.
The encouragingtrend in earnings is a major factor for why Briefing.combelieves
the market's recent struggles are nothing more than a normal correctionwithin a
bull market. That correction arguably has more room to run, but even so, we
remain grounded in our moderately bullish long-term outlook and forecast for a
mid- single digit gain in the market this year.-- PatrickJ. O'Hare Briefing.com
DJIA
10240.08
10186.89
-53.19
-0.5 Yo
-2.6Yo
-2.2%
-3.1%
-1.0 Yo
-0.20h
-2.10
2.5 Yo
Nasdaq
1984.73
1940.47
s&P 500
t120.57
1109.78
44.26
-10.79
582.84
570.69
-12.15
Russell2000
What's in store for us ne)Gweek...,...

EcononricCalendirr
Week of March22 - March27
Oate
ET
Release
D a t e s a n d f o r c a s t s o f u p c o m i n ge c o n o m i c r e l e a s e s .
r4ctlal
Erieffng.rom Cons*nsus
ar22 00:00
Feb DATETBA 0,1%
Mar24 0 8 : 3 0 D u r a h l eO r d e r s
Feb
2.5%
Mar24 1 0 : 0 0 N E WH o m eS a l e s F e b
1130K
Mar25 0 8 : 3 0 I n i t i aCl l a i m s
03/20
340K
Mar25 0 8 : 3 0 G D P - F i n a l
A4
4.1%
Mar25 0 8 : 3 0 C h a i nD e f l a t o r - F i n aGl 4
1.2%
Mar25 10:00 Help-Wanted
Index Feb
39
Mar25 1 0 : 0 0 E x i s t i nH
q o m eS a l e s F e b
6.25M
Mar26 0 8 : 3 0 F e r s o n al ln c o m e F e b
0.3%
Mar26 0 8 : 3 0 P e r s o n aSl p e n d i n f l F e b
0.5%
Mar26 09:45 fr''lich
SentimenfRev. Mar
94.1
Frior
NA
1.296
1100K
NA
41%
1.?%
39
6.20M
0.3%
0.5%
0.3%
-2.3%
s4.0
s4.1
Fronr
Rer
Revised
1106K
336K
4.1%
1.2%
38
8.04M
8.2%
0.4%
Be prepared.
Nextweekis the Marchequinoxandthe 4h anniversary
of the March2000
S&Phigh.Thereare a coupleof otherimportantanniversary
datesas well
wheretheS&Pmadeimpoftant
sentiment
swingsin 2001and2002.
ESIGNAL
Therewas somethingelse I meant to tell you:

from
Backbeforethe S&P500
finallymadeits recenthightherewasevidence
the DJIAthatan important
timeryde in USstocKwaspresent.
Thepicturesaysit all.
Dov.rJones Industriol Index
CgcleTrailer
T II1E CYILE
tR]
BBB118
TB]
BZLBTB
daqs
degs
ueeks
gears
SSE
S?S.5
742.3
2.72I
in volue
PRt]JECTIBH
icl
Bzl8ls
trl
dags
degs
ueeks
gedrs
s4aztg
457
493. E
71.8
t,378
ZAAEA1IA - ZBB4A3 LS
Commanils... tHlhelp,
[*]Scroll,
tEscIExit
50o/oof the time downwouldhavebeen498 daysup - the recenthighon the

DOWwas497 daysup from the October2002low.
The DOWincreasedin valuefrom the Octoberlow 50.3oloin this time period.
Here we are now:
IIJIfl
date B40Z1g
hi 1B7S5.BB
Feb 19
Cgclefrader
la
daie
848116
MMBZ.
A4AZLA
a4a3B3
A4trtlg
I guessmy mainpointin showingyouthisis to saythat if 10,000DJIAbreaks

phasewill
downand 1100SPbreaksdown- we couldassumethiscorrection
takesometime
to resolveitself.If notwe maybejust stuckin a tradingrange.
I1ltellyouwhathappens
beforeI publishthiseditionof the course.O
ESIGNAL
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oing info next v.raekthe psychologicol

support hEsto be the IO,OOOlavel.
t'lai
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Week ending 26b March 2OO4:

This week developedinto a mixed bag - first down and then up, finishing
backnearlywherewe closedon the previousFriday.
--Lfuinsr-Johwrns.b. @es-ccru
OtDc Or s Oco @DsihOri*
SEf+
.|ninl FuturEs: Gl6lex;Dl
O:itOAE
Agr
laf
Jtrn
Jol
Auq
Sep
Eitlao
l:ilHg
Oci
E:t1m
llw
EO
Dec
2|ltt
Feb
llat
Published by eSignal (rucsigml.com)
Mondaystaftedoff with a gapdownto testthe 1101lowsandpromptlybroke

down.Tuesdaythe marketmadeseveralattemptsto get backthroughthe
1100andfailedon eachoccasion,
this resultedin a hugeselloff latein the
day.Wednesday
after someto andfro the marketreverseddirectionbackup
froma majordegree38.2retracement
level.Bythe endof the day,evenafter
a sharprallyit closeddownon the day.Thursday's
tradingbeganwith a gap
up openingwhichthey couldn'tfill and finishedthe day abovethe 1101
resistance.
Thismoreor lessvalidated
the 38.2reversal
as a changein trend.
Fridaythe marketwasgenerally
most
up
of the day,but in the lasttwo hours
or so cameback8.75off the dayshighclosingunchanged
on the day and
unchanged
for the week.
Therallyhighon Fridayreached
within2 ticK of a 38.2retracement
backup
of the Lt62.75highand t084.75low range.Butthe rallyexceeded
a 1:1 of
the previous
correction
lastweekby 3.75. 29.25versus25.50
I wasthinkingon Fridaythatthe 1:1(1110.25)
wouldhavebeenan excellent
shoftandit did looklikea chancefor a while.Butin the endthe marketcould
notoverbalance
the previous
smallercorrections
it hadmadeon the rallyup.
I havea friendfromGermany
visitingwith meandhe is continually
askingme
questions.
Onething I havebeentryingto explainto him this weekis that
you canonly be guidedby whatthe marketactuallydoesandthat is why it
doesn'tpayto forecast.It is alwaysbetterto just takeit onedayat a time.
ESIGNAL
79

EEf+
O60 @cvih Oriq*
J E q u i r i s s .J D $ s t n F v d b . @ e s c o l t @ r o c @ 1 e 5
-r 163!o Rxl5r8
orcl
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03,t15
0l,ll9
0]Jl1
03r'13
O3t17
Publishedby eSign:l (w,esignel'com)
As we go into next weekwe now havethe marketsittingabove1100but

undera 38.2 retracement
of the currentdecline.But we havealso been
the 1:1Alt.
andexceeded
rallyingfroma majordegree38.2retracement
Whowantsto makea forecast?
EEf+
J E q u i t i B r .J o h r l n F r a b ' @ e s - c o l t @ l D c @ r s
Ooo @oaiv Oricr
-mini Futurs - Globsx,lo! Dynlmicll:0o24.00
s!l
414.5t
1:1
ol
A0nEAi(tici h6l0mrli6it an eliditl
*riiirAifii;
of loflh8r dffiide.
glqt-le r.tlltt
.T.
let ? .lRJttCF.qr-4
509t. Xc 1099-?5hcro be r Slcll
ofwoaktcg
.ts50
. ,
;I7,54..1
I
1rt6,00:
,.,,;...-- - ,.-.- -.
-i-l!{?:Lt@)
r0t{,75
0l,25/04
0326j8.t
lE:00 01fl
tlfi$1
0lS0
05$l
ThepointD
D is subjectto change.
OnthischartX, A, B & C areestablished.
is 8.75downfromC. AB= 11.5.
WaveCDof ABliesat 1102.50
Soa 1:1Alternate
There's
a 38.2of XCat 1102.75
A 50o/o
retracement
of XC(3 dayrange)is at 1099.50
Andthe psychological
or naturalsupportis 1100
it is not.
If the marketbreaksbelow1099it wouldlookbearishotherwise
ESIGNAL
80
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Week ending 2ndApril 2OO4=

This week the marketopenedat 1112.5on a gap (low for the week) and
finishedat tt42 after makinga highof 1145on Friday.
DAILY ESCONTINUOUS
- @E$coil @nc @r Os O60 Eoeir Orirt
EEtr + J Equitis. J grhsrinFv!'5
(S iF - SIP 5lE E-m!!i FuluE
XIBCD e1-59
b.vft!
- Globex,Dl DyDlmic,o
18:lS9
lhe mlrket mldr sms oood gri6 th-6w$k,

I sppr$ in ! w|lr it% isEhoially prs.li(i!bls,
Yol se arc up In rhin air again. :
q.tl?_l? 1 !l!!0,o, ,!i-!-!,49. -!.i r!3!9- m
tglto
II
4275
n
-
tt0t.00
-*.*
. . .----!o..i-d-?flr-qq9)-
friday fte good neBwaeiobs
3l$,000 rcw jobs in $Elch

The m.tat wenl out oo a bullbh nole
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range.
1145represents
of the 1163.75-1084.75
a76.4(2x38.2)retracement
Throughout
this weekthe marketcontinued
to feedon the bullishsentiment
reportsto talk aboutand
that abounded.
Therewere no negativeeconomic
reportcamein with an increase
of 308,000
on Fridaythe Marchemployment
jobs for the period.This repoftwas released
at B:30amETandthe Globex
marketralliedstronglymakingthe 1145highin advanceof the day session
opening.
Friday's
tradingrangewasa mixedaffairwitha lO-pointrange- down- updownandthen up to finishthe day.As we cameintothe last90 minutesof
the session
tradersboughtthe marketoff a doublebottomon the day.There
werenota lot of traderswhowantedto be shortoverthe weekend.
If you look back on the week you will see that the upwardtrend was
confirmed
eachstepof the way.Firstoff on Mondayit tookout the 38.2,then
The nextresistance
wasthe
aftera pauseat the 50 brokethroughTuesday.
for a while.Thursday
whenit tested
old 1126.5highthat heldup progress
the 61.8it wentstraightthroughbut did reversea littlehigher,then it went
sideways
for the restof the day.Fridaywe knowaboutalready.
Aswe go into Mondaywe are left with supportat L134.75(Ihursday'shigh)
and1135(Friday's
low).Theactionon Fridayhaslefta gapto befilled.
ESIGNAL
8l

Bdtr+
J E q u t i B : . J o f i B ' l n h t r r e b - @ E s { o uO i D c ' 3 l g s
060 E0.i? eTi:}
{ESUl;z : S&P5tl! E-filnl Furor6:6lobe*,AD Dlfiantad.0:ttr.2{:m

i!ryce! X{BCo v15$i
WEtl( f llDlNG znd APRIL
tg)00
t.t5ul
1t3{.?9
toFlel
l250tl
t2000
I1500
ti000
T|tis fisrter sdd ftllq to coile ltdt lhJotgh ll2,
nm lo anlirm uny rigoiliorl dosnsido in progtw
illloo
t@ttr
Ths DOWIilDUSTRIALS
Nvr brol blw ilre
r'rijriio
iitei tili;|i;in; ; ii6iiiii;.
1@.?groDlel
Published by esignal (wM.elignd.com]
I've markedthe followingsupportsLL34.75,1128and 1125that wouldneed

to be brokento indicatea reversalof this upwardtrend that has beenin
progress
highnot
for overa weeknow.Onthe highsidewe havethe LL63.75
got
there.
far awaywhichwouldceftainlyattractsellingif we
AsI havesaidso manytimesbeforeI am not makinga forecast.Neveftheless
recovery
the jobs repofton Friday(if it is correct)giveshopeto a continuing
numbershas long beenthe subjectof
in the US economy.Employment
past
year.
for the
Justthe samethe US economystill needsto
discussion
Bush
create3,000,000
morejobsto get backto whereit waswhenPresident
in
in storefor investors
waselected.Sotherecouldbe a few disappointments
the monthsahead.I alwaystakethe viewthat it is betternot to countyour
chickens
untiltheyhatch.
It won'treallymatterwhatthe S&Peventually
doesin anycase.Justso long
go
as eachday it continuesto
up and down and createregulartrading
oppoftunities.Somethingsdon't changeand eachday it just offersthe
chanceof makingeasymoney.
: n0.00
.tm0fit
nnn
1t00.00
IIEB.BO
s,0fir
m0r0
?ut.00
Sep
llov
Jan
zffi
llar
fllay
Jul
Sep
Nov
Jan
ru3
thr
llay
Publishedby eSignal(www,esignal,com)
ESIGNAL
82
IA'DD
taDo
JunJul
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Dow JonesIndustrials Index to replace3 stocks by April 8h:

EEtr+
JEquitgr- Jo$ertnkrvsb- @gs+ou gID( e1
lndusial
{illlDlJ - DowJonn
AryebXi.BCO
d.5gl
.o. r@58
ts:tqs4
Es 6oo oaiy Orrt

t0753.61
AyrrgE,D) Dfm.miclltro:{tro
L: ffit.3
E ezoe
33578
IItFi
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:
c
fiogz4l
2llh ililch
f0007,49
0ow JoDBs Indudrill
Avsr.ls
thsl 3 5luclq arc to

On llu 1l Alril ?004 - ll wffr 6ntr6loed
bc rapll4d
ort Dt th. :It on thc 0th ,lpril ZlN,{
IiIDFX tUl{DS dn
etzB
t52?Z'6 t3?0
Sep
Oct
a
ilN
Dec
$22r'.,5
12il262
2001
I
feb
tsue to adlEil||eh
1723t
fiar
po,ifoliB
t5?Z:9
Apr
PqblisH
by e5ignal (ww,esignd,com)
The NYSEadvisedon the 1s Aprilthat it wouldbe replacing

3 stocksin the
DJIAindex.Thenewstocksenteringthe DJIAindexnowhavea muchgreater
capitalisation
valuethan thosestocK beingremovedfrom the index. It is
hardto say how muchthis wouldaffectthe valueof the indexunlessthey
will haveto adjust
INDH(FUNDS
adjustit to fit the changes.Nevertheless,
portfolios
selling
their
by buyingthe newstocksand
out of the old ones.This
couldhavea bullishimplication
for the DJIAoverthe nextweekor so.
I did mentionthat
Backabouttwo weeksago,on page25 of this appendix,
just
the DJIAwastrading abovethe 10,000levelwhenwe werein the recent
supportof some
The 10,000-level
decline.
wasthenviewedasa psychological
significance.
The DIIAdid not tradebelow10,000beforethiscurrentrallywe
areexperiencing
so it hasto beviewedas an importantlevelin the future.By
as
that I mean,if the DJIAwereto breakbelow10,000it wouldbe perceived
position
holders.Sofor nowwe canuse
a bearishsignalfor the longer-term
thisasa guideto the currentstateof strengthor weakness.
Week Ending86 April 2OO4- EasterHolidays:
for
Thisweekstartedwith a rallyto a new highof L149.75,then sideways
two days.Thursdaythe marketopenedon a doubletop with a highof 1150
economic
aftersomegoodprofitreportswerereleased
andno reallynegative
news.Butthen it just tradeddownon low volumefor mostof the day in a
controlled
technical
manner.
Youshouldstudythe 5 minutechaftfor Thursday
as it onlygoesto reiterate
you
allthethingsI havebeenteaching in thiscourse.
ESIGNAL
83
Thursday8s April 2OO4tEasterThursday

- J E q u i t i a s -J D t f i s r l n b v a b - @ e s g u
EEF+
GS iln-2 . StP 500Eiiriii Fulliea - Globr{5|
bryce'sX{BCD di5
@roc @r
Os
@oo oei'r @ri:t
Wanl to llay lhir GAIIF

It i$ olqt
Fills Gap
V J;1-t1o.5l
.10-50
01fl
Today'sselloff beginsfrom a doubletop with Mondayandfills the gap left

A weakrally backup to whereit brokethe
from the closeof Wednesday.
prior
highon the way downfollowedby anotherselloff. I
supportfromthe
couldn'tsee a lot of reasonsfor the supportat 1139.5but the rally that
of the daysrangeto date
retracement
followedstoppeddeadat the 38.2o/o
market
Whatfollowedwasa sideways
offeringa clearcut sellingopportunity.
forming a RECTANGLE
on low volume and setting up anotherselling
testedthe priorlowfor the day
Theinitialbreakof the rectangle
opportunity.
Whentheycouldn't
at 1139.5andtheyboughtit backto retestthe breakout.
once
againandthey
clear-cut
sell
get it backinsidethe rectangle
it becamea
it downto newIowsfor the day.Therewasanothershottcovering
hammered
rallyof 2.75pointsthat didn'tmakea lot of sensebut the targethadto be
10.5downfrom the 38.2pointat 1143.5and as it turnedout the decline
terminated
exactlyat 1133settingolf a rallythat lastedfor the restof the
afternoon.
closewith a
Asfor the weekwe finishedonly2 pointsdownfromlastFriday's
rangeof t7 pointsfor the week.We certainlyhaven'tseenany sign of
weakness
to speakaboutthisweek.Butthenwe haven'tseenmuchstrength
either.As I saidlastweekwhat'sit matteranyway,just so longas it goesup
anddownfor useachday.
technicalpicture
I wastryingto roundoff this coursewith clearlonger-term
of the US stockmarketbut it seemsto me that we are stuckin a trading
bearRobertMinerwasat
rangerightnow.I seethisweekthatthe perennial
two weeksago the S&Pwouldtop out between
it againwith a prediction
"B"
joined
waveof majordegree.Oneof hissubscribers
1125and tI47 in a
myTTWgroupthisweekandwantedto knowmyopinion.
ESIGNAL
84
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Well,for all the goodit will do anyoneI am teachingto day trade,doesit

matter?It reallydoesn'tmatterto me whatthe marketdoeslong-term.
Just
as longas it staysopenwill begoodenoughfor me.
JEquili4.
E6+
Johsrinhr'/ab-
GEg,X|N OrDc S1
oo
oai.r@ri:r
rm00
t({It0
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.
:
Ylu rBwr:knw
:
blt|'lis
rl
-/&50
tto:
markBl could hE torming
i.htq.q.a!{-:h9g!!qr1-!or.
apt
l@5 (@
C :
t0f5.00
:
21245 n'B262 I
mary
Jun
Jul
Arq
sep
o8'
tlov
'ec
20lH
Feb
'Lron"iii,
*-"ar(ww,signar.roml
You neverknowbut this marketmaybeforminga headand shoulders

top
patternor it couldbe settingitselfup for anotheradvance.
Two thingsare
obvious.
1. The high at 1163.75is a 50o/oretracement
of the completedbear
marketfrom2000-2002.
2. The low at 1085is a 38.2o/o
retracement
of all the gainsfrom the
advance
that beganin Augustof 2003.
ThebestadviceI couldgiveanyoneis to just takeit ONEDAYATA TIME.
Followmy rulesand applymy logicto the marketandyou will be fine.As
soonas you learnto do your own workandforgetaboutwhatthe so-called
"Guru's"are sayingthe sooneryou will be ableto makeconsistent
money
trading.
Tradingis just a job to me now,well maybeit is morethan that - it has
becomea way of life. I feel that by havingwrittenthis bookI am giving
something
to the futureI can be proudof. I hopeall thosepeoplewho buy
thisbookgetoutof it whatI intended.
Goodluckwith it.
BryceT. Gilmore
10bApril2OO4
ESIGNAL
Epilogue:
Nowthat I havecompleted
this manualto the beststandardI canrelateto I
wouldliketo mentiona fewthingsI amgratefulfor.
of tradingI owemy
Overall the yearsI havebeeninvolvedin this business
continued
success
to the peopleI havemet alongthe waywho encouraged
minds
futuresandmixingit withthe smartest
meto think.Tradingcommodity
man's
in theWorldis a thinking
business.
somehavebeen
Mystudentshavecomefroma widevarietyof occupations,
tradersbut manyhavejust beennormalpeoplewhowantedto learnhowto
tradeandaskedmeto helpthem.
In the processof them askingme questionsall the time on the various
aspectsof my trading approachthey also helped me understandthe
havewhentheytry to entera newprofession.
difficulties
newcomers
Severalyearsback,when I first promotedan Internetsite "Club L44" for
studentsof my soft\/areandbooks,peoplewhowantedto learnandneeded
a teacher.I attracteda new breedof students.Frommy interactionwith
someof
thesestudentsI soonbecameawarehowotherswereoverlooking
thesimplest
of thingsI wasusingto makemoney.
Manyof the thingsI haveexplained
in this text are not new.Manyof them
I have
traders.Nevertheless
are taken for grantedtoday by professional
give
in
long
run.
But
the
edge
the
to
mea better
developed
somerefinements
mainthingI havedoneis to prioritise
an orderin myapproach.
wastheirinherent
ThecommonproblemI havefoundwith mostnewcomers
faultfor complicating
everything.
Tradingis a simplematterof
Tradingis not a complicated
occupation!
identiffingan opportunity
and takingit. If it workslike it shouldyou make
money.If it doesnotworkyoutakea smallloss,getout andstartagain.
that openup a window
thereareceftainsituations
Onceyou canunderstand
of oppoftunity
andofferyou a chanceto profityoutakethemandas soonas
the windowclosesyou get out andgo backto the drawingboard;thenyou
willbeTrading
to WIN.
Thereis no roomfor fear, hopeor greed,or what mighthavebeenrn my
equation.Eachday is a new day and you just take it as it comes.To do
trading.
will onlyleadyouintobadhabitsandunprofitable
othennrise
BryceT. Gilmore.
Epilogue
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Trading To Win - Bryce Gilmore

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w

One Doy of o Time

Trading to WIN Course - One day at a time

[c] Bryce Gilmore2004

Tradingto WIN Course- One day at a time

Market Mechanics- howfuturesmarketsoperate

Shoft Term Trend Indicators

GeneralPatternTools- Linesin the Sand- Higher

OpenInterest in futures markets.

NewsEvents/ Repofts/ EconomicIndicators.

Fail SafeTRADEENTRYtechniquesand exit rules.

Trading to WIN Course - One day at a time

Alternate Waves& RetracementLevels

Section3: Dayto DayandWeekto Week

Contract Rollover - 1"t Month

Tradingto WIN Course- One day at a time

A look at the S&Pmarket prior to publication

Information on my internet Tradingto Win Group:

INFORMATION ON MY XABCD INTRA.DAY

Tradingto WIN Cowse- One day at a time

Tradingto WIN Cowse- One day at a time

[c] Bryce Gilmore2004

Againyou haveto understand

Daytradingis all abouttradingpredominately

Tradingto WIN Course- One day at a time

Tradingto WIN Course- One day at a time

Traderswill buy and sell basedon technicalindicators

Tradinsto WIN Course- One dav at a time

It is very important for you to understandwhat can motivate other

YOU EMBARKON THIS

Tradingto WIN Course- One day at a time

Tradingto WIN Course- One day at a time

3.DAY SWING HIGHS & LOWS:

The3-dayswinghighor Iowevenif it is froman intra-daychartis the fastest

NEVERFORGETTHIS: Never leavean open positionon if it is in a loss

Tradingto WIN Course- One day at a time

Tradingto WIN Cornse- One day at a time

[c] Bryce Gilmore2004

Tradingto WIN Course- One day at a time

Tradingto WIN Course- One day at a time

This is an exampleof a top patternthat was recentlydisplaying

Tradingto WIN Course- Oneday at a time

[c] Bryce Gilmore2004

BUYING in or uptrendwith the 3 doy trand

Aswe movealongthe logicbehindallof thiswillbeexplained

Tradingto WIN Course- One day at a time

THINGSYOU NEEDTO LEARNTO BEA PROFESSIONAL

Tradingto WIN Course- One day at a time

Tradingto WIN Course- One day at a time

Tradingto WIN Course- One day at a time

Tradingto WIN Course- One day at a time

[c] Bryce Gilmore2004

Tradingto WIN Cowse- One day at a time

[c] Bryce Gilmore2004

Tradingto WIN Course- Oneday at a time

Themarket trades at the pnicethat focilitotes tnodes

Tradingto WIN Course- One day at a time

[c] Bryce Gilmore2004

Tradingto WIN Course- One day at a time

I take the view that if you entera trade,for whateverreason,it

Tradingto WIN Course- One day at a time

Suppolt- Resistance& TREND: