Pitchfork Primer Manual

From: PitchforkPrimer
To: TradersZone
Subject: Course Information
Date: Sonntag, 30. Januar 2000 01:47:24
Hello TradersZone,
Glad to hear you are going to join us. Here's some more information for you.
The course was designed to fill in the details of Dr. Andrew's Action/Reaction trading methods. The
"Pitchfork" is his best known method. It became his namesake, and a lot of traders know what it is.
What isn't generally known, however, are the rules and techniques he taught for it's use. Those
rules are covered in detail in the course.
Dr. Andrews also taught several other Action/Reaction trading methods. He used them in
conjunction with the Pitchfork. When used together, they are a powerful combination. Those
methods are also taught in the course.
The course consists of six lessons; each has several parts, or teaching points. Charts, instruction,
and comments are exchanged by e-mail.
Each lesson costs $35.00, payable by check or money order. To enroll, simply let me know that you
want to begin the course. The first segment of lesson one will be e-mailed to you shortly after you
let me know your payment is in the mail.
Mailing address is: Gordon DeRoos, PO Box 3555, Princeville, HI. 96722
Thanks again for your interest, and please let me know if you need more information.
Sincerely,
Gordon
>
To: TradersZone
Subject: Course enrollment
Date: Mittwoch, 2. Februar 2000 01:02:30
At 1/30/00 12:33:00 PM, you wrote:

>I would like to begin the course. I sent a money order with the payment
>for the first lesson today.
>
>Thanks,
>TradersZone
Hello TradersZone,
Glad to hear you are joining us. Thank You. I hope you find the course interesting and worthwhile.
Here's the first part of lesson 1.
Regards,
Gordon
__________________________________________________________
WELCOME TO THE PITCHFORK PRIMER STUDY COURSE! THIS IS THE FIRST PART
OF LESSON ONE.
__________________________________________________________
Each lesson of your Pitchfork Primer Study Course is made up of

several parts, or teaching points. Each point will be introduced in
separate e-mail correspondence, and will be supported by chart
examples. You are encouraged to send questions and comments at any
time. Also, you'll be asked to e-mail samples of your chart work
from time to time. That's done to see whether clarification of a
teaching point is needed. Let's begin.
Lesson one has two main teaching points:

1: Identifying Andrews' pivots.
2: Drawing the pitchfork.
We'll start with a definition of the terms and abbreviations used

in this lesson:
ANDREWS' PITCHFORK: The nickname given to the unique configuration

of Dr. Alan. H. Andrew's Median Line and Parallel Line formation.
So named because it resembles a farmer's pitchfork.

PIVOT: A turning point.The extreme price on a bar or line chart
where a change of direction takes place.
ML: Median Line. The middle line of the pitchfork.
MLH: Median Line Parallel. The outer line(s) of the Andrews'

pitchfork.
__________________________________________________________
THE PIVOT COUNT:

Pivot counting the Andrews way is not cluttered up with a lot of
subjective rules. Once you become familiar with the count, you'll
find it's possible to "eyeball" the charts and quickly find
potential buy, or sell candidates. By using Dr. Andrew's counts in
your preliminary selection checklist, a considerable amount of time
and energy can be saved. The pivot count quickly shows you the best
place to draw a pitchfork, as well as other Andrews lines.
To begin, look at any stock or commodity chart in order to spot the
major legs or waves. They're usually pretty obvious, as on the
attached Network Associates chart. You'll note in the definition of
course terms that the extreme prices of these legs, or waves, are
called "pivots." They are numbered P1, P2, P3 and so on. Dr. Andrews labeled the pivot from which
he began his count as P0.
Looking at the attached Network Associates chart, you'll notice that prices started a move to the
downside beginning in mid to late July. The move, which bottomed out in early October, was
composed of 5 distinct price waves; 3 in the direction of the move, and 2 correction waves. The
pivot count for that move was 5, as shown on the chart. A point to remember is Dr. Andrew's
found that most long-term and intermediate-term price moves will end with a 5 pivot count. Those
terms are relative, but for our purposes, the move down on the Network Associates chart will be
considered an intermediate-term move.
Please study the attached chart of LSI Logic. Locate and label the intermediate-term pivots as you
see them. Keep Dr. Andrew's 5P observation in mind. When ready, please return your chart to me.
We'll continue from that point.
__________________________________________________________
From: TradersZone
To: gordon@pitchforkprimer.com
Subject: Re: Course enrollment
Hello Gordon,
I was not sure where to put P1, so I chose the bar with the highest close.
>Please study the attached chart of LSI Logic.

>Locate and label the intermediate-term pivots as you see them.
>When ready, please return your chart to me. We'll continue from that point.
To: TradersZone
Subject: Good call
At 2/2/00 1:59:00 AM, you wrote:

>I was not sure where to put P1, so I chose the bar with the highest close.
Hello TradersZone,
Your pivot count was by the book.....nice job. Also your use of the highest close for pivot 1 was
excellent logic. It doesn't appear as if the count will be giving you any trouble. We'll be working
with pivots throughout the course, since much of Dr. Andrew's work was based on the often
overlooked importance of the interaction of various pivots on a price chart. It's good to see that
you have an early grasp of the procedure.
Here's the next part of the lesson.
Regards,
Gordon
_________________________________________________________
Lesson One, continued.

_________________________________________________________
We'll continue to work with the NETA chart, focusing on prices beginning the latter part of July,'98.
We'll use our earlier pivot count to draw a pitchfork.
Three pivots are used when drawing the pitchfork. They must be either a high, low, high, or a low,
high, low configuration. In this example we will use the P0-3/4 pivots as shown on the attached
chart. With a ruler, we locate the mid-point between the low at P3 and the high at P4. We mark
that point with a small dot. Then, from the high at P0, we draw a line that extends through and
beyond the P3/4 mid-point that we marked. This line is called the median line. (ML) A second line
is drawn beginning at P3, and is drawn parallel to the median line. A third line is drawn beginning at
P4, and is also drawn parallel to the median line. These lines are called parallel lines. (H) A
connecting line is then drawn from pivot 3 to pivot 4. And that's the pitchfork! It's shown on the
NETA chart.
At this point, please send me a chart of your choice showing several intermediate-term pivots that
you've marked. Include at least two pitchforks. We'll go on from there.
From: TradersZone
Subject: Re: Good call
Hello Gordon,
I have attached a chart of AET. I hope it's a good example.
Regards,
TradersZone
>At this point, please send me a chart of your choice showing several
>intermediate-term pivots that you've marked. Include at least two
>pitchforks. We'll go on from there.
To: TradersZone
Subject: Pivots and pitchforks
Date: Donnerstag, 3. Februar 2000 07:12:28
At 2/2/00 8:24:00 PM, you wrote:

>I have attached a chart of AET. I hope it's a good example.
>
>Regards,
>TradersZone
Hello TradersZone,
The chartwork you sent was excellent....good grasp of the count, and your pitchfork procedure was
correct. Later on in the course we'll go over Dr. Andrew's techniques which will help you decide
which pivots to use for the pitchfork that offers the best probability of staying in tune with the
markets.
Here's the next segment of lesson 1.
Regards,
Gordon
------------------------------------------------------------------------------------------------------
We'll continue our pitchfork and pivot study using the NETA chart from the previous segment.
Dr. Andrews noted that most sizeable price moves form 5 significant, or easily recognizeable pivots
before reversing. Some moves end with 3 pivots, and occasionally you'll find 7 or 9. But most, he
said, will end with 5 pivots before reversing the trend under study. Whenever he observed that a
P4 was formed on a chart, he used what he termed the 0-3/4 ML method to project the likely price
level where the P5 would form. Large price reversals, Dr. Andrews observed, often occur after a P5
has formed. This method is an excellent early warning signal for anticipating price reversals at a P5.
The pitchfork is drawn using the P0-3/4 ML method as illustrated on the attached chart of NETA.
Notice that prices reversed at the ML, forming a P5.
Also attached is a chart of Conseco, Inc.. Please label the significant pivots starting at the July high,
and then draw one pitchfork using the 0-3/4 pivots, and one using the 3-4/5 pivots. Please return
your chart along with any questions or comments.
From: TradersZone
Subject: Re: Pivots and pitchforks
I have attached the CNC chart.

When the price moves below the P0-3/4 ML before making a P5 low, is the lower parallel line the
next likely level where the P5 should occur?
On the CNC chart the price closes above the P0-3/4 ML the day after breaking the ML. Is that a
confirmation that the P5 low has been made?
To: TradersZone
Subject: Good Questions
Date: Freitag, 4. Februar 2000 06:33:20
At 2/3/00 3:45:00 PM, you wrote:

>I have attached the CNC chart.
>When the price moves below the P0-3/4 ML before making a P5 low, is the
>lower parallel line the next likely level where the P5 should occur?
(That's right , TradersZone. The function of parallel lines is to provide the next level of support or
resistance for those times when prices do not stop or reverse at the ML. Dr. Andrews, by the way,
looked for prices to reverse at any ML, and form a new pivot in the process.)
>On the CNC chart the price closes above the P0-3/4 ML the day after
>breaking the ML. Is that a confirmation that the P5 low has been made?
(That was a good sign, but too close to call. (imho) Please see chart for TL use as a confirmation
signal.)
Dr. Andrews used several techniques to help him deal with probable reversals.
Some are special situation type methods, and others are used in conjunction with the pivot count,
pitchfork lines, or Action/Reaction lines. We'll be covering those rules in the last part of the course.
I'm sending another chart for you to study and work on. Please identify the main pivots in the
down move that started in April, and also draw at least 2 pitchforks.
When ready, please return to me.
Regards,
Gordon

From: TradersZone
Subject: Re: Good Questions
To: TradersZone
Subject: Median Line Technique
Date: Sonntag, 6. Februar 2000 01:07:35
Hello TradersZone,
Nice work on the charts you returned. Everything was by the book. It appears that you have the
procedures well in hand.
Here's the final portion of lesson 1. The concept is basic, but it does the important job of helping a
trader stay on the right side of the market.
Will you be continuing the course?
Regards,
Gordon
The first lines Dr. Andrews drew on a new chart were the long-term and intermediate-term median
lines. After identifying the significant pivots, he drew his first median line beginning with P0-1/2,
and worked forward on the chart, using each subsequent set of 3 pivots. Each ML served to vector
prices....acting as a magnet, if you will, that drew prices towards it. He said that prices will head for
the new ML over 80% of the time.
Parallel lines are not drawn when using this procedure. It's prime function is to determine the
direction and price level of the new ML. Recall that Dr. Andrews anticipated a price reversal at each
new ML.
The attached chart of LPX illustrates this technique. Try this on some of your own charts, and then
please send me an example.
From: TradersZone
Subject: Re: Median Line Technique
Date: Montag, 7. Februar 2000 19:27:18
I found a chart with 9 pivots, I hope it doesn't matter.

Is it necessary that the move is made of swings with higher highs and higher lows in an uptrend (lower highs and lower lows in a
downtrend)?
For example, in the attached chart the point P6 is lower than P4 and P7 is lower than P5.
Another question: For how long are median lines valid?
I noticed that the P2-3/4 ML from my chart served as support and resistance two years later in 1998 (see attached chart
LOW2.GIF), but on the other hand I don't want to clutter my charts with too many lines from the past.
I would like to continue the course to the end. I will send the money for the remaining 5 lessons tomorrow. Did you receive my
first payment yet?
Regards,
TradersZone
LOW2.GIF

To: TradersZone
At 2/7/00 7:27:00 PM, you wrote:

>I found a chart with 9 pivots, I hope it doesn't matter.
>Is it necessary that the move is made of swings with higher highs and
>higher lows in an uptrend (lower highs and lower lows in a downtrend)?
>For example, in the attached chart the point P6 is lower than P4 and P7
>is lower than P5.
( When using this ML technique, TradersZone, the main object is to note the price level of the new
ML, for that is the next probable reversal area. The pivots need not be in Elliott formation having
swings as you noted above. Your ML procedure, by the way, was correct. I noticed how often
prices headed for each new ML, and then reversed.
Later in the course, we'll see how Dr. Andrews handled those times when prices reversed before
reaching the ML area.)
>Another question: For how long are median lines valid?
>I noticed that the P2-3/4 ML from my chart served as support and
>resistance two years later in 1998 (see attached chart LOW2.GIF), but
>on the other hand I don't want to clutter my charts with too many lines from the past.
(One of the interesting things about Dr. Andrew's lines is that no matter how far out his lines are
projected, they will continue to cause prices to stall-out, or reverse when reached. Also, whenever
several of his lines intersect, there is a very high probability of a price reversal, whether prices
converge at the intersection, or are some distance
>from it. The probability is higher, though, when prices are at the
>intersecting lines. A line
that has, in the past, provided frequent support or resistance, is probably a pretty good line to
keep on your chart. You're right, though, charts seem to get cluttered up very
quickly.)
>
>I would like to continue the course to the end. I will send the money
>for the remaining 5 lessons tomorrow. Did you receive my first payment yet?
(Glad to hear you're going to continue to the end. Thank you for the prepayment. Your first check
hasn't arrived yet, will let you know when it does.)
Meanwhile, here's the first segment of the next lesson.
Regards,
Gordon
In this lesson, you'll be introduced to Dr. Andrew's sideways count. The sideways count was his
"old reliable;" a tool that worked so well, so often, that it was one of the very first studies he
performed on his charts. The sideways count gave him a reliable gauge that told him ahead of time
how far a stock or commodity was likely to move. Sounds too good to be true, perhaps, but as you
work with the sideways count, you'll discover for yourself how often the projected price targets
are reached...often within tics.
Markets frequently spend a lot of time in congestion. Here's Dr. Andrew's way to use that
congestion to our advantage:
Looking at the Brightpoint attachment, please note the channel lines starting in January. You'll see
that most of the pivots from Jan-May were within this channel. Now look at where I've placed
circles. At each point where prices touched a channel line, and then reversed direction and went all
the way back to touch the opposite channel line, a circle was drawn. Put another way; if prices
touch one channel line, but then don't go all the way back to touch the opposite channel line, a
circle is not drawn.
At first glance, this technique can often be unclear, so we'll pause here for some chart work. Please
e-mail me a chart that shows where you've drawn channel lines to identify sideways price action,
and also where you've placed the channel line circles.
From: TradersZone
Subject: Re:
>At each point where prices touched a channel line, and then reversed
>direction and went all the way back to touch the opposite channel line,
>a circle was drawn. Put another way; if prices touch one channel line,
>but then don't go all the way back to touch the opposite channel line,
>a circle is not drawn.
Shouldn't the last circle on your Brightpoint chart be left out?

The price didn't return to the opposite channel line after that day.
This is my chart:
To: TradersZone
Subject: Thanks for the question
At 2/9/00 6:48:00 PM, you wrote:

>Shouldn't the last circle on your Brightpoint chart be left out?
>The price didn't return to the opposite channel line after that day.
Hello TradersZone,
The last circle is appropriate, but I can see where the wording in the explanation is confusing. I
have changed that paragraph to read:
Looking at the Brightpoint attachment, please note the channel lines starting in January. You'll see
that most of the pivots from Jan- May were within this channel. Now look at where the circles were
placed on the channel lines. They are in alternate sequence.
Note that each circle was drawn only after prices had first been at the opposite channel line.The
Brightpoint chart illustrates this procedure.
Thanks for pointing this out, TradersZone. If the wording is still unclear to you, I'd appreciate your
input.
Meanwhile, here's the next segment of this lesson.

Regards,
Gordon
We'll continue to use the Brightpoint chart for this portion of the sideways count study. To review;
the pattern we're looking for should be a recent rectangular shaped sideways trading range that
contains most, if not all, of the congestion price action. Take a look at the attached chart and note
how well defined the price channel for Brightpoint is. You'll probably notice that it is deeper than
the channel you studied on the chart in the preceding segment. This comparison is made to
illustrate that while the first channel example covers a longer period of time, the second includes
all of the price ranges, and is the preferred method.
Please look at where the circles were placed on the channel lines. To review, a new circle is drawn
only after prices have first been at the opposite channel line. Recall that circles must be in
alternate sequence, eg; upper line/lower line/upper line/lower line, etc., one circle at a time.
Note that the price range within the channel is $4 3/4. (High 21 1/2, Low 16 3/4) There were two
circles drawn on the lower line of our sideways channel before prices broke down. Using that
information, our next step will be to use some simple arithmetic in order to come up with two
downside price targets. We'll cover that procedure in the next segment. Please let me know when
you are ready to continue.

To: TradersZone
Subject: Sideways count
Attachments: image001.png
Hi TradersZone,
I'm returning your chart....please note comments.
Gordon
Regards,
Gordon
From: TradersZone
Subject: Re: Thanks for the question
Hello Gordon,
thank you, I'm ready for the next lesson.
Regards,
TradersZone
To: TradersZone
Subject: Next part
At 2/10/00 11:30:00 PM, you wrote:

>Hello Gordon,
>thank you, I'm ready for the next lesson.
>
>
>Regards,
>TradersZone
>
>
>
TradersZone....I sent this yesterday, but will re-send. It was part of my reply to your question
regarding the circle. I don't have a record of your return chartwork for this part. If it's a duplicate
send, sorry.
Regards,
Gordon
We'll continue to use the Brightpoint chart for this portion of the sideways count study. To review;
the pattern we're looking for should be a recent rectangular shaped sideways trading range that
contains most, if not all, of the congestion price action. Take a look at the attached chart and note
how well defined the price channel for Brightpoint is. You'll probably notice that it is deeper than
the channel you studied on the chart in the preceding segment. This comparison is made to
illustrate that while the first channel example covers a longer period of time, the second includes
all of the price ranges, and is the preferred method.
Please look at where the circles were placed on the channel lines. To review, a new circle is drawn
only after prices have first been at the opposite channel line. Recall that circles must be in
alternate sequence, eg; upper line/lower line/upper line/lower line, etc., one circle at a time.
Note that the price range within the channel is $4 3/4. (High 21 1/2, Low 16 3/4) There were two
circles drawn on the lower line of our sideways channel before prices broke down. Using that
information, our next step will be to use some simple arithmetic in order to come up with two
downside price targets. We'll cover that procedure in the next segment. Please let me know when
you are ready to continue.
From: TradersZone
Subject: Re: Next part
I think the placement of the circles is clear to me now.

I have attached another chart with a sideways count.
Regards,
TradersZone
>TradersZone....I sent this yesterday, but will re-send. It was part of

>my reply to your question regarding the circle. I don't have a record
>of your return chartwork for this part. If it's a duplicate send, sorry.
To: TradersZone
Subject: Sideways
At 2/11/00 11:41:00 PM, you wrote:

>I think the placement of the circles is clear to me now.
>I have attached another chart with a sideways count.
>
>Regards,
>TradersZone
>
Hello TradersZone,
Your chart was on target.....
Looks like you're ready for the next part. Here it is.
Regards,
Gordon
During this segment, you'll learn how to arrive at two price targets using Dr. Andrew's sideways
count. Simple arithmetic is all that's required once the sideways channel and circles are in place.
We'll continue to use the Brightpoint chart, which is attached. Note that Brightpoint fell through
the bottom channel line at the point where we placed our second circle, so figuring out possible
downside targets would have been in order at that time. Here's how that's done:
1: Determine the price range of the channel. In this case, the range is $4 3/4. (21 1/2 - 16 3/4)
2: Count the number of circles on the lower channel line. The lower line is used in this case
because that's the line that didn't hold. Prices went through it, returned to check it out, and then
continued lower.
3: Multiply the price range of the channel times the number of circles drawn on the lower channel
line. (4 3/4 x 2 = 9 1/2)
4: Subtract that figure from the upper channel line price.

The result becomes downside price target #1. (21 1/2 - 9 1/2 = 12)
5: Next, subtract that same figure from the price at the lower channel line. That's price target #2.
(16 3/4 - 9 1/2 = 7 1/4)
In the case of an upside channel breakout, the procedure is reversed. Please draw a few channels
and figure out some downside targets on your own charts. When you're ready, send me two or
three examples of your work. As always, send your questions as they arise.
From: TradersZone
Subject: Re: Sideways
Here are my examples. I couldn't find enough charts with downside targets, so I included some charts with upside targets.
Do the channel lines always have to be horizontal? When I look at my charts, I find more channels with an upward slope or a
downward slope.
Regards,
TradersZone
To: TradersZone
Subject: Sideways channels
At 2/14/00 1:43:00 PM, you wrote:

>Here are my examples. I couldn't find enough charts with downside
>targets, so I included some charts with upside targets.
>
>Do the channel lines always have to be horizontal? When I look at my
>charts, I find more channels with an upward slope or a downward slope.
>
>Regards,
>TradersZone
Hello TradersZone,
The sideways method can be used with either up or down. Sorry, didn't mean to imply that only downside
targets should be found. I'll reword that portion of the lesson. Thanks for mentioning it.
Dr. Andrews sideways method works only on horizontal channels. Others have mentioned the sloping
channels also, and have wondered if there is some method to use with them. I know of none. I've asked
other course members for their ideas on how to approach this problem, but so far no one has come up with a
method. I would think that there should be a solution, but have not personally taken the time to research it.
If some method could be found that works as often as the Andrew's sideways count, it would be a significant
find.
The Andrew's sideways count doesn't always hit the targets, as you saw on your chart of Bausch & Lomb. It
works more often than not, though, and it still amazes me at how often prices reach the targets.
Here's an observation to keep in mind: Quite often, after the first target is reached, prices will reverse and
head back towards the channel. At times, you'll note that they return inside the channel. They will then
reverse again and head back towards the second price target. These reversals happen frequently, and present
trading opportunities.
I'm including the final segment of this lesson.
Regards,
Gordon
So far in the course you've learned about Dr. Andrew's pivot counting procedure, pitchfork, and sideways
count. You've noticed by now how often prices change trend at a P5. You've seen how the 0-3/4 ML method
can help locate the probable P5 area. You've seen how often price targets are met using the sideways count
method. The tendency for prices to reverse at a median line should be recognized as a high probability event
as well. In coming lessons, you'll be shown how Dr. Andrews used these, and other high probability events to
trade the stock and commodity markets. The tools and techniques he used will help you put the finishing
touches on your market analysis using Andrew's lines.
Before continuing on to the next lesson, let's briefly review what has so far been covered. The attached chart
provides an opportunity to illustrate the methods referred to above. Please draw these methods on the
chart, and return to me.
From: TradersZone
Subject: Re: Sideways channels
>Before continuing on to the next lesson, let's briefly review what has
>so far been covered. The attached chart provides an opportunity to
>illustrate the methods referred to above. Please draw these methods on
>the chart, and return to me.
Hello Gordon,
here is my chart:
Regards,
TradersZone
To: TradersZone
Subject: Next lesson attached
At 2/21/00 7:37:00 PM, you wrote:

>Hello Gordon,
>here is my chart:
>
>Regards,
>TradersZone
Hello TradersZone,
Good job on the pivots, sideways count, and pitchfork.

Looks like you're ready to move on to the next part. It won't be long and things will begin to fall in
place.
Regards,
Gordon
Lesson 4, continued.
In one of his course letters, Dr. Andrews wrote: "The Law of Physics stated by Newton that Action
and Reaction are equal and opposite was first applied to prices by your Course Director's friend,
the late Roger Babson, who attributed his earnings of several million dollars to this law."
Beginning with this segment of lesson four, and continuing in lesson five, you'll learn how to draw
and apply the Action/Reaction trading method as taught by Dr. Andrews in his trading course.
The A/R method requires a "centerline," or C/L, from which to start. The C/L can be any of the
following:
- MPL
- ML
- MLH
- 2P line
- 2 Gap line
- Peak to low line
- Low to peak line
These are the primary lines that Dr. Andrews used. He stressed that "some pencil work, and a good
eyeball" was needed in order to find the "best fitting" C/L. As with most other chart lines, some
work better than others. The task is to find the best fit, as he put it. You will be shown examples of
each of the above CL's in this lesson, and the next.
Determining which of the above listed lines to use as the CL is the first step in the Action/Reaction
method. The solution often presents itself. With a little practice, a quick scan of the chart under
study will be all that's needed to spot the most likely C/L. We'll begin with the attached chart. Note
the C/L drawn. In this example, a MPL (multi-pivot line) was used as the C/L. A MPL is a straight
line that connects three or more consecutive pivots without passing through prices. The
connecting line is then extended. I've circled the three pivots that form the MPL on the chart.
There are several other places on our chart where a MPL C/L can be drawn. Please bear in mind
that this is just the first step of the process. Identification of likely C/L's is all we're after here. See
if you can locate two more, then draw them in and send the chart back to me. We'll take up from
there.
From: TradersZone
Subject: Re: Next lesson attached
>Lesson 4, continued.
>
>In one of his course letters, Dr. Andrews wrote: "The Law of Physics
>stated by Newton that Action and Reaction are equal and opposite was
>first applied to prices by your Course Director's friend, the late
>Roger Babson, who attributed his earnings of several million dollars to this law.
>
>Beginning with this segment of lesson four, and continuing in lesson
>five, you'll learn how to draw and apply the Action/Reaction trading
>method as taught by Dr. Andrews in his trading course.
>
>The A/R method requires a "centerline," or C/L, from which to start.
>The C/L can be any of the following:
> - MPL
> - ML
> - MLH
> - 2P line
> - 2 Gap line
> - Peak to low line
> - Low to peak line
Hello Gordon,
2P line, 2 Gap line, Peak to low line, Low to peak line actually I don't know what these lines are.
Are they discussed in Lesson 3?
I believe you havent sent me this lesson yet?
Anyway, I found two more MPLs on the Novellus Chart and drew them in.
Regards,
TradersZone
To: TradersZone
Subject: Lesson 3
At 2/23/00 9:23:00 PM, you wrote:

>Hello Gordon,
>2P line, 2 Gap line, Peak to low line, Low to peak line - actually I don't know
>what these lines are. Are they discussed in Lesson 3? I believe you didn't
>sent me this lesson yet.
>Anyway, I found two more MPLs on the Novellus Chart and drew them in.
>
>Regards,
>TradersZone
Hello TradersZone,
My apologies.....I sent you an outdated version of the lesson. Thanks for letting me know. Must
have been my bedtime.
Here's the correct version.
Regards,
Gordon
Lesson 3.
In one of his course letters, Dr. Andrews wrote: "The Law of Physics stated by Newton that Action
and Reaction are equal and opposite was first applied to prices by your Course Director's friend,
the late Roger Babson, who attributed his earnings of several million dollars to this law."
In this lesson, you'll be introduced to the Action/Reaction trading method as taught by Dr. Andrews
in his trading course.
The A/R method requires a "centerline," or C/L, from which to start. The C/L can be any of the
following:
- MPL: Multi-pivot line. A line drawn across 3 or more pivots.

- ML: Median line. The middle line of the pitchfork.
- MLH: Median line parallel. Either parallel line of the pitchfork.
- 2P line: A line drawn across 2 pivots.
- 2 Gap line: A line drawn connecting 2 gaps without touching prices in between.
- Peak to low line: A line drawn connecting the high and low of a price leg.
- Low to peak line: A line drawn connecting the low and high of a price leg.
These are the primary lines that Dr. Andrews used. He stressed that "some pencil work, and a good
eyeball" was needed in order to find the "best fitting" C/L. As with most other chart lines, some
work better than others. The task is to find the best fit, as he put it. You will be shown examples of
each of the above CL's.
Determining which of the above listed lines to use as the CL is the first step in the Action/Reaction
method. With practice, a quick view of the chart under study will be all that's needed to spot the
most likely C/L. You'll be shown later how to experiment with possible combinations in order to
find the centerline that is most in tune with the market under study.
We'll begin with the attached chart. Note the C/L drawn. In this example, a MPL (multi-pivot line)
was used as the C/L. A MPL is a straight line that connects three or more consecutive pivots
without passing through prices. The connecting line is then extended. I've circled the three pivots
that form the MPL on the chart. There are several other places on our chart where a MPL C/L can
be drawn. Please bear in mind that this is just the first step of the process. Identification of likely
C/L's is all we're after here. See if you can locate two more, then draw them in and send the chart
back to me.
To: TradersZone
Subject: Next segment
At 2/23/00 9:23:00 PM, you wrote:

I found two more MPLs on the Novellus Chart and drew them in.
>
>Regards,
>TradersZone
Hello TradersZone,
Your mpl's were correct. This next segment shows the purpose of the centerline, and how it is
used.
Your payment in full arrived today, TradersZone. Thank you.
Regards,
Gordon
Lesson 3 continued.
Please refer to the attached chart of Novellus. The line drawn connecting the 3 circled pivots is a
multi-pivot line, (MPL) and represents the centerline (C/L) we'll be using in this example. Recall in
the previous segment that several types of centerlines are possible. The choice is determined by
experimenting with the potential combinations on the chart under study. It's best to try to locate a
centerline somewhere close to the middle of the price chart in order to have sufficient past and
forward data to use with the study. This will become clear as you work with the method.
Once the centerline is drawn, the next step is to locate a previous low or high pivot point to use for
drawing an action line. Dr. Andrews observed that the low pivot points often seem to work best,
but that either could be used. In our example, a line starting at the previous significant low was
drawn parallel to the C/L. It is labeled A-1, (Action line 1) because it represents the first "action"
line. Dr. Andrews called it an action line because it was drawn as a result of a previous pivot (price
reversal) that had taken place. Next, a parallel line was drawn to the right of the C/L, and labeled R-
1. Notice that it is the same distance from the C/L as the corresponding A-1 line. It is labeled R-1,
because it represents the first "reaction" line; a line where prices are likely to stop or reverse.
Notice how prices "reacted" at the R-1 line in early '98. That serves as an indication that the
centerline chosen for this study should be a good one to use. Not all reaction lines cause such a
clear reversal as the R1 on this chart, but many do. That's why it's important to experiment with
various centerline possibilities in order to find action lines that produce reaction lines which create
the greatest number of pivots, or price stall-outs. This experimentation is often quite time
consuming, but experience has shown that it is time well spent. When a centerline is found that is
in tune with the price action of the issue under study, it can be a highly effective tool for use in
locating probable reversal areas. When combined with pitchfork lines, the AR method can pinpoint
potential reversal areas that are generally not recognized as such by others. Dr. Andrew's
techniques for using the pitchfork and A/R lines together are covered in later lessons.
In coming segments we'll study other lines that Dr. Andrews used for his centerlines. In the
meantime, experiment with the multi-pivot centerline on your own charts. Then please send me
an example of your work, along with any questions you may have.
From: TradersZone
Subject: Re: Next segment
>In the meantime, experiment with the multi-pivot centerline on your own
>charts. Then please send me an example of your work, along with any
>questions you may have.
Hello Gordon,
I was wondering how many Action/Reaction lines could be drawn on a chart? On my attached chart I found at least 6 parallel
lines which had a significant meaning for the price.
Regards,
TradersZone
To: TradersZone
Subject: AR lines
>Hello Gordon,
>
>I was wondering how many Action/Reaction lines could be drawn on a
>chart? On my attached chart I found at least 6 parallel lines which had
>a significant meaning for the price.
>
>Regards,
>TradersZone
Hi TradersZone,
There's no set number of lines that can be drawn....actually the more you can find, the better.
Finding a good centerline is the key. And once you find lines that work, such as you did, any
number of parallel lines can be drawn. You are doing exactly what Dr. Andrews did....taking the
time and effort to find the best fitting sets of lines. Each chart has them, and each chart is different,
as I'm sure you've found. Nice work!
Here's the next part.
Regards,
Gordon
Lesson 3 continued.
One of Dr. Andrew's favorite techniques dealt with gaps....an often times perplexing price event for
many traders. His observations over the years suggested to him that, while gaps show up
frequently on many price charts, few traders have a method for including them as an integral part
of their chart analysis. That's not surprising, since not much has been published about how to
approach the use of gaps in a trading method. Dr. Andrews, however, found several ways to put
price gaps to good use. An Action/Reaction centerline which uses gaps as its basis is one such
method.
Please refer to the attached chart of Cendant. You'll see that a centerline was drawn which passed
through the July gap. Note that it also came in contact with several pivots, thereby qualifying as a
gap/multi-pivot centerline. It is drawn by starting at the April low pivot, and extending a line across
and through the gap in mid-July. It subsequently touches two additional high pivots.
Dr. Andrews counted each gap as two pivots. He noted that the more pivots a line touched, the
stronger the line tended to be in the future. Good reason, then, for using the July gap as the basis
for an Action/Reaction study. Our C/L is labelled a gap-mpl-C/L.
The May '98 high was used for the Action Line starting point. A line was then drawn parallel to the
Centerline, as per Action/Reaction procedure. The corresponding Reaction Line was then drawn in.
If this particular study had been drawn on Cendant's chart right after the July gap was put in, the
potential for prices to go all the way down to the Reaction Line might have seemed very slim at the
time. Notice, however, that prices reached the Reaction Line in early September. You'll see this
happen time and again as you work with the A/R method. The core of it's effectiveness is a strong
C/L.
Please send me two examples of a gap/mpl A/R study using charts of your choice.
From: TradersZone
Subject: Re: AR lines
>Please send me two examples of a gap/mpl A/R study using charts of your
>choice.
Hello Gordon,
here are my examples.
Regards,
TradersZone
To: TradersZone
Subject: More on the AR
Date: Donnerstag, 2. Mrz 2000 07:11:58
At 2/28/00 3:59:00 PM, you wrote:

>>Please send me two examples of a gap/mpl A/R study using charts of
>>your choice.
>
>Hello Gordon,
>here are my examples.
>
>Regards,
>TradersZone
>
Hello TradersZone,
You picked some good examples to use for your AR study. Both showed the potential power of this
method. Takes time and lots of chart study sometimes to find the best set of lines, but the rewards
can be many.
Here's something else to look at.
Regards,
Gordon
The Action/Reaction technique requires a strong centerline from which to begin. The key to
deciding which set of pivots to use for the centerline is found through experimenting with the
various configurations visible on the chart under study. The centerline might be a series of gaps,
pivots, an existing median line, or any of Dr. Andrews lines. The task is to search for that centerline
which shows the greatest potential for projecting price reversal areas. Dr. Andrews did that by
finding a likely centerline near the middle of his price chart. That allowed him to use any of the
previous pivots for his action lines. By experimenting, he found reaction lines that did the best job
of pegging reversal areas at data points located forward of the centerline.
Reaction lines are equal and opposite of the action lines, and serve to project price levels at which
a reversal can be expected. That is why the task of seeking out the best centerline is so important.
Dr. Andrews reasoned that a series of reaction lines which have pegged price reversals in the past
is likely to continue to be in tune with current and future market price action. Having several
previous pivots to use as anchors for drawing action lines is thus essential.
The attached chart of Lattice illustrates this concept. Please bear in mind that the gap/mpl
centerline is not the only centerline one could use on this chart. You might want to study the chart
for other A/R possibilities. Try a peak-to-peak C/L, or a multi-pivot C/L. Send me your studies along
with any questions.
From: TradersZone
Subject: Re: More on the AR
Date: Samstag, 4. Mrz 2000 00:25:21
>The attached chart of Lattice illustrates this concept.

>Please bear in mind that the gap/mpl centerline is not the only
>centerline one could use on this chart.
>You might want to study the chart for other A/R possibilities.
>Try a peak-to-peak C/L, or a multi-pivot C/L. Send me your studies
>along with any questions.
Hello Gordon,
here is my chart.
Regards,
TradersZone
To: TradersZone
Subject: Peak to peak c/l
Date: Sonntag, 5. Mrz 2000 06:41:07
At 3/4/00 12:25:00 AM, you wrote:

>Hello Gordon,
>here is my chart.
>
>Regards,
>TradersZone
Hello TradersZone,
Looks like you have the concept down. Takes time and a lot of chart work to find the best
centerline. When the reaction lines don't seem to peg reversal areas, chances are the centerline is
not the one that is best in tune with the price action of the issue under study.
Despite the time required for this method, it was one of Dr. Andrew's stand-bys....AR lines could be
found on most of his charts.
I'm sending a chart with an example of a peak-to-peak C/L.
Regards,
Gordon
From: TradersZone
Subject: Re: Peak to peak c/l
Date: Sonntag, 5. Mrz 2000 17:12:32
Hello Gordon,
I think the peak-to-peak C/L on the last chart I sent to you was not really drawn from peak to peak.
I'm sending another example.
Regards,
TradersZone
To: TradersZone
Subject: Next Lesson
Date: Mittwoch, 8. Mrz 2000 07:25:26
At 3/5/00 5:12:00 PM, you wrote:

>Hello Gordon,
>
>I think the peak-to-peak C/L on the last chart I sent to you was not
>really drawn from peak to peak.
>I'm sending another example.
>
>Regards,
>TradersZone
Hello TradersZone,
Your peak to peak c/l example was correctly drawn. That's a fairly simple approach, but quite often
the peak to peak yields better reaction lines.
Here's the first part of the next lesson.
Regards,
Gordon
You'll find times when prices don't quite reach the ML, but instead drift alongside or away from it.
The Schiff ML was designed to be used in place of the regular ML whenever that happens. Such
price action can be found at any place on a chart, but most frequently occurs after a sharp sell-off,
or run-up of prices.
Dr. Andrews also used the Schiff ML whenever his regular ML sloped at an unusually steep angle.
He said it helped smooth out irregular price action such as that caused by unexpected earnings
news, crop planting delays or poor growing conditions, crop production reports, etc.. You'll find
nearly vertical price moves over a short period of time on many charts. The Schiff ML method helps
put things back in perspective when that happens.
We'll use the chart of Sterling Bancorp as an example of prices drifting away from the regular ML.
That ML is drawn in black. Prices didn't quite reach the ML, but drifted alongside and eventually
away from it. The Schiff ML and parallel lines are drawn in red. Notice how prices were contained
within the Schiff pitchfork until they finally broke down at the upper parallel line.
The procedure for drawing the Schiff ML is the same as for the regular ML, except the starting
point is located midway between the first 2 pivots you'll be using. The Sterling Bancorp chart
illustrates how this is done.
Dr. Andrews also suggested using the Schiff ML whenever the regular ML method doesn't seem to
be in sync with price action.
Practice this procedure on your own charts, and send a couple examples when you're ready.
From: TradersZone
Subject: Re: Next Lesson
Hello Gordon,
in my charting software (Dynamic Trader) the Schiff ML is drawn by finding the midpoint of the line between pivot A and pivot B,
moving this point horizontally to directly above or below (depending on whether A is a low or high pivot) the A pivot, and
drawing a line from his point through the midpoint of the BC swing.
Are there different methods of drawing a Schiff ML?
I was too lazy to draw Schiff MLs by hand with the method you described, so I'm sending my examples with the "Dynamic Trader
Schiff MLs" :-)
Regards,
TradersZone
To: TradersZone
Subject: Schiff
Date: Samstag, 11. Mrz 2000 07:02:26
At 3/9/00 12:11:00 AM, you wrote:

>Hello Gordon,
>
>in my charting software (Dynamic Trader) the Schiff ML is drawn by
>finding the midpoint of the line between pivot A and pivot B, moving
>this point horizontally to directly above or below (depending on
>whether A is a low or high pivot) the A pivot, and drawing a line
>>from his point through the midpoint of the BC swing.
>Are there different methods of drawing a Schiff ML?
>I was too lazy to draw Schiff MLs by hand with the method you
>described, so I'm sending my examples with the "Dynamic Trader Schiff MLs" :-)
>
>Regards,
>TradersZone
Hello TradersZone,
Your program Schiff line procedure is fine....it's actually what Dr. Andrews called a "modified schiff ml" and is only
slightly different than the one I sent you initially. The one you used is preferred by most course members. I'm sending
the modified Schiff lesson and a chart along with this email. The chart example shows how to use it with 0-3/4 pivots.
Regards,
Gordon
To: TradersZone
Subject: Sliding Parallel Line
Date: Montag, 13. Mrz 2000 00:52:52
Hello TradersZone,
Here's one of the tools Dr. Andrews used most often when entering, exiting, or reversing market
positions. Not many people know about this technique.
Regards,
Gordon
The Sliding Parallel (SH) is drawn whenever prices cross an Andrew's line, and then move along it.
For example, if the bottom of a daily price bar range drops through a lower parallel line of a
pitchfork, a new parallel line is then drawn from that low and extended to the right. If the next
day's price bar drops through that sliding parallel line, a sell signal is generated.
Whenever price action dictates a sliding parallel, the next step is to draw a "Warning Line." The
warning line is an additional parallel line that is an image extension of the original pitchfork
channels. It serves as a warning that if prices penetrate the sliding parallel, the next likely target is
the WL.
The attached chart of Avis illustrates these procedures. Please try these on your own charts, and
send me an example.
From: TradersZone
Subject: Re: Sliding Parallel Line
Date: Dienstag, 14. Mrz 2000 22:57:37
Hello Gordon,
this is my chart with the sliding parallel line and the warning line.
Regards,
TradersZone
To: TradersZone
Subject: Circuit City SH
At 3/14/00 10:57:00 PM, you wrote:

>Hello Gordon,
>
>this is my chart with the sliding parallel line and the warning line.
>
>Regards,
>TradersZone
>
Hello TradersZone,
Your chart of circuit city was a good example for this study. I may have mentioned it earlier, but Dr.
Andrews used this technique on a regular basis. The next part of this lesson covers another of his
favorite tools, the mini-median line pitchfork. Here it is....
Regards,
Gordon
The "Mini-Median Line" was one of Dr. Andrew's favorite market entry and exit tools. Though most
often drawn using alternate closing prices, alternate highs and lows can also be used
in order to avoid whipsaws in narrow trading range markets. 2 to 4 days is usually the maximum
between pivots 2 and 3, and P1 can be a day or more back from P2.
Dr. Andrews used Mini-Median Line pitchforks for buy and sell signals whenever he expected a
reversal. Some examples include a probable P5, or when prices are at a Warning Line, ML, MLH,
major ML extension, or a sideways channel price target. When prices cross the Mini-Median Line
Parallel (MMLH) a sliding parallel (SH) is used for order entry.
From: TradersZone
Subject: Re: Circuit City SH
>The "Mini-Median Line" was one of Dr. Andrew's favorite market entry and
>exit tools. Though most often drawn using alternate closing prices,
>alternate highs and lows can also be used
>in order to avoid whipsaws in narrow trading range markets. 2 to 4 days is
>usually the maximum between pivots 2 and 3, and P1 can be a day or more
>back from P2.
Hello Gordon,
wouldn't it be better to use "real" median lines on intraday charts

instead of drawing Mini-Median Lines on daily charts for better timing?
Could it be that intraday charts were simply not available when
Dr. Andrews was alive?
Regards,
TradersZone
To: TradersZone
Subject: intraday charts
Date: Samstag, 18. Mrz 2000 01:24:00
At 3/16/00 11:15:00 PM, you wrote:

>Hello Gordon,
>
>wouldn't it be better to use "real" median lines on intraday charts
>instead of drawing Mini-Median Lines on daily charts for better timing?
>Could it be that intraday charts were simply not available when Dr.
>Andrews was alive?
>
>Regards,
>TradersZone
Hello TradersZone,
You're absolutely correct....intraday charts were not available when Dr.

Andrews was a trader.
I'm reading between the lines here, but if you plan to day-trade using the course techniques, ie the
pitchfork, then I agree that the regular pitchfork would be more useful on intraday charts. Otherwise
whipsaw would be a significant problem. Please get back to me if I didn't address your question,
because this is a very important technique. The mini-median line pitchfork and sliding parallel showed
up on most of Dr. Andrew's charts.
Regards,
Gordon
From: TradersZone
Subject: Re: intraday charts
Hello Gordon,
You are right. I'm planning to daytrade S&P futures using the course techniques among other things.
Regards,
TradersZone
To: TradersZone
Date: Freitag, 24. Mrz 2000 00:34:08
Hi TradersZone,
Here are a couple Andrew's techniques that will help anticipate the breakout direction of a
sideways channel.
They work often enough to warrant keep handy.
Regards,
Gordon
In an earlier lesson you were introduced to Dr. Andrew's sideways count. You saw how frequently
the sideways count method provided high probability price objectives after the breakout from the
established channel took place.
In this segment of lesson 4, you'll be shown 2 congestion area techniques that can help you
determine the probable sideways channel price breakout direction. Both rely on the use of pivots.
The first uses the pivot points that are circled on a sideways channel. Dr. Andrews observed that
whenever a sideways channel results in at least 5 circle contacts, the eventual price breakout
would very often be in the direction indicated by the location of the 5th circle. If circle 5 is at the
top of the channel, for example, the eventual price breakout would likely be to the upside. If circle
5 is at the bottom of the channel, look for a downside breakout. Dr. Andrews noted that this
technique can be subject to false breakouts, but that such breakouts are usually followed shortly
after with a confirmed breakout in the direction indicated by the location of the 5th circle. He
emphasized that this study is best considered as a rule of thumb observation. He viewed it as a
supporting indicator for use with a short-term pitchfork as prices approached a channel line.
There are 2 charts attached that show how this works.
The second technique in this part of lesson 4 deals with a sideways channel
that is building shortly after a P3 has been formed. Dr. Andrews noted that
whenever that happened, the probabilities were high that prices would
breakout in the same direction they were moving prior to the formation of
the sideways channel. The attached "P3 to sideways example" chart shows this
procedure.
From: TradersZone
Date: Freitag, 24. Mrz 2000 20:52:35
Hello Gordon,
here is my example for the 5 circle sideways count.
Regards,
TradersZone
To: TradersZone
Subject: Lesson 5
Date: Montag, 27. Mrz 2000 06:07:31
At 3/24/00 8:52:00 PM, you wrote:

>Hello Gordon,
>
>here is my example for the 5 circle sideways count.
>
>Regards,
>TradersZone
>
>
Hi TradersZone,
Good example of the 5th circle tendency to predict the direction of a sideways breakout. Any luck
finding a chart showing the P3 to sideways rule?
I'm sending the first part of the next lesson. This trendline method is a useful tool with all of Dr.
Andrew's course lines. He used it all the time, but especially when looking for confirmation of other
course method trading signals.
Regards,
Gordon
The Course Trendline

__________________________________________________________
Next we'll discuss the trendline. Seasoned traders agree that the trendline is one of their most
important tools. No matter what kind of trading program or technique they use, the trendline on a
chart is a must. But one of the biggest mistakes made by amateurs and professionals alike is
inconsistently drawing or defining the trendline. Dr. Andrew's trendline procedure is simple,
consistent, and accurate. It works extremely well with the pivot count, and with the pitchfork.
For an uptrend within the period of consideration, draw a line from the lowest low, up and to the
highest minor low point preceding the highest high. The line must not pass through prices in
between the two low points. Extend the line.(Attached chart of Brightpoint)
For a downtrend within the period of consideration, draw a line from the highest high point to the
lowest minor high point preceding the lowest low so that it does not pass through prices in
between the two high points. Extend the line. (Brightpoint chart)
That's all there's to it. It's simple, consistent, and it works well with other Andrew's lines. It also
helps eliminate personal bias and haphazard analysis.
Practice drawing these trendlines on your own charts. Send me any questions you might have, and
then e-mail a chart of your choosing which shows at least two uptrend and two downtrend lines
that you've drawn.
_______________________________________________________________________
From: TradersZone
Subject: Re: Lesson 5
Hello Gordon,
here is my chart with trendlines.

When a trendline is broken in an uptrend and the price is going above the trendline again, should I draw a new trendline and
delete the old one?
Attached is another chart with the P3 to sideways rule, I finally found an example for it.
Regards,
TradersZone
To: TradersZone
Subject: Price failure technique
Date: Freitag, 31. Mrz 2000 08:14:12
At 3/28/00 12:02:00 PM, you wrote:

>Hello Gordon,
>
>here is my chart with trendlines.
>When a trendline is broken in an uptrend and the price is going above
>the trendline again, should I draw a new trendline and delete the old
>one?
Hi TradersZone,
Take a look at the chart I'm returning....I added some lines for you to consider.
With the course trendline, once it's broken a new one should be started. There's a technique that
ties in with this coming up soon.
Meanwhile, here's an important technique to work on. It deals with those times when prices don't
reach the ML.
Regards,
Gordon
Dr. Andrew's Price Failure Rule:
"When prices fail to reach the ML as shown by a space between the P of

reversal
and the ML, the probability is that this price reversal will go further than
it
did on it's approach toward the ML." (Extract of original course material)
A price failure very often indicates a sizeable reversal will take place.
The
pitchforks drawn on the chart of Home Depot illustrate the concept of price
failure. Dr. Andrews routinely drew a new pitchfork on his chart after a new
significant pivot had formed. He knew that prices had a high probability of
reaching the new ML before stalling out or reversing. If prices reversed
before
reaching the ML, thereby forming a new pivot, he termed it a price failure.
The
underlying idea here is that Dr. Andrews fully anticipated his median line
would
act as a price magnet.
To conclude that a price reversal resulted in a price failure, Dr. Andrews

used
these primary signals:....a subsequent price penetration of a short-term
multi-pivot
line, and/or a return of prices to, and penetration of the parallel line
formed at
pivot 3 of the pitchfork. (The circles on the Home Depot chart denote the
parallel
line penetration signal. To avoid clutter, the mpl lines were not drawn.)
One possible use of this method is shown on the attached chart of Conseco,
Inc..
Look for similar examples on your own charts, and please send me a copy.
To: TradersZone
Subject: Chart
Date: Freitag, 31. Mrz 2000 08:18:00
Attachments: image002.png
Hi TradersZone,
Forgot the chart.....
Gordon
From: TradersZone
Subject: Re: Price failure technique
Date: Samstag, 1. April 2000 20:10:00
>One possible use of this method is shown on the attached chart of

>Conseco, Inc..
>Look for similar examples on your own charts, and please send me a
>copy.
Hi Gordon,
here are my charts with price failures.
Regards,
TradersZone
From: Gordon
To: TradersZone
Date: Mittwoch, 5. April 2000 23:56:24
Hi TradersZone,
Good price failure examples you sent...any comments or questions about it?
Here's the next part....another old standby Dr. Andrews kept handy.
Regards,
Gordon
In this segment you'll learn how to use the "Fan line Technique." To draw the fan lines, you'll apply the course
trendline method which was introduced in an earlier lesson. It might be well to emphasize that the practical
application of the course trendline method requires practice and experience, both of which will serve you
well in this technique. Dr. Andrews used fan lines as an adjunct to his pitchfork, sideways channel, and
action/reaction methods.
In the fan line study three trendlines are drawn from the original reversal pivot of the price correction under
study, typically a P0 or a P5. You'll notice on the charts included with this study that each fan line is at a
flatter angle than its predecessor. When the third fan line is broken, the rule is that the correction has ended
and a new trend is under way.
Try this technique on some of your own charts, and then please send me a
sample.

From: TradersZone
Date: Donnerstag, 6. April 2000 23:43:15
Hi Gordon,
No, I don't have any specific question about the price failure technique. I guess the next likely target after a price failure would
be the warning line?
I have attached two charts with fan lines.

Is it possible to calculate a fourth "target" fan line, if the third fan line is broken?
Regards,
TradersZone
From: Gordon
To: TradersZone
Subject: Re[2]: Next segment
Date: Freitag, 7. April 2000 00:33:12
Hello TradersZone,
Tuesday, April 06, 2000, 11:43:15 AM, you wrote:
TZ> Hi Gordon,
TZ> No, I don't have any specific question about the price failure
TZ> technique. I guess the next likely target after a price failure
TZ> would be the warning line?
TZ> I have attached two charts with fan lines.

TZ> Is it possible to calculate a fourth "target" fan line, if the third
TZ> fan line is broken?
TZ> Regards,
TZ> TradersZone
That's right, the warning line is the next price target. Additional
warning lines can be drawn if needed, but usually one will do it. If
prices go through the first warning line, another can be drawn, but
most likely a new pitchfork could be drawn instead, which would be
preferable. Helps stay current with recently formed pivots.
When prices break through the third fan line a buy or sell signal is
given. Not sure what you mean by fourth target fan line. I'm a little
dense today.
Your chart work was good...this is another handy tool for spotting the
high probability of a price reversal or trend change.
Best regards,
Gordon mailto:gordon@pitchforkprimer.com
From: Gordon
To: TradersZone
Subject: The Gap Trade
Date: Freitag, 7. April 2000 00:48:58
Hello TradersZone,
This trading signal doesn't show up very often, but past

observations have shown that it's well worth watching for.
Dr. Andrews placed a lot of emphasis on the importance of
price gaps, something many traders overlook. This is one of
his gap uses.
Best regards,
The Gap Trading Technique.
Price gaps can be a dilemma for many traders. The general rule denoting market strength or weakness after a
high volume gap often comes up short after the initial reaction is over. Many "gappers" simply run out of
steam. A high volume gap in itself seems to offer precious little evidence that a profitable move is about to
get under way.
Dr. Andrews used price gaps somewhat differently than others. He counted a gap as 2 pivots. You'll see how
that works in the following technique which uses a gap to arrive at a price level for a buy or sell order:
Using short-term, daily price pivots, label the pivot immediately preceding the gap as p0. Count the gap as 2
pivots, labeling it p1 & p2. After p3 has formed, and prices reverse towards a short-term p4, draw a horizontal
line 2 price tics or more (individual preference)to the right of p3. Enter the market only if prices reach or
penetrate that line within a few days after reversing from p4.
Please look over your own charts to see if you can find places where the gap trade technique could have been
used. Send me a sample when you're ready.
From: TradersZone
To: Gordon
Subject: Re: The Gap Trade
Date: Sonntag, 9. April 2000 00:19:25
Hello Gordon,
this is my chart with a gap trade.
Regards,
TradersZone
From: Gordon
To: TradersZone
Subject: Re[2]: The Gap Trade
Date: Sonntag, 9. April 2000 06:55:38
Hello TradersZone,
Thursday, April 08, 2000, 12:19:25 PM, you wrote:
TZ> Hello Gordon,
TZ> this is my chart with a gap trade.
TZ> Regards,
TZ> TradersZone
Good example...the gap trade technique shines when an issue in at or near a P5. Similar to the one on the
chart you sent.
Here's another trading signal tool....
Best regards,
Dr. Andrews used several techniques which helped him determine whether a P5 was near at hand. You'll
recall that he observed most price moves ended or had a significant reversal at a P5.
This technique uses alternate closing prices after a P4 has been formed. As with many of his studies, the
number 5 is used. The chart accompanying this segment shows that there were 5 alternate closes to the
downside after P4 was put in. Dr. Andrews noted that whenever 5 or more alternate closes followed a P4, the
probabilities were high that a P5 was near at hand.
An added feature to this chart study is the sideways channel. Notice how the 2nd target price and the 5th
alternate close nearly coincide.
From: TradersZone
To: Gordon
Subject: Re: Re[2]: The Gap Trade
Hello Gordon,
This is a chart with an example for the 5 alternate closes.
Regards,
TradersZone
From: Gordon
To: TradersZone
Monday, April 12, 2000, 8:07:30 AM, you wrote:
TZ> Hello Gordon,
TZ> This is a chart with an example for the 5 alternate closes.
TZ> Regards,
TZ> TradersZone
Hello TradersZone,
Good chart example of this Andrew's tool....another of his very unusual observations that work
more often than not.
Here's the final part of this lesson.
Best regards,
In this trendline method, Dr. Andrews once again used the number 5 as the basis for locating a
probable reversal area. He found this technique to be especially useful whenever a clear, or
obvious pivot count didn't show up on
the price move under study.
Trendlines are drawn using the course trendline method. When the 5th trendline is broken, the
probability is high that the trend under study has ended. A mini-median line pitchfork, and/or
sliding parallel could be used for pricing a trading order.
The accompanying chart of Compaq Computer is an example of how the trendline study could be
used. The pivot count beginning at the October low is difficult to nail down. There were several
small areas of congestion, but no sizeable corrections while prices advanced. The count was
unclear. By following the price action using the course trendline technique however, the trader
would have been alerted to the possibility of a change of trend when the 5th trendline was broken
in early February.
Try this technique on your own charts. When you're ready, please send me an example of your
study.

From: TradersZone
To: Gordon
Subject: Re: Re[4]: The Gap Trade
Hello Gordon,
this is my example with 5 trendlines.
Regards,
TradersZone
From: Gordon
To: TradersZone
Monday, April 19, 2000, 12:41:08 AM, you wrote:
TZ> Hello Gordon,
TZ> this is my example with 5 trendlines.
TZ> Regards,
TZ> TradersZone
Hello TradersZone,
Good example of the 5 TL technique. Always reminds me of how the fairly simple tools often do a better job than many
of the sophisticated studies out there.
That was the last part of lesson 5. Lesson 6, attached, is made in one mailing. You'll find Dr. Andrew's trading rules along
with a wrap-up review which uses several of his rules. You might have questions about some of the rules, so feel free to
send them as they arise.
Best regards,
Dr. Andrews had an abbreviated set of trading rules on several index cards that he carried around with him in his shirt
pocket. He said every trading day turned up something new on his charts, and by having his rules in his pocket, he was
reminded of the need for a methodical approach to his analysis. Quite a comment coming from the man who wrote the
rule book.
In this, the final lesson of the course, Dr. Andrew's original trading rules and observations are presented. Let's work with
a few of them at this point.
Using charts of issues you follow, please send me an example that illustrates your interpretation of each of the following
rules:
Rule #4. Anticipating major P's.
Rule #7. Penetration rule.
Rule #8. Price failure rule.
Rule #11. 1-ML2/3 AR Centerline.
Rule #12. Sliding Parallel rule.
Rule #15. Mini-median line parallel to buy or sell.
Feel free to include any other course techniques you choose to apply, but please include examples of the above as a
minimum. Use more than one technique on a chart if your analysis supports it. Send as many charts as you like, along
with your questions/comments.
############################################################################
Lesson 6 - Dr. Andrew's Trading Rules.
This lesson covers course rules and significant observations as taught by Dr. Andrews in his original trading course. The
rules are those that he used in his own trading, and are provided to serve as a checklist for use with the course trading
methods you've learned.
Rule #1. Where prices are always headed Rule. You course members are among the fortunate few to be able to draw a
straight line and know that prices are headed toward that ML. Very few investors have ever applied this ML principle of
statistics to price fluctuations, and we've never seen this in any books on investment. You are among the very few who
know that prices are always headed toward the newest ML.
Rule #2. The Rule of coming opposites applies all through life. In the bible we find, "Blessed at they that mourn, for they
shall be comforted." As investors, we know that any losses can be recovered by using course methods.
Rule #3. "Turn your mind about," or "Rethink, for all good is at hand." We should mentally prepare ourselves for the
coming reversal in prices, and other affairs. Here's one way for example, that you course members who know the ML
rules can use: When prices are skyrocketing upward, we do this preparation by thinking "If prices pivoted here today at
this price, I'd draw a new ML bisecting the distance between todays price and the price from which the rise started." And
we know now that if this is a Major Pivot, prices will fall rapidly to this new ML. Profits from such drops are big and quick.
Rule #4. Rule for anticipating major P's. If, during congestion, or after a rally or decline, you can count four previous P's,
the fifth one is highly probable to be the one from which a new trend starts.
Rule #5. Rule for easily detecting the major P from which you can make a quick, big profit is to watch for the EP
formations.
Rule #6. The other reversal rule is that prices tend to reverse at or near any ML, as well as at any extension of each ML.
And also at any MLH or extensions of MLH.
Rule #7. The Penetration Rule is that whenever prices gap past, or plunge through any ML, there is a high probability that
they will quickly return to it temporarily, and then resume the trend they had before they gapped or plunged through.
Rule #8. Price Failure Rule; When prices fail to reach the ML as shown by a space between the P of reversal and the ML,
the probability is that this price reversal will go further than it did on it's approach toward the ML.
Rule #9. The price failure rule is negated when the next price trend is also a failure in reaching the ML. This is almost
invariably a signal of a big, fast move in the direction indicated by this last "space."
Rule #10. When alternate median lines of comparable length slope in the same direction, the trend is firm, and rapid
price changes take place.
Rule #11. When 1-ML2/3 is exactly reached at P4, it can be used as a highly reliable centerline for the A/R method.
Rule #12. Frequently, after crossing a lower MLH, prices continue to rise along the MLH. Since the crossing of the MLH
signals a further drop is likely, use a sliding parallel along the bottom of the most recent crossing. If prices drop past that
sliding parallel line, a sell signal is generated.
Rule #13. ML's between P2 and P3 can start from a nearby or a remote P1, since prices tend to reverse at each of these
ML's. Try several such P2-P3 ML's to discover the best fit.
Rule #14. The distance of each MLH from its ML is the distance of the next warning line. Use these warning lines
whenever a SH has signalled a buy or sell.
Rule #15. Use the MMLH as a buy or sell signal when you expect a reversal because of a P5. Also when prices are at a
WL, ML extension line, or where course lines converge, or intersect.
Rule #16. Converging lines that meet prices have shown the highest probability of a trend reversal.
Rule #17. Two to four days is usually the maximum between P2 and P3 for a MML. P1 can be a day or so back from P2
and 3.
Rule #18. The most reliable Action/Reaction centerlines seem to be: MPL, 2P line, 2 Gap line, peak to low, or low to peak.
Rule #19. When prices pass through R lines, look for a pull back and then a continuing move in the direction of the pass
through.
Rule #20. Use gaps as Action lines from the centerline.

From: TradersZone
To: Gordon
Subject: Rule #4
Date: Freitag, 5. Mai 2000 00:37:55
Hello Gordon,
here is my example for Rule 4.
And I have a question: What are EP formations?
>Rule #5. Rule for easily detecting the major P from which you can make
>a quick, big profit is to watch for the EP formations.
Regards,
TradersZone
From: Gordon
To: TradersZone
Subject: Re: Rule #4
Tuesday, May 04, 2000, 12:37:55 PM, you wrote:
TZ> Hello Gordon,

TZ> here is my example for Rule 4.
TZ> And I have a question: What are EP formations?
>>Rule #5. Rule for easily detecting the major P from which you can make
>>a quick, big profit is to watch for the EP formations.
TZ> Regards,
TZ> TradersZone
Hi TradersZone,
Good use of the warning lines....also, the EP material is part of lesson 4. Rather than go back
through the files to see when (or if) it was sent, I'm sending it along with this reply. Glad you
brought it up.
Best Regards,
Tuesday, May 04, 2000

2:08 PM
Dr. Andrews used a fairly common price chart formation that he found useful at probable P5
market tops and bottoms. The formation, generally called a wedge or pennant by chartists, is
referred to in Dr. Andrew's trading course as the "Expanding Pivot." (EP) One of the few chart
formations used in the course, he regarded it as among the most dependable indications that a
market top was forming. Closely related to the EP is his "Inverted Expanding Pivot" (IEP) which he
noted could often be observed at market bottoms. Both are regarded as intermediate and long-
term reversal indicators.
Dr. Andrews found that both formations were most reliable when they occurred after a sharp,
rapid price move coinciding with the formation of a probable P5. He said it wasn't unusual for the
formation to take several weeks to complete, and that conservative traders could best avoid the
whipsaw associated with congestion patterns by trading only in the direction of the probable price
break out of the EP or IEP formation.
The attached charts illustrate these formations. Please look over your own charts for an example of
the EP and IEP, and send me a copy.
From: TradersZone
To: Gordon
Subject: Re: Rule #4
Hello Gordon,
Thank you for the lesson with the EP material, I couldn't find it in any previous email.
Here is my example for Rule #7.
Regards,
TradersZone
From: Gordon
To: TradersZone
Subject: Re[2]: Rule #4
Date: Samstag, 6. Mai 2000 08:08:27
Wednesday, May 05, 2000, 11:21:27 AM, you wrote:
TZ> Hello Gordon,
TZ> Thank you for the lesson with the EP material,

TZ> I couldn't find it in any previous email.
TZ> Here is my example for Rule #7.
TZ> Regards,
TZ> TradersZone
Hi TradersZone,
Glad you mentioned it earlier....except for the EP, IEP, and his
sideways channel, Dr. Andrews didn't have much to say about chart
patterns and formations. These are good ones to use though.
Your study of the penetration rule was good. Later....
Best Regards,
Wednesday, May 05, 2000

8:01 PM

Pitchfork Primer Manual

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Pitchfork Primer Manual

Uploaded by

Copyright:

Available Formats

From: PitchforkPrimer

At 1/30/00 12:33:00 PM, you wrote:

Here's the first part of lesson 1.

Each lesson of your Pitchfork Primer Study Course is made up of

Lesson one has two main teaching points:

We'll start with a definition of the terms and abbreviations used

ANDREWS' PITCHFORK: The nickname given to the unique configuration

ML: Median Line. The middle line of the pitchfork.

MLH: Median Line Parallel. The outer line(s) of the Andrews'

THE PIVOT COUNT:

>Please study the attached chart of LSI Logic.

At 2/2/00 1:59:00 AM, you wrote:

Here's the next part of the lesson.

Lesson One, continued.

I have attached a chart of AET. I hope it's a good example.

At 2/2/00 8:24:00 PM, you wrote:

Here's the next segment of lesson 1.

I have attached the CNC chart.

At 2/3/00 3:45:00 PM, you wrote:

Will you be continuing the course?

I found a chart with 9 pivots, I hope it doesn't matter.

At 2/7/00 7:27:00 PM, you wrote:

Meanwhile, here's the first segment of the next lesson.

Shouldn't the last circle on your Brightpoint chart be left out?

At 2/9/00 6:48:00 PM, you wrote:

Meanwhile, here's the next segment of this lesson.

I'm returning your chart....please note comments.

At 2/10/00 11:30:00 PM, you wrote:

I think the placement of the circles is clear to me now.

>TradersZone....I sent this yesterday, but will re-send. It was part of

At 2/11/00 11:41:00 PM, you wrote:

Your chart was on target.....

4: Subtract that figure from the upper channel line price.

At 2/14/00 1:43:00 PM, you wrote:

I'm including the final segment of this lesson.

At 2/21/00 7:37:00 PM, you wrote:

Good job on the pivots, sideways count, and pitchfork.

At 2/23/00 9:23:00 PM, you wrote:

Here's the correct version.

- MPL: Multi-pivot line. A line drawn across 3 or more pivots.

At 2/23/00 9:23:00 PM, you wrote:

Your payment in full arrived today, TradersZone. Thank you.

Here's the next part.

At 2/28/00 3:59:00 PM, you wrote:

Here's something else to look at.

>The attached chart of Lattice illustrates this concept.

At 3/4/00 12:25:00 AM, you wrote:

I'm sending a chart with an example of a peak-to-peak C/L.

At 3/5/00 5:12:00 PM, you wrote:

Here's the first part of the next lesson.

At 3/9/00 12:11:00 AM, you wrote:

At 3/14/00 10:57:00 PM, you wrote:

wouldn't it be better to use "real" median lines on intraday charts

At 3/16/00 11:15:00 PM, you wrote:

You're absolutely correct....intraday charts were not available when Dr.

There are 2 charts attached that show how this works.

here is my example for the 5 circle sideways count.

At 3/24/00 8:52:00 PM, you wrote:

The Course Trendline

here is my chart with trendlines.

At 3/28/00 12:02:00 PM, you wrote:

Dr. Andrew's Price Failure Rule:

"When prices fail to reach the ML as shown by a space between the P of