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Good morning Dear Traders,
How about that, we made it through yet ANOTHER "Stress Test" in the markets. I'm sure you know this by now that the "game is rigged". When "Chicken Little" is screaming "The Sky is Falling, the Sky is Falling" the so called experts begin to calculate how bad things are going to really get. And then the fun really starts. They then adjust earnings predictions and economical reports down so low that the market first reacts to these very bad projections and then when news comes out that is "BAD" but just not as "BAD" as these experts predicted, the market can and most often WILL RALLY! This forces a further short squeeze and off we go into the wild blue yonder.
Well, I wouldn't exactly call it "Wild Blue Yonder" as we do have some resistance points above where we are today and the market can NEVER go up forever. CAN IT? During times of climactic moves up or down as we have just witnessed, the market often has sharp moves as I mentioned in my past letters talking about a potential move up off the bottom that could be at least 25 - 30%. All but the Dow 30 are now in positive territory for the year and now we shall see what the so called, "Sell in May and Go Away" brings us. These often self fulfilling prophecies are very reliable as if enough people believe in something, they WILL MAKE IT HAPPEN. However, we at Pristine don't stay awake at night trying to predict market moves, but rather "Live IN the Moment". What is a moment for any of us? That depends on your selected time frame for trading and investing. If you are to enter long positions now to hold for any length of time after a very large run up as we had, you had best make sure your risk to reward is adequate to support your trading or investing idea and make sure to have an appropriate money management strategy laid out.
Technical analysis as used through the Pristine Method is so accurate that it will show you where the money flow is going. We always want to be on the side of the "Smart Money" with trades and investments that are working in our favor as quickly as possible. I want to review with you the following information which I hope will help you understand a little better what we do on a daily basis in all divisions of Pristine to be so profitable trading and investing in all time frames.
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What Is Technical Trading? Part 1
This is the first question I usually present to trading students in our Workshops and Trading The Pristine Method ® Part 1 seminars. The usual answer typically revolves around "buying and selling stocks to make a profit", or some variation of the same theme. Sometimes a wiser soul, remembering one of my slides may say that trading "isn't about trading stocks, it's about trading people". But what does this mean?
Let's begin by defining what technical trading is not. Trading isn't about news, upgrades/downgrades or fundamental information. Long-time Pristine students should know this by heart. Most of the time the market makes an excellent effort to discount news items. With the sole exception of a completely unpredictable event, most news items are "known" in advance, and there is an army or analysts whose only job is to "predict" the earnings reports and all the other tidbits of information coming from the incredibly vast world of the financial markets. The utmost example of how futile it is to read the news and predict market moves based on them takes place every FOMC meeting. Everyone and their families know in advance what Chairman Bernanke will say in terms of interest rates, and yet they wait until the announcement, only to react erratically for several minutes, while the different actors in the market decide whether the announcement (widely known beforehand) is "good" or "bad".
We also don't trade using upgrades/downgrades, as these are mere tools used by large institutions to manage "inventory". Have you noticed how most upgrades take place after a sizable advance in the securities price? It's no coincidence. If a large institution needs to sell a large position in a security, it needs to create the necessary demand to absorb such supply without causing a large counter move in the price. Last but not least, we don't trade based on fundamental information, as it's not possible to consistently determine the potential direction of the price of a stock based on the P/E Ratio, book value or any other such number on a balance sheet. So if we don't trade based on news, upgrades/downgrades or fundamentals, what do we base our trading on? The market deals with expectations, which shape the actions of its two most powerful participants, supply and demand. Therefore we need to find tools which will allow us to analyze those expectations. Enter the price charts.
Charts display the constant interaction that exists between supply and demand. This interaction creates price movements which are displayed as trends. Next week we'll finish this discussion, describing the true definition of trading, and the advantages of fully understanding its implications.
I will be doing a FREE Online program Tuesday, May 12th at 8:30 pm ET discussing how you can create wealth or trade for income. You can register for "A Journey Into Trading In All Time Frames "using the following link: http://www.pristineworkshops.com/info/moreinfo.aspx?EventID=2410
We have a full line up of incredible FREE programs this week including some NEW programs never been done before. You can choose the ones that will benefit you the most by using this link: www.pristineworkshops.com
Until we meet up again, stay safe and remember, NO ONE is making you trade. So, only take trades and investments that line up with the highest probabilities that fit into YOUR plan!
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Ron Wagner
President of Pristine Education
Pristine Capital Holdings, Inc.
www.pristine.com
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