The MoneyShow Las Vegas, May 14-17, 2012

Transcription

1 The MoneyShow Las Vegas, May 14-17, 2012 Thursday, May 17, 2012 Fibonacci Time and Price Analysis on Stocks and ETFs Carolyn Boroden, Commodity Trading Advisor and Technical Analyst Synchronicity Market Timing CAROLYN: All right, well, we ve got some people who are late, but we re not going to wait for them, so we ll get started. How many people have read my book? Nobody? You might need it. Well, it s helpful if you do that first, but it s okay if you don t, but what Prechters? Actually I don t know because I haven t read those, but Robert Miner, he s my mentor, and if you. (INAUDIBLE) CAROLYN: Yeah, but they ran out, but they ll give you the same discount price, and they will mail it. Do we think; is this going to be okay as far as the volume? Okay. All right. Okay, basically what I want to do different here today, after we go over the basic presentation that you have the handout for is go through the current markets, and show you which highs and lows that I use to create the setups and just go through example after example, and then what we can do is I can also label the swing highs and lows, and take snapshots of the charts, and then make them available as a zip file, so you can actually take them home with you and have trade setups to work with tomorrow, actually. CAROLYN: This is actually Robert Miner s software; it s called the Dynamic Trader. This is the one I ve been using since it was created; since version one. It s up to version six; multiple upgrades there, and I really can t do my work without it, but you can use Think or Swim; it does have some really good tools, and they accommodated us by getting the single line erase tool because if you use something like esignal or Trade Station, you have to uncheck each line individually, and that s a real pain. Now, just to kind of get you started, let s see, one of the things that you might want to download, okay, if you go to my website, Fibonacciqueen.com, I have a guideline sheet, okay, that s a little bit of a cheat sheet; it s basically how you use the work, and what I tell people that I do, if you get really confused when you start to look at my work, simplify it to simple support simple resistance. Now, how I come about it might not be super simple, but that s all it is as far as using it for a trade, so I go over the basic setups; this is a free download, I updated it recently, that basically goes over the three types of setups that I want to show you how to create on your own, okay. A Fibonacci price cluster, which is the coincidence of at least three price relationships that come together within a relatively tight range, and they identify key support or resistance decisions. CAROLYN: Yes, if you go to the main page, so this is just Fibonacciqueen.com/home. You ll see it right underneath the book, okay, see here s the main website. Right underneath the book. Now, the only problem is that some people have said that they can t see it on some of their browsers, but this is Firefox, and I m pretty sure you should also be able to see this link, and if you don t, feel free to me, and the best for me is cb1618@aol.com, and just also; does anybody do the Twitter stuff; look at the Twitter feeds or stock twits, or anything, okay. Well, for charts that I do, I do post typically a few different charts on the Twitter feed or the Facebook fan page, okay, so you can actually go back and you could look at, for example this was a setup that I posted yesterday. You ll be able to go back over some of these examples, and if you re recreating the same zones, then you know that you re pretty much doing it correctly, so that s an option if you want to check out some of the current charts, if you don t check out the trading room that we do. As far as, let s see, that, you can also find the links for the Facebook page or the Twitter page, and on Facebook you don t have to like me, you have to like the page, and if you do it on my personal page that s okay, fine; that s fine also, but that s when I basically say where I m drinking tequila at night, so it s not a prerequisite, but it s okay if you want to know that; you ll know where to find me, okay, and so you can find that on the main page. What I want to start with is just the basics and then I think we can go into; we ve got quite a few things happening today, especially Apple; who trades Apple, anybody? It s

2 down over $30 or something. Alright. Are you sure? Okay. There is an area that you re going to want to be aware of, okay. I ll have to mess with these charts later, but what we ll do is get started with the presentation that you have; the papers that you have handed out there. Okay. Alright, these should be the packets that you have as far as just some of the basic price analysis. I will go over some time analysis if you want to, but I think what we want to do is first assess if I m going too fast, as far as the price work. There are basically three different trade setups that I create every single day. There s a chapter on each one of these setups in the book, so don t worry if you don t get everything at once here because I m basically putting down into two hours stuff that I ve worked on ever since 1989, okay, after the crash of 1987, so it can only get so much information across, but the book has everything in it, and that video should also be very helpful, so that s something that you can use at home. It s not a DVD, it s a CD, so that s what you re going to need to just play it in the computer or something like that. As far as the basic number series, is everybody pretty much familiar with that; okay. We re basically just using the ratios derived from the number series, and applying those ratios to both the time and the price axis. I don t want to spend a whole lot of time on that, you do have a slide on it, but I think we really want to focus on how we apply it in the current markets. Now, the ratios that I m using; 382, 50%, 618, 786, 100%, 1.272, and 1.618; those are the main ratios. For confirming ratios, I will use 236, for example if it s a huge swing, okay, like when we have a huge swing in CMG, and I might use the 236, but smaller swings I don t really bother to use it. 2618, I do use as my third target for any of the trade setups, and I rarely use, but every once in a while if it s a total runaway market, I might run that extension because sometimes moves will terminate at the Let s see. Alright, I don t think it s that important, if you want to understand where it comes in, in nature, I highly recommend that you just go to YouTube and type in Fibonacci. There are a number of awesome videos that go through where Fibonacci is found in nature, especially like nautilus shells and the flowers, this has Fibonacci in it, okay it s an ammonite. Okay, everybody pretty much familiar with Fibonacci retracements, or is anybody not? Okay. How about extensions? Extensions are basically the retracements beyond 100%. For those I use and 1.618, and occasionally the 2.618, or at least for target three, and then the Fibonacci price projections, that s where you use three points on a chart, so you ll measure a prior low to high swing and then project from another low, or you ll measure a high to low swing and project from another high, so what we re going to do is go over these. Hopefully this is not too boring because it s the basics, but it s just as far as price retracements you re going to measure any prior low to high swings for potential support running these ratios, the 382, 50%, 618, 786. You re going to run the high to lows for potential resistance using those same ratios, okay? So, this is just an example of a simple retracement, measuring this; this is actually an old S&P chart. It s a fifteen minute chart where I measured the low to the high and ran the retracements, and you would be looking for possible support, so there s three areas that this went through and it held the 786, okay, so the question is typically which one do you trade against? Well, typically do not trade against single levels unless it s a huge swing, okay. Moe is looking for either symmetry or a confluence of the price relationships, okay, so it really identifies an important decision because you re not going to sit here and say, well, I m going to buy at 382, and if I get stopped out I m going to try 50, or if I get stopped out at the 618, I m going to You don t want to do that, okay. The way that I m going to show you how to do it should really refine some areas for you, and I think it will definitely give you the edge, okay, so then this next example, again, simple; we re going to get beyond simple pretty quickly, but taking a prior high to low swing and running the retracements, and looking for possible resistance, okay, but again, not using single levels for trades. Okay, this is another simple retracement; this was in the, I believe it was the mini-crude, measuring a prior low to high swing, and running the retracements, okay, in this case it s just the 382, and people will also tell you if you put enough lines on a chart something s going to hit, right? But that s not the way that we do it, and I don t try to fool people. I ve been doing this since 1989 because I lost my job in the crash of 1987 on the trading floor, and somebody talked me into going to a presentation at what was the Midland Hotel in Chicago at that time, and that s where I met my teacher, and just it was like the light bulb went on. Okay, simple retracement again, this was the mini-dow, measuring a prior high to low and running the retracements, so in this case 618 gave you some resistance. Okay, as far as the price extensions, you re going to pretty much use the same tool that you use for the retracements because you re still only using two points; you re just going to add the and in the program, usually anything from esignal to Trade Station. How many people are using; does anyone have Dynamic Trader? Okay, how about Think or Swim? Trade Station? esignal? What else, they ve got Genesis has some good Fib tools; Advanced Get.

3 CAROLYN: How are the charts? Okay. Do you have tools on it? CAROLYN: All of the Fib tools? CAROLYN: Yeah. I haven t heard of them. CAROLYN: Okay. Well, the one that I would recommend if you don t have a program that has all the tools is I would give Think or Swim a shot. Okay. I have a video for you; CD. CAROLYN: For the swing highs and lows? CAROLYN: That s what we re going to go through when we go through the light examples because that, I think, is, yeah because that s the thing is, which ones do you choose for the highs and lows? I have a CD up here for when you want to grab it. I just want to go through the basics and then we ll go through the live stuff, and then I will, like I said, I ll make copies for you guys and a zip file, and I ll give you a place to download it; it might be like on Fox.com or, I m not sure they take zip files, but Drop Box, I could probably do it that way. Okay, so as far as the extensions you re going to run the prior low to high swings, and extend downwards using the ratios of and for possible support or run the prior high to low swings and extend upwards for possible resistance, okay, so this is just the mechanics of it, so for example, actually this was the old; I used to use quote.com way back when, and I believe this was the Russell, and this was the daily chart, so an example of it is taking this prior high to low swing in the Russell and extending upwards. You didn t see any resistance at 1.272, but you did at the 1.618, okay, so knowing this, this ended up being a major high. What you want to combine this work with is the triggers. The triggers will filter you out of many of the zones and decisions that will never hold, okay, and it s really important to do that, I believe, because otherwise if you re just throwing in bids or offers in front of these zones without waiting for an indication of a reversal that tells you it s okay to place a bet, I don t think that that s going to work very well. I ve seen people do it and destroy their accounts, okay, so that s an example of an extension. Also, this next chart, this was the, it looks like the daily chart of, this was the mini-crude contract I believe, measuring a prior; this is an old chart, a prior low to high swing, and extending downwards; 1.272, for possible support. In this case the essentially held. Now, the other thing about is that it is always my target one on any trend trades, okay, so for example if we had a sell setup at where this high is, my target for the trade would have been the extension down at this 4759 area. Whenever you get to extensions, I always tell everybody to start trailing your stops because many moves tend to terminate at the extensions of the prior swings, even if it s just temporarily. In this case, you definitely terminated the decline at It s great if it goes to the next level and you get more money out of it, but it s time to trail the stops, okay, even if it goes to It s kind of better safe than sorry. CAROLYN: Yep. It s okay. CAROLYN: Well, that s what the program will do for you, and believe it or not, I just edited my old updates, and I actually had you add this and you subtract from this if you re coming from a low, and I was like, everybody has a computer now; you don t do this by hand anymore. When I started, I was on the Chicago Mercantile Exchange, and I used to buy the

4 paper charts; the commodity perspective charts, and I had a proportional divider, and did it by hand until I met Bob Miner, and I think my first Fibonacci program was Relevance III, by Maynard Holt, which is a really old program. He s been retired for years now, and then I believe, used Wave Trader by Bryce Gilmore, and then has anyone heard of that book, Geometry of Markets by Bryce Gilmore? It s an awesome book, okay, him and Bob Miner used to work together. Bob wanted his own way; his program was still in DOS, when we had Windows, so Bob created the Dynamic Trader, and I ve been using this ever since. CAROLYN: If you re just beginning and you don t want to spend $2000 for a program, Think or Swim, so download the free version, and I m going to make the video on how to use those tools on Think or Swim available; I think it was on my public videos, and I think it went beyond the one date, so I have to get it posted back up there, so you can look at it, but here, again, an example of an extension measuring a prior high to low using the ratios beyond 100%, possible resistance. The second extension we hit, and we moved off that area, so as soon as you hit the 1.272, you start trailing up your stops, and then of course you want to get to a breakeven stop as soon as possible because there are plenty of setups where we will make the target and then there are others that will never, so if you have a chance to move it up with it, go for it, but especially when you get to the extensions because that s when I would tighten it up even further. So, how many people are trading stocks and options? Okay, and then is anybody doing futures? Okay. You can use this on anything, but like for example if you use Ninja Trader, you can do an auto trail, that type of thing, a stop and just have it follow you up. We ended up having a setup in the S&P from yesterday that ended up, it did not make the target, but it declined eighteen points from the zone. I have a CD for you up here, and hopefully you have a handout. CAROLYN: No problem. Okay, so that s another example of an extension. I wanted to show you another example of an extension where we didn t have a perfect hit where it was the resistance, but just to, again, bring back the idea that when you get at least to 1.272; you want to tighten up your stops because many moves tend to terminate at extensions of prior swings, okay. If you just go and look at a chart and just watch how; within an uptrend, you ll see it extend, pull back, extend, pull back, extend, and sometimes you re going to have the or the major swings, but it s still a good thing to tighten up your stops. Okay, now as far as Fibonacci price projections; this is where you re going to look for three points on the chart to do the analysis from. This is when you re comparing swings in the same direction, so for example I m going to measure a prior low to high swing and then project from another low and look for possible resistance, or I m going to project a prior high to low swing and then project from another high for possible support. I m mostly using 100%. I rarely use 1.618, and it s not because it doesn t have value, it s because I typically don t need it, okay, there are some times, and I ll probably show you an example today of when you might be able to use it, but I typically don t need it. If I just run the retracements, the extensions, and the projections from all possible swings on one chart, I will typically find either a symmetry setup, a price cluster setup, or a two-step pattern setup, okay. I have a CD up here for you when you get a chance, whenever you want to grab it; does everybody have it. Question? CAROLYN: The projections? Yeah. CAROLYN: This; for the three-pointed tool I use 100% almost all the time; occasionally I will us For, no projections where you use three points because we re doing, in retracement low to high retrace under 100%, extend beyond 100%, and then you re doing from three points low to a high from a low. I think when we go over the actual charts it ll make a whole lot more sense, so hopefully this is not; it s simple enough now, or it s only because I ve been doing it I guess for years and years and years, but I think when we get to the real charts I ll make it clear. As far as examples of price projections, okay, now this is what I call symmetry. The symmetry is similarity of swings in the same direction when comparing swings in the same direction, okay, symmetry is also a measured move, okay, where you just take in 100% of

5 one swing and then you re projecting it from another high or low, depending on what direction you re coming in, so if you see here, this is a daily chart in the S&P; this prior high to low swing was 3245, okay, I projected that from the Jan 26 high, and this is a really old chart, but nothing s really changed, so didn t have to change that, but that projection came in at for possible support, and the actual low was made at , okay, very close. If you knew this was possible support you would look for buy triggers, and we did see a really nice healthy rally off of that area, so this was 3245 and this was 33; symmetry, similarity. It was similar this time, not equal, but you re looking for either similarity or equality because there are times where you will find exact where it hits to the exact tip. You ll have a $5 decline and you ll have another $5 decline, exactly. Okay, this is another example of a projection where you would measure a prior low to high swing and then project from the low using 100% and then sometimes 1.618, okay, so it s basically measuring this low to high swing which was $6.10 and then you would be multiplying that by 100%, so $6.10 added to this low here gave you this , but that did not hold, but if you also took that $6.10 and multiplied it by 1.618, and then added that to the low, that would have given you this area, 1096 was the high. Okay, symmetry, again, even if you just apply symmetry to your charts after you just say oh my god, this is just too confusing I can t run all those numbers, I can t run all those levels, just use the symmetry, okay, because it s so simple, but it s very powerful, I mean I did a whole setup on symmetry. I write about it all the time and actually Kramer did a show on it too, and we got two out of three stocks that I gave him that were setting up that way, so Bed, Bath, & Beyond played out, and IBM gave us a $12 rally. The COP tested the zone and then blew through it, so two out of three ended up playing out, so this, again, is another example of symmetry. Now this is down to a five minute chart. You will find this even down to one-minute charts, okay, but there s going to come a point where you can t go really too low because you ll never get the stuff updated because every time a new high or low is made you have to recalculate the levels, and that s, like I said, can be extremely tedious, so this high to low; A to B was $1.30. That was in the Russell on a five-minute chart. All I did was project the $1.30 from point C, the next high, and that gave you as possible support, and we ended up making the low exactly at , so it was $1.30 and $1.30. Symmetry and in this case it was total equality, okay, so when you hit this area then you need to look for a buy trigger. If you re looking at a setup on a five-minute chart, you might want to use something like a one-minute chart to look for a trigger, and some people will even use tick charts, okay, but if you go too micro, sometimes you ll just get knocked out too quickly. One of the things that we found in the past two trading sessions, I had two setups in the S&P off of a 30-minute chart and both of them held, I think one of them might have made the full target, but the other one didn t, but it still declined eighteen points. We used a three-minute chart for an entry on that, and if you don t want to trade S&Ps, you can use SPDRs, but basically what I use symmetry for most of all, is to help get you involved in the market in the direction of the trend, so if you re looking at higher highs and higher lows, you want to compare the prior corrective declines within the uptrend with any new decline, and that will give you a possible support area for an entry, okay, so is that concept clear on symmetry? It s pretty much 100%. CAROLYN: Swings in the same direction, so the swing from A to B, which was $1.30, and the swing from C to D, so I m comparing A to B to C to D; they were exactly equal. It really helps when you have a program that will label the swings, and that s the only way that I really started working this way with the analysis. CAROLYN: This one is Dynamic Trader. Yeah. There s a link on my site for it, but that s the software that Robert Miner created, and I ve learned probably 80% of what I do now from him, and a little bit from Larry Pesavento, a few other people, and what then like what I taught myself by just watching the charts, so here s an example, again they re old examples, so, Starbuck s. This is a fifteen-minute chart, so here I would have measured the high to the low and projected from another high. Now the next high was pretty close to the prior high, okay, but that gave us one projection at 5361 that didn t hold, and then the you did get a micro-bounce off of it, so you re basically looking for reactions off of these, but again, you re not going to use a single level for a trade setup. The only exception is something like if you have a

6 major 618 retracement on a daily chart in gold, then what you would do is then go down to a lower timeframe chart and look for a pattern to shift there and then set your trade up on a lower timeframe, okay. Yeah. CAROLYN: The trailing stop? If you use a trailing stop, it s really going to depend on what you re trading, like for example if you re trading futures, which are really fast, okay, well then you don t have to worry that much, but like they have Ninja Trader, which would do an automated trading strategy, which would just automatically trail the stop, like let s say you can set it to for every five ticks we re going to move my stop up three ticks, or something like that. As far as Think or Swim, it s not going to be as fast. I believe that there is something that you can set up as a trailing stop on Think or Swim. I haven t used that, I just do it by hand. CAROLYN: No, I ll put in the stop, but as far as moving them, yeah. Yeah, what I ll do is actually go down to a lower timeframe chart and look at that chart, and then trail it as it goes, so if it breaks the area on price on the stock, get out of the option. CAROLYN: Yes. Yeah. Okay, so is anyone not familiar with Fibonacci price cluster? Okay, a price cluster is the coincidence of at least three or more price relationships that come together within a relatively tight range, and it identifies a key support or resistance decision, okay, so like I said, if it gets a little confusing, distill it down to I m giving you support and I m giving you resistance. You re supposed to buy against support if it holds and it triggers, and you re supposed to sell against resistance if it holds and it triggers, okay, so to set up the clusters, I m going to start probably with a daily chart. We ve got some awesome examples in the current market. We re going to run all possible Fibonacci retracements from lows to highs and highs to lows. We re going to run all Fibonacci extensions of lows to highs and highs to lows, and we re going to run projections, comparing swings in the same direction by running a prior high to low and projecting from an alternate high or from a low to high projecting from an alternate low, and I believe I have a cheat sheet in the back of this that you can use if you re not used to running the price relationships, yeah, hopefully the cheat sheet s in here. Okay, yeah, page 30, this is basically you can hang this on your wall if you re really new to this, and basically you re saying okay, if the market is a pattern of higher highs and higher lows, I m going to look to set up support because I like being on the side of the trend, so if I m running support, I m going to run all possible lows to highs for the retracements using the first set of ratios, lows to highs using the extensions with the second set of ratios, and then running projections using three points prior high to low project from another high using 100% and See, this is actually an old slide, subtract the result. This was when, some people used to do this on spreadsheets, but now, just about every single program that you can get your hands on will have it, and then you just flip it around for the resistance, so if you re saying well, you know, I think Apple is going to hell and I want to set up the sell side, go to your cheat sheet and then whatever chart you re looking at, we can actually go over one of the setups that we could have looked at this morning and then run the price relationships, and then what I m going to do is go over how we choose those, and I just wanted to get the basics done with, so you can take a few notes, and then we ll go into the real-time markets, and is there somebody that s going to be teaching after me, do you know? CAROLYN: Okay, so, and I m willing to stay a little bit longer if we need to. As far as price cluster, again, it s the coincidence of at least three or more price relationship that come together within a relatively tight range, okay, so in this example I measured the retracements; this was an old chart, the Dow futures, measured a prior high to low and ran the retracements. I measured a lower high to a low, and ran the retracements. Now, I would have also done this one, okay, but it s not showing in this example because it didn t fit in the cluster, and I m just trying to show you a cluster first. I also measured, if you can see this little swing high to this low, now this will take some kind of training your eye of what to look at, but taking that high to low, extend it upwards. Now, I have color coding. I have this stuff on my website; I believe I did

7 a free video on it. As far as the colors I like to know what is inside the price clusters, so for symmetry I always have red. For the 618, the only stand-out that was pink, okay, I mean I don t want to use gold for the golden ratio or anything because that would be difficult to see on the chart unless I guess they were black charts, which I don t like, but pink is always 618 for me. The regular ratios; 382, 50% and 786 I have in blue, and extensions because that s where you typically will take; they re your targets and you ll take profits, I have those in green; green for money, okay, so here we had just, we had four price relationships. You had a 618 retracement of one swing, okay, that would have been this high to low; 618, and then you had a 786 of another swing, so this high to this low; 786, then you had a extension, and I believe that was this high to this low extended upwards, and then there s a minor extension; I don t think you can really see the swing that well, but it looks like this high to this low, okay, that gave you a zone of 9248 to 56. That s pretty tight if you re looking at trading the mini-dow, so what you want to do if it hits the zone and holds you want it to at least stall, go down to a lower timeframe chart and look for a sell trigger, okay, that s basically what you want to do. If you have one of these setups, you want to see a trigger, and if you get the trigger you enter the trade and then you manage it, and that s pretty much the formula to make money with this work, okay, so you need setup plus trigger equals trade, and then management. If you have a setup and there s no trigger, don t take the trade. As far as the analysis steps, again, run all possible retracements using these ratios. Run all possible extensions using the next set of ratios, and run all projections, especially the symmetry, using these ratios, and then look for the clustering effect, and if you don t see it then you don t have one of those setups. CAROLYN: Yeah, pink is 618, blue I have 382, 50%, and 786 are in blue, and the extensions and are in green, so if you see any of my charts, because I do post charts on Twitter and stuff, and if you see red, that s a good thing. If you have symmetry overlapping any of these other price relationships, it s usually a pretty good trade setup. It might not trigger, but it s good to watch. CAROLYN: Triggers? Yes, I might save that until the end because with that document that you can download that has all the information in it, but I will go over at least the basics of that. CAROLYN: If you go to my website, I ve got Fibonacciqueen.com, right underneath my book, it says Guidelines to using the work to make money, and it s like eleven pages and it talks about, first of all, the three setups that I do that I look for every single day, and then the triggers; what triggers you can use, what you re going to use typically for a swing trade against, let s say, a daily support or resistance decision will be a fifteen-minute chart, which is the aggressive entry or a 30 minute chart, which is regular entry. As far as the day trades, you can use daily zone or a 30 minute zone or whatever; you can use anything from, like a three- to five-minute chart. Some people will even go micro and use one-, but you re going to have to look at each issue individually because some of them are too choppy, like a one-minute chart on Apple can have you, so, but a three s okay, I mean that s what we got it down to on the S&P, and I mean I can show you those trades because they were just in the last two days. Now, here s the quote Art Part. Now, you can know the mechanics of it that you re running lows to highs and highs to lows and all that good stuff, but everyone always says well, how do you know which swings to run the projections from, okay, and there s a couple of different ways. Now, one way is what we re doing today, which is I m going to go through charts with you so you ll get a feel for it and kind of learn through osmosis, which swings make sense, but you re pretty much going to look for isolated swing highs and lows that might be relevant to the current activity, okay, so first question you re going to ask is what are the obvious swing highs and lows on the chart, okay, also ask yourself if you ran the work from the swings would the results be relevant to what the market is currently doing and can you get the same results as me. Now, you can test yourself easily by just downloading the Twitter charts that I have, and then see if you get the same results, because if you re getting the same results then you re more than likely choosing the right swings, and I m not saying that I m 100% perfect. There are times where I might miss an extension or a projection or whatever, but generally if you re getting the same area you re probably doing it correctly,

8 especially if it holds. Okay, so this is just to give you an example of pointing out highs and lows that I would use on this chart. Do you think it s relatively obvious which are the key swing highs and lows on this? Here s a nice isolated low, high, low, high, low, high, low, high, low. I would use all of these swings to run my analysis, okay, so there s a fair amount of work involved; there s probably less involved if you want to set up day trades. You can probably just run a couple of symmetry projections with a retracement like I m going to show you in Apple, and you should be able to set up a trade, and multiple trades during the day doing that. Okay, so this is just kind of illustrating the swings that I would be looking at to do the analysis, all right. How many people are interested in the timing work? Okay, then I ll spend some time on that too. We have until 12:30, yeah, I can stick around a little later if they don t kick us out of the room. Okay, as far as the price work, is this on the paper? Did this print up okay? Okay, so whatever retracement tool that you use, whether it s Think or Swim or Dynamic Trader, or esignal, these are the ratios you want to have checked, and my colors are right here that I use. Different people will use different colors, but if you want to understand what I m doing, you ll say oh, well I don t know where she got that level, but it s red, so that means it s a projection of a prior swing, okay, so this is where you re using the two point tool to run both the retracements and the extensions because you re using the same math for that, so here s all the retracements, and then beyond 100%, here s the extensions, okay, and then as far as the three-pointed tool, now on Dynamic Trader it s called alternate price projection or APP, okay. On Think or Swim, it s going to be called the extension tool, I think. I know that it is on Trade Station, and I know that it is on esignal. I think they might even call it the extension tool on Ninja Trader, Genesis, and all that, and again, it doesn t matter what you call it, it matters that you use three points. CAROLYN: Yeah, I m going to go through examples; we re just about done with this part. We re going to go to the live charts and I ll show you exactly what we re going to do, and then I will make a copy of it for you, and have everybody download a zip file of it, so that you can go home and have trade setups that you might execute in the next couple of days, and also charts to work with to see if you can replicate the same results, and the way that you re going to do that though is because I m going to label the highs and lows that I use, so you ll know that that you have to run a retracement from the high or low that I have marked, and that ll help you to get to the next point, so for the projections, again, I have 100%; that s where I m measuring a low to a high and projecting from another low using 100% and occasionally 1.618, okay, and there s your cheat sheet, okay, so done with that part. What we want to do is now start going through some examples. Anybody want to call out a favorite? CAROLYN: SPDR? Okay, let s see which one I have here first. CAROLYN: I try and, for a daily chart, and I want to do a lot of these examples on the daily chart, so that, well, I do them all, but these examples so that you can try and replicate them because the daily charts are not going to change that much, so if you try to replicate this in a week from now, you ll still see the results, so that s why we ll focus mostly on daily charts, and then I will show you some of the intra-day work also, okay, so this is what I currently have in the SPDR, okay, it s on top of very important support decision. It blew through quite a few other decisions on the way down, but if you re in this decision now, what do you do? It s stalling, you re going to look for a buy trigger against it, okay. If you want me to explain that before I go further, what I should do is just show you the other PowerPoint, and then what we re going to do is we re going to recalculate it, okay, so here s an example; this was a trade that occurred yesterday, okay. This was a setup; again, I like to set it up in the direction of the timeframe that you re trading. If you re looking at a 30 minute chart then this trend was down. You re looking at a pattern of lower lows and lower highs, right, so what I did in this case was I took all these prior rally swings and projected them from the low at that time, and there were different price relationships; there were a couple of groupings, but one of the ones was this to 1342 area. There was a 100% projection of one of these prior rally swings that overlapped a 50% retracement of one swing, a 786 retracement of another, and a extension if you look at this high to this low and extended it upwards, that was the area, so basically what we do is I have a trading room rule; I ll run some of the numbers, intra-day stuff during the day while I m working on some other

9 charts in the background, this was one of the setups, so we knew that if we ended up getting a sell trigger, that the downside potential was all the way to this 1315 area from it, but I ll show you what we used as far as a trigger. Now, a trigger is basically price action that just suggests that it s worth placing a bet against that zone. Yep? CAROLYN: No, you ll be able to run the price projections using the extension tool, but you have to run each price relationship, so you ll have to run the retracement a low to a high, you might have to run an extension, a low to a high, and you might have to run a projection; a high to a low projected from another high, and then that will cluster on your chart, so it s not an automatic thing. That program costs like $20,000; I forgot the name of the guy that does that. CAROLYN: Yeah, yeah. I usually only need to see two things to enter a trade, okay, and I m going to show you those, but I love when you get the confirmation of the squeeze trigger, for example, okay, so here s where the squeeze fired off short yesterday after getting up into the resistance decision, which is right here, okay, so it got into that zone, so you want to see price action that says it might be worth taking a short against it, so you see on the left-hand side it s a pattern of higher highs and higher lows. What s a shift? Well, if it takes out a prior swing low, so I want it to take out a prior swing low, and for confirmation, which I added. I used to just use taking out a prior swing high or low, okay, and I found that I needed an extra filter because there were a few too many stop-outs, so. CAROLYN: I don t do it that way, but for example the chart setup was on a 30 minute chart. This is a three minute chart, so you re taking it way down to a lower timeframe and yeah, would you rather ideally sell it right exactly at the zone, sure, but there are so many times where the market will just stall and then just blow right through it, and I don t want to have that many extra stop-outs. I would rather get the money in the middle, so like, we had an eighteen point move, if you got ten points in the middle that would be a good trade. CAROLYN: Well, combined with the moving average crossover, which is always the eight EMA below the 34 for a sell, or the eight EMA above the 34 for a buy. CAROLYN: Eight and 34. There s also a 200 on there. There s actually one of the guys in my chat room that told me how he used it, and he s doing extremely well with the work, so I listen to him, and he is actually the most disciplined guy in the whole room that I know of because he would take the trade, and for example I would get in an IBM trade and it would rally $3 and I d end up getting out because I m like, oh, well it s probably going to pull back, and I ll get in on the next pull back, well he stays with it and he ll ride it for the $15, but he s very disciplined; he s got an awesome skill that way, so what he says is he likes to use the 200 EMA as a filter also, but that s for him. But those are the two things I need to see; I need to see the moving average crossover and I need to see it for short take out a prior swing low, for a buy take out a prior swing high, but this was yesterday s trade. This was one that we did live in the room, and basically said this is it. This is the setup, okay, it s triggered. You can buy some SPDR puts, short some S&Ps, do whatever you want, and that ended up following through with at least by the end of the day eighteen points down off of the high, so if there s a meaty swing because we re setting up the setups on the higher timeframe, you don t have to get in at the exact resistance; if you do that and place a stop just above there, you can possibly do that in a really, really quiet market, it s just that I had, when I first started doing this work and I did the analysis, and I would see that it worked often enough, I didn t talk about triggers and people were just getting in there and getting in front of the zones, and just getting stopped out too many times, so that s when I went in to basically refine it and put the instructions on the site, so people would know how to do it. If you have a different trigger you can do that also. Yeah, question?

10 CAROLYN: Yes. Yeah, so the eight over the 34. All right, and see, because if you wanted to you could just take a squeeze trigger. If one of my setups happens and you want to use the squeeze trigger, wait for the squeeze to fire off, take the trade, and the rule is initial stop goes above the high made prior to the reversal trigger. In certain cases you might leave a little bit more room for the stop above or below the zone, but typically not, it just depends on how close the rest of the zone is, but that s what I m looking for as far as triggers, but I think more than anything what we want to do is go over some of these examples. I mean these are current ones that, okay, these are, one of the things that I do; I post charts on box.net for my subscribers, like during the day. I m in the chat room when I m in town; I m pretty much in there all day. I m not slotted to be there all day, but if I m around I ll share my charts, but I typically go over charts for anywhere from a half an hour to an hour a day and then some of the setups that are really close I just post them. I put them on the video, but for example, today; this morning in between my early presentation and this, I basically posted a bunch of charts on box.net, but this is where we re at in Apple, so that is a decision because Apple had a huge drop this morning. That was CMG, you had a $21 rally off of a support decision that we set up last week, but it failed to clear the resistance, so that basically told you it was time to get out. I ve got two clusters in CRM, okay. This, I can put this up in the zip files also, but what I want to do is not just give you trade setups, I want to go through them and how you do them, okay, so that you want to come to a point where you don t need me to run the work for you because I m not crazy about the way that the guy that does the marketing sells it, and he goes it s the bus syndrome; see if he gets hit by a bus, what are you going to do? Okay, so let s get back to the SPDR, okay. So right now, we re on top of support in the SPDR, but let s start with a blank canvas, okay, and then we re going to start with a daily chart. I transferred my work over from my desktop and apparently; now look at the chart and just kind of think what highs or lows do you think might make sense as far as running analysis, I mean I m going to click them for you, but that s the first thing that you want to think about because I m not going to be there at your desk showing you these, but you want to look at all possible swings that would be relevant to what the market s currently doing, okay, and you remember the steps that you re going to take is that you re going to run all possible retracements, projections, and extensions, so I m marking off the highs and lows, so that you can at least download Think or Swim, pull up a chart of a SPDR, and then be able to replicate this, okay, so these dates will be there. I see some more of them. CAROLYN: I think that s the 50, let me double check it. That s 50, yeah, because the other thing, how many people are familiar with Toni Turner s work? Okay, I watched her presentation on the Money Show, and I really enjoyed it, so normally I will look at those averages on the daily chart; I ll look at the eight and thirteen EMA and then the 50 and 200 SMAs, okay, so let s look at the steps. You re supposed to run all possible retracements, extensions, and projections, so what I typically like to do first is run projections; I like comparing swings in the same direction because if you look at the larger pattern, would you say this is bullish or bearish; the larger pattern? Okay, I wasn t sure if I heard you guys right, but I would still have the bigger picture, especially if you look at a weekly chart as a bullish pattern of higher highs and higher lows, okay, let s go back to this one. So, let s measure the projections, so remember all of these ones that I put a date on you re supposed to use, so I m going to run a projection of this high low; this is the larger high to low swing. Do you want me to label these like this? So you know that s what you re supposed to run; that s one of them. Another one is going to be this one, and then there s also swings within swings, so that ll be like this high to this low, this high to this low, and this high to this low. CAROLYN: No, I m just identifying the swings for you. It might turn into a cluster, but this is what has the cluster, so I ran 100% of this high to low; everybody got that? And that came at I m going to run 100% projection, you know the tool that uses three points, from this next high to low swing, projected from the most recent high; April 12, 2012, then, now I know that we already went through this one, so that s why I didn t have that one marked because we already went through that, but now I m also going to take the swings within the swings back here, so I m going to measure a high to a low, project that from the high, we went through that, so get rid of it, I want to see if the other ones worked from high to low, see if this has any value; right on top of it, and then one more high to low, okay, so it s the swings within the swings.

11 You might want to write that down somewhere. With symmetry projections, you will also run swings within the swings. Okay, so now you see where that one also came in. We ve got three different price relationships between pretty much 129 and 131.5, okay, so we re on top of a relatively important decision, but that s only using projections, so now let s run the retracements. I m going to run; now if you re running low to high retracements, you can do the major low to the major high, and then you can also do any higher lows to the major high, okay. You can t do something in the middle, like you can t run this retracement to this high because it s no longer valid because we took that out. You have to go to the ultimate high when running support, okay, and then as far as resistance, you can go to the ultimate low and you could use lower highs, okay. That s, I think when you start to do the work it ll make some sense, but you just might want to write that down. As far as retracements, okay, let s see, I m going to run all of these swings. I m going to run that higher low, and then even this higher low, and there are also some swings that I m going to run here. They re not quite as obvious, so that higher low to the ultimate high, and then I believe this low to this high, so there s quite a few swings that you have to run, but you can do them relatively quickly, so now I m going to take the retracement tool, which has all of these ratios, and I m just going to use two swings, so I m going to take the major low to the high, okay, now this program automatically erases some that it goes through unless you have it set to show all projections, so it kind of makes your life a little bit easier because it got rid of the 236 retracement because we went through it, so now I m going to do the next higher low, low to high, okay and we went through 382, so I m going to get rid of it. I m going to do the next low to the ultimate high, and then there s a couple other swings I m going to throw in here. Okay, now I get rid of the levels that are not really close to the market, just so my chart is not insane, and I get rid of the levels that the market has gone through already because they no longer have any value. When you do this work it s not old support becomes new resistance or vice versa, instead of that, what happens is that you recalculate the levels on the other side. That s the better way to do it, so you re seeing where we re starting to get a cluster of possible support, right. I m not quite done yet because I have; I also want to run, this is where I ll run the projection, okay, so I m going to take and I ll put this in a different color, and again, if this is, like you think it s going to be overwhelming, just run the projections, okay, so I m going to measure that and project from here; see where it comes out, so this time I m going to add the projection and I m going to measure high to low projected from the high. 100% was violated. Now, because you cluster like this, in this program you can just mouse over and it will tell you what the price is, so $ Okay. Here s your first price cluster; $ to $131.52, so I m going to write this in here. I mean I don t know if it ll still be holding it by the end of the trading day, but if it is, you can go down to a lower timeframe chart and you can either use that support for a day trade entry using a trigger, or if you want to wait for the swing entry it probably won t trigger immediately; it ll probably take a couple of days before you see the shift in pattern on a 30 minute chart, so that s the first area. I m going to label the other areas too, and basically what I want you to do when I make these charts available; $ to $ Now this is a relatively wide zone, obviously, but you can break it down into smaller zones. There s like a zone within the zone, so like $128 to $ is a big stand out, but you just want to look at the general area there because you re not going to enter at the top of the zone and place a stop underneath there; you re going to wait for a trigger, but what I basically want you to see is if you come up with the same decisions. I would say these are the two major decisions in the next couple of trading sessions. If we don t hold it, this market s in trouble I think. CAROLYN: It s between those levels; between $ to $ You have three price relationships. I know where I can put these; I can have you guys download these. I ll do both; I ll make a zip file, but I think I can also post them on TheStreet.com file, but this is labeling what you would need to do. I m going to take a snapshot, so here s your snapshot of SPDR daily, and then what you need to do is basically use these swings and see if you can come up with the same price relationships. Know that if I marked one of the swings you should be using that in the calculation. CAROLYN: For a buy, yeah.