Pristine Swing Trader

Opening Bell

Dear Trader

Yesterday saw a continuation of the bounce we had considered late last week. The bounce was stronger in Nasdaq 100 as this average was oversold per the 5-ma of TRIN-Q. By the end of the session the tech-heavy Nasdaq 100 left a green bar near first resistance, while the S&P 500 managed a milder bounce.

Now the question is how much longer will these averages retrace? Although we'd expect the current bounce to last a bit longer, if prices form a lower high near the current areas it would suggest a move to test the previous lows, with bearish patterns setting up (Particularly in S&P 500). We'll take a closer look at this in our Market Strategy section.

Today traders will focus on Housing Starts and PPI at 8:30AM and Industrial Production at 9:15AM, with Options Expiration later in the week.

Have a great trading session!

The Pristine Research Team

Pristine Market Strategy Corner

chart courtesy of Mastertrader.com

The S&P 500 had a slightly higher high and still above the 20ma, but expect some selling in the current level. An hourly close above the 137.50-138 levels will suggest a deeper move but this remains the weaker major. Watch for another green day setting up a sell setup in the daily chart.

chart courtesy of Mastertrader.com

The Nasdaq 100 had another green day on the daily chart (Not shown) and continued its uptrend on the 60-min. If prices can close above the current levels on an hourly basis there will be little resistance to stop a move to the 50.00 - 50.50 level. A lot will ride on the performance of the Semis who area approaching resistance on the daily chart.

Pristine Trading Ideas

Chart Courtesy of Mastertrader.com

IYT: Industry: ETF. Chart Set-up: Sell Setup: IYT broke under support nad has retraced with a sell setup into a -WRB. We'll look to sell short IYT if it trades under 91.57 Place a protective stop above 93.13 Target 1: $89.50 Target 2: $87.50

Chart Courtesy of Mastertrader.com

APP: Industry: Apparel Manufacturers. Chart Set-up: Pristine Sell Setup: APP broke down to a downtrend. This is the first retracement to resistance with declining volume. We'll look to sell short APP if it trades under 6.20 Place a protective stop above 6.52 Target 1: $5.75 Target 2: $5.10

Chart Courtesy of Mastertrader.com

ITG: Industry: Finance-Invest Bnkr/Brkr. Chart Set-up: Pristine Sell Setup: ITG is in a downtrend and the price has retraced after a lower low to test resistance. We'll look to sell short ITG if it trades under 38.35 Place a protective stop above 39.35 Target 1: $37.00 Target 2: $35.50

Chart Courtesy of Mastertrader.com

ACXM: Industry: Data Processing/Mgmt. Chart Set-up: Breakout: ACXM is in a stage 2 uptrend. The price has corrected toward the 20ma and yesterday closed with a bullish bar above resistance. We'll look to buy ACXM if it trades above 15.00 Place a protective stop under 14.51 Target 1: $16.00 Target 2: $16.50

The Pristine View

Drawdowns

Can we avoid prolonged drawdown periods in our accounts? Every aspiring trader deals with this problem. But let's begin by differentiating two types of drawdown periods. There is the common drawdown period associated with the development of a novice trader. When a trader establishes his trading plan and commences his learning curve, he'll have to face these periods of losses. These drawdown periods can rarely be avoided. They can be planned in such a way that they won't represent a danger to the aspiring trader's account. This is achieved through a proper plan that establishes minimal risk exposure for every position taken by the student-trader. Then there are those drawdown periods which occur after the trader has achieved a certain level of consistency, when he is supposed to be able to handle himself effectively. Can these drawdown periods be avoided? It depends. Let me elaborate.

Prolonged drawdown periods in any trading style seem to occur when a trader uses an excessively systematic trading style which can't adapt itself to the ever-changing market environment. Many traders, being hostages of trading indicators and other "tools", seem to think that these tools can be applied to any market condition. Then, when the market changes direction, these traders continue to apply the same strategies (which worked ok in the previous market) to a new market direction, with in turn produces the drawdown as the trader is late in recognizing the ineffectiveness of the tools. We in Pristine train our traders to recognize the changes that occur in the price of any security, teaching them the proper strategies to apply to any market direction. Another cause of extended drawdowns seems to be produced by the inflexibility of some traders. One of the first things we teach in Pristine is the need to have diverse trading styles in the toolbox of every trader. We teach both Income Producing styles and Wealth Building styles. A trader that can recognize the changes in the market, and can choose which trading style is more appropriate to the current conditions is less likely to incur in prolonged drawdown periods.