Pitchfork primer

From PitchforkPrimerTo TradersZoneSubject Course InformationDate Sonntag 30 Januar 2000 014724

Hello TradersZone Glad to hear you are going to join us Heres some more information for you The course was designed to fill in the details of Dr Andrews ActionReaction trading methods ThePitchfork is his best known method It became his namesake and a lot of traders know what it isWhat isnt generally known however are the rules and techniques he taught for its use Thoserules are covered in detail in the course Dr Andrews also taught several other ActionReaction trading methods He used them inconjunction with the Pitchfork When used together they are a powerful combination Thosemethods are also taught in the course The course consists of six lessons each has several parts or teaching points Charts instructionand comments are exchanged by e-mail Each lesson costs $3500 payable by check or money order To enroll simply let me know that youwant to begin the course The first segment of lesson one will be e-mailed to you shortly after youlet 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 gt

From PitchforkPrimerTo TradersZoneSubject Course enrollmentDate Mittwoch 2 Februar 2000 010230

At 13000 123300 PM you wrotegtI would like to begin the course I sent a money order with the paymentgtfor the first lesson todaygt gtThanksgtTradersZone Hello TradersZone Glad to hear you are joining us Thank You I hope you find the course interesting and worthwhile Heres the first part of lesson 1 Regards Gordon __________________________________________________________ WELCOME TO THE PITCHFORK PRIMER STUDY COURSE THIS IS THE FIRST PARTOF LESSON ONE__________________________________________________________ Each lesson of your Pitchfork Primer Study Course is made up ofseveral parts or teaching points Each point will be introduced inseparate e-mail correspondence and will be supported by chartexamples You are encouraged to send questions and comments at anytime Also youll be asked to e-mail samples of your chart workfrom time to time Thats done to see whether clarification of ateaching point is needed Lets begin Lesson one has two main teaching points 1 Identifying Andrews pivots 2 Drawing the pitchfork Well start with a definition of the terms and abbreviations usedin this lesson ANDREWS PITCHFORK The nickname given to the unique configurationof Dr Alan H Andrews Median Line and Parallel Line formationSo named because it resembles a farmers pitchfork

PIVOT A turning pointThe extreme price on a bar or line chartwhere 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 Andrewspitchfork__________________________________________________________ THE PIVOT COUNTPivot counting the Andrews way is not cluttered up with a lot ofsubjective rules Once you become familiar with the count youllfind its possible to eyeball the charts and quickly findpotential buy or sell candidates By using Dr Andrews counts inyour preliminary selection checklist a considerable amount of timeand energy can be saved The pivot count quickly shows you the bestplace to draw a pitchfork as well as other Andrews linesTo begin look at any stock or commodity chart in order to spot themajor legs or waves Theyre usually pretty obvious as on theattached Network Associates chart Youll note in the definition ofcourse terms that the extreme prices of these legs or waves arecalled pivots They are numbered P1 P2 P3 and so on Dr Andrews labeled the pivot from whichhe began his count as P0 Looking at the attached Network Associates chart youll notice that prices started a move to thedownside beginning in mid to late July The move which bottomed out in early October wascomposed of 5 distinct price waves 3 in the direction of the move and 2 correction waves Thepivot count for that move was 5 as shown on the chart A point to remember is Dr Andrewsfound that most long-term and intermediate-term price moves will end with a 5 pivot count Thoseterms are relative but for our purposes the move down on the Network Associates chart will beconsidered an intermediate-term move Please study the attached chart of LSI Logic Locate and label the intermediate-term pivots as yousee them Keep Dr Andrews 5P observation in mind When ready please return your chart to meWell continue from that point__________________________________________________________

From TradersZoneTo gordonpitchforkprimercomSubject Re Course enrollmentDate Mittwoch 2 Februar 2000 015929

Hello Gordon I was not sure where to put P1 so I chose the bar with the highest close gtPlease study the attached chart of LSI LogicgtLocate and label the intermediate-term pivots as you see themgtWhen ready please return your chart to me Well continue from that point

From PitchforkPrimerTo TradersZoneSubject Good callDate Mittwoch 2 Februar 2000 064819

At 2200 15900 AM you wrotegtI was not sure where to put P1 so I chose the bar with the highest close Hello TradersZone Your pivot count was by the booknice job Also your use of the highest close for pivot 1 wasexcellent logic It doesnt appear as if the count will be giving you any trouble Well be workingwith pivots throughout the course since much of Dr Andrews work was based on the oftenoverlooked importance of the interaction of various pivots on a price chart Its good to see thatyou have an early grasp of the procedure Heres the next part of the lesson Regards Gordon _________________________________________________________ Lesson One continued_________________________________________________________ Well continue to work with the NETA chart focusing on prices beginning the latter part of July98Well 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 lowhigh low configuration In this example we will use the P0-34 pivots as shown on the attachedchart With a ruler we locate the mid-point between the low at P3 and the high at P4 We markthat point with a small dot Then from the high at P0 we draw a line that extends through andbeyond the P34 mid-point that we marked This line is called the median line (ML) A second lineis drawn beginning at P3 and is drawn parallel to the median line A third line is drawn beginning atP4 and is also drawn parallel to the median line These lines are called parallel lines (H) Aconnecting line is then drawn from pivot 3 to pivot 4 And thats the pitchfork Its shown on theNETA chart At this point please send me a chart of your choice showing several intermediate-term pivots thatyouve marked Include at least two pitchforks Well go on from there

From TradersZoneTo gordonpitchforkprimercomSubject Re Good callDate Mittwoch 2 Februar 2000 202415

Hello Gordon I have attached a chart of AET I hope its a good example RegardsTradersZone gtAt this point please send me a chart of your choice showing severalgtintermediate-term pivots that youve marked Include at least twogtpitchforks Well go on from there

From PitchforkPrimerTo TradersZoneSubject Pivots and pitchforksDate Donnerstag 3 Februar 2000 071228

At 2200 82400 PM you wrotegtI have attached a chart of AET I hope its a good examplegt gtRegardsgtTradersZone Hello TradersZone The chartwork you sent was excellentgood grasp of the count and your pitchfork procedure wascorrect Later on in the course well go over Dr Andrews techniques which will help you decidewhich pivots to use for the pitchfork that offers the best probability of staying in tune with themarkets Heres the next segment of lesson 1 Regards Gordon ------------------------------------------------------------------------------------------------------Well 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 pivotsbefore reversing Some moves end with 3 pivots and occasionally youll find 7 or 9 But most hesaid will end with 5 pivots before reversing the trend under study Whenever he observed that aP4 was formed on a chart he used what he termed the 0-34 ML method to project the likely pricelevel where the P5 would form Large price reversals Dr Andrews observed often occur after a P5has formed This method is an excellent early warning signal for anticipating price reversals at a P5 The pitchfork is drawn using the P0-34 ML method as illustrated on the attached chart of NETANotice 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 highand then draw one pitchfork using the 0-34 pivots and one using the 3-45 pivots Please returnyour chart along with any questions or comments

From TradersZoneTo gordonpitchforkprimercomSubject Re Pivots and pitchforksDate Donnerstag 3 Februar 2000 154548

I have attached the CNC chartWhen the price moves below the P0-34 ML before making a P5 low is the lower parallel line thenext likely level where the P5 should occurOn the CNC chart the price closes above the P0-34 ML the day after breaking the ML Is that aconfirmation that the P5 low has been made

From PitchforkPrimerTo TradersZoneSubject Good QuestionsDate Freitag 4 Februar 2000 063320

At 2300 34500 PM you wrotegtI have attached the CNC chart gtWhen the price moves below the P0-34 ML before making a P5 low is thegtlower parallel line the next likely level where the P5 should occur (Thats right TradersZone The function of parallel lines is to provide the next level of support orresistance for those times when prices do not stop or reverse at the ML Dr Andrews by the waylooked for prices to reverse at any ML and form a new pivot in the process)gtOn the CNC chart the price closes above the P0-34 ML the day aftergtbreaking 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 confirmationsignal) Dr Andrews used several techniques to help him deal with probable reversalsSome are special situation type methods and others are used in conjunction with the pivot countpitchfork lines or ActionReaction lines Well be covering those rules in the last part of the course Im sending another chart for you to study and work on Please identify the main pivots in thedown move that started in April and also draw at least 2 pitchforksWhen ready please return to me Regards Gordon

From TradersZoneTo gordonpitchforkprimercomSubject Re Good QuestionsDate Freitag 4 Februar 2000 191043

From PitchforkPrimerTo TradersZoneSubject Median Line TechniqueDate Sonntag 6 Februar 2000 010735

Hello TradersZone Nice work on the charts you returned Everything was by the book It appears that you have theprocedures well in hand Heres the final portion of lesson 1 The concept is basic but it does the important job of helping atrader 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 medianlines After identifying the significant pivots he drew his first median line beginning with P0-12and worked forward on the chart using each subsequent set of 3 pivots Each ML served to vectorpricesacting as a magnet if you will that drew prices towards it He said that prices will head forthe new ML over 80 of the time Parallel lines are not drawn when using this procedure Its prime function is to determine thedirection and price level of the new ML Recall that Dr Andrews anticipated a price reversal at eachnew ML The attached chart of LPX illustrates this technique Try this on some of your own charts and thenplease send me an example

From TradersZoneTo gordonpitchforkprimercomSubject Re Median Line TechniqueDate Montag 7 Februar 2000 192718

I found a chart with 9 pivots I hope it doesnt matterIs it necessary that the move is made of swings with higher highs and higher lows in an uptrend (lower highs and lower lows in adowntrend)For example in the attached chart the point P6 is lower than P4 and P7 is lower than P5Another question For how long are median lines validI noticed that the P2-34 ML from my chart served as support and resistance two years later in 1998 (see attached chartLOW2GIF) but on the other hand I dont 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 myfirst payment yet RegardsTradersZone

LOW2GIF

From PitchforkPrimerTo TradersZoneDate Mittwoch 9 Februar 2000 054710

At 2700 72700 PM you wrotegtI found a chart with 9 pivots I hope it doesnt mattergtIs it necessary that the move is made of swings with higher highs andgthigher lows in an uptrend (lower highs and lower lows in a downtrend)gtFor example in the attached chart the point P6 is lower than P4 and P7gtis lower than P5 ( When using this ML technique TradersZone the main object is to note the price level of the newML for that is the next probable reversal area The pivots need not be in Elliott formation havingswings as you noted above Your ML procedure by the way was correct I noticed how oftenprices headed for each new ML and then reversedLater in the course well see how Dr Andrews handled those times when prices reversed beforereaching the ML area)gtAnother question For how long are median lines validgtI noticed that the P2-34 ML from my chart served as support andgtresistance two years later in 1998 (see attached chart LOW2GIF) butgton the other hand I dont want to clutter my charts with too many lines from the past (One of the interesting things about Dr Andrews lines is that no matter how far out his lines areprojected they will continue to cause prices to stall-out or reverse when reached Also wheneverseveral of his lines intersect there is a very high probability of a price reversal whether pricesconverge at the intersection or are some distancegtfrom it The probability is higher though when prices are at thegtintersecting lines A linethat has in the past provided frequent support or resistance is probably a pretty good line tokeep on your chart Youre right though charts seem to get cluttered up veryquickly)gt gtI would like to continue the course to the end I will send the moneygtfor the remaining 5 lessons tomorrow Did you receive my first payment yet (Glad to hear youre going to continue to the end Thank you for the prepayment Your first checkhasnt arrived yet will let you know when it does) Meanwhile heres the first segment of the next lesson Regards Gordon

In this lesson youll be introduced to Dr Andrews sideways count The sideways count was hisold reliable a tool that worked so well so often that it was one of the very first studies heperformed on his charts The sideways count gave him a reliable gauge that told him ahead of timehow far a stock or commodity was likely to move Sounds too good to be true perhaps but as youwork with the sideways count youll discover for yourself how often the projected price targetsare reachedoften within tics Markets frequently spend a lot of time in congestion Heres Dr Andrews way to use thatcongestion to our advantage Looking at the Brightpoint attachment please note the channel lines starting in January Youll seethat most of the pivots from Jan-May were within this channel Now look at where Ive placedcircles At each point where prices touched a channel line and then reversed direction and went allthe way back to touch the opposite channel line a circle was drawn Put another way if pricestouch one channel line but then dont go all the way back to touch the opposite channel line acircle is not drawn At first glance this technique can often be unclear so well pause here for some chart work Pleasee-mail me a chart that shows where youve drawn channel lines to identify sideways price actionand also where youve placed the channel line circles

From TradersZoneTo gordonpitchforkprimercomSubject ReDate Mittwoch 9 Februar 2000 184837

gtAt each point where prices touched a channel line and then reversedgtdirection and went all the way back to touch the opposite channel linegta circle was drawn Put another way if prices touch one channel linegtbut then dont go all the way back to touch the opposite channel linegta circle is not drawn Shouldnt the last circle on your Brightpoint chart be left outThe price didnt return to the opposite channel line after that day This is my chart

From PitchforkPrimerTo TradersZoneSubject Thanks for the questionDate Mittwoch 9 Februar 2000 231437

At 2900 64800 PM you wrotegtShouldnt the last circle on your Brightpoint chart be left outgtThe price didnt 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 Ihave changed that paragraph to read Looking at the Brightpoint attachment please note the channel lines starting in January Youll seethat most of the pivots from Jan- May were within this channel Now look at where the circles wereplaced on the channel lines They are in alternate sequenceNote that each circle was drawn only after prices had first been at the opposite channel lineTheBrightpoint chart illustrates this procedure Thanks for pointing this out TradersZone If the wording is still unclear to you Id appreciate yourinput Meanwhile heres the next segment of this lessonRegards Gordon Well continue to use the Brightpoint chart for this portion of the sideways count study To reviewthe pattern were looking for should be a recent rectangular shaped sideways trading range thatcontains most if not all of the congestion price action Take a look at the attached chart and notehow well defined the price channel for Brightpoint is Youll probably notice that it is deeper thanthe channel you studied on the chart in the preceding segment This comparison is made toillustrate that while the first channel example covers a longer period of time the second includesall 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 drawnonly after prices have first been at the opposite channel line Recall that circles must be inalternate sequence eg upper linelower lineupper linelower line etc one circle at a time Note that the price range within the channel is $4 34 (High 21 12 Low 16 34) There were twocircles drawn on the lower line of our sideways channel before prices broke down Using thatinformation our next step will be to use some simple arithmetic in order to come up with twodownside price targets Well cover that procedure in the next segment Please let me know whenyou are ready to continue

From PitchforkPrimerTo TradersZoneSubject Sideways countDate Mittwoch 9 Februar 2000 232315Attachments image001png

Hi TradersZone Im returning your chartplease note comments GordonRegards Gordon

From TradersZoneTo gordonpitchforkprimercomSubject Re Thanks for the questionDate Donnerstag 10 Februar 2000 233059

Hello Gordonthank you Im ready for the next lesson

RegardsTradersZone

From PitchforkPrimerTo TradersZoneSubject Next partDate Donnerstag 10 Februar 2000 235613

At 21000 113000 PM you wrotegtHello Gordongtthank you Im ready for the next lessongt gt gtRegardsgtTradersZonegt gt gt TradersZoneI sent this yesterday but will re-send It was part of my reply to your questionregarding the circle I dont have a record of your return chartwork for this part If its a duplicatesend sorry Regards Gordon Well continue to use the Brightpoint chart for this portion of the sideways count study To reviewthe pattern were looking for should be a recent rectangular shaped sideways trading range thatcontains most if not all of the congestion price action Take a look at the attached chart and notehow well defined the price channel for Brightpoint is Youll probably notice that it is deeper thanthe channel you studied on the chart in the preceding segment This comparison is made toillustrate that while the first channel example covers a longer period of time the second includesall 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 drawnonly after prices have first been at the opposite channel line Recall that circles must be inalternate sequence eg upper linelower lineupper linelower line etc one circle at a time Note that the price range within the channel is $4 34 (High 21 12 Low 16 34) There were twocircles drawn on the lower line of our sideways channel before prices broke down Using thatinformation our next step will be to use some simple arithmetic in order to come up with twodownside price targets Well cover that procedure in the next segment Please let me know whenyou are ready to continue

From TradersZoneTo gordonpitchforkprimercomSubject Re Next partDate Freitag 11 Februar 2000 234113

I think the placement of the circles is clear to me nowI have attached another chart with a sideways count RegardsTradersZone gtTradersZoneI sent this yesterday but will re-send It was part ofgtmy reply to your question regarding the circle I dont have a recordgtof your return chartwork for this part If its a duplicate send sorry

From PitchforkPrimerTo TradersZoneSubject SidewaysDate Montag 14 Februar 2000 054227

At 21100 114100 PM you wrotegtI think the placement of the circles is clear to me nowgtI have attached another chart with a sideways countgt gtRegardsgtTradersZonegt Hello TradersZone Your chart was on target Looks like youre ready for the next part Here it is Regards Gordon During this segment youll learn how to arrive at two price targets using Dr Andrews sidewayscount Simple arithmetic is all thats required once the sideways channel and circles are in place Well continue to use the Brightpoint chart which is attached Note that Brightpoint fell throughthe bottom channel line at the point where we placed our second circle so figuring out possibledownside targets would have been in order at that time Heres how thats done 1 Determine the price range of the channel In this case the range is $4 34 (21 12 - 16 34) 2 Count the number of circles on the lower channel line The lower line is used in this casebecause thats the line that didnt hold Prices went through it returned to check it out and thencontinued lower 3 Multiply the price range of the channel times the number of circles drawn on the lower channelline (4 34 x 2 = 9 12) 4 Subtract that figure from the upper channel line priceThe result becomes downside price target 1 (21 12 - 9 12 = 12) 5 Next subtract that same figure from the price at the lower channel line Thats price target 2(16 34 - 9 12 = 7 14)

In the case of an upside channel breakout the procedure is reversed Please draw a few channelsand figure out some downside targets on your own charts When youre ready send me two orthree examples of your work As always send your questions as they arise

From TradersZoneTo gordonpitchforkprimercomSubject Re SidewaysDate Montag 14 Februar 2000 134314

Here are my examples I couldnt 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 adownward slope RegardsTradersZone

From PitchforkPrimerTo TradersZoneSubject Sideways channelsDate Freitag 18 Februar 2000 005531

At 21400 14300 PM you wrotegtHere are my examples I couldnt find enough charts with downsidegttargets so I included some charts with upside targetsgt gtDo the channel lines always have to be horizontal When I look at mygtcharts I find more channels with an upward slope or a downward slopegt gtRegardsgtTradersZone Hello TradersZone The sideways method can be used with either up or down Sorry didnt mean to imply that only downsidetargets should be found Ill reword that portion of the lesson Thanks for mentioning it Dr Andrews sideways method works only on horizontal channels Others have mentioned the slopingchannels also and have wondered if there is some method to use with them I know of none Ive askedother course members for their ideas on how to approach this problem but so far no one has come up with amethod I would think that there should be a solution but have not personally taken the time to research itIf some method could be found that works as often as the Andrews sideways count it would be a significantfind The Andrews sideways count doesnt always hit the targets as you saw on your chart of Bausch amp Lomb Itworks more often than not though and it still amazes me at how often prices reach the targets Heres an observation to keep in mind Quite often after the first target is reached prices will reverse andhead back towards the channel At times youll note that they return inside the channel They will thenreverse again and head back towards the second price target These reversals happen frequently and presenttrading opportunities Im including the final segment of this lesson Regards Gordon So far in the course youve learned about Dr Andrews pivot counting procedure pitchfork and sidewayscount Youve noticed by now how often prices change trend at a P5 Youve seen how the 0-34 ML methodcan help locate the probable P5 area Youve seen how often price targets are met using the sideways countmethod The tendency for prices to reverse at a median line should be recognized as a high probability eventas well In coming lessons youll be shown how Dr Andrews used these and other high probability events totrade the stock and commodity markets The tools and techniques he used will help you put the finishingtouches on your market analysis using Andrews lines

Before continuing on to the next lesson lets briefly review what has so far been covered The attached chartprovides an opportunity to illustrate the methods referred to above Please draw these methods on thechart and return to me

From TradersZoneTo gordonpitchforkprimercomSubject Re Sideways channelsDate Montag 21 Februar 2000 193743

gtBefore continuing on to the next lesson lets briefly review what hasgtso far been covered The attached chart provides an opportunity togtillustrate the methods referred to above Please draw these methods ongtthe chart and return to me Hello Gordonhere is my chart RegardsTradersZone

From PitchforkPrimerTo TradersZoneSubject Next lesson attachedDate Mittwoch 23 Februar 2000 014539

At 22100 73700 PM you wrotegtHello Gordongthere is my chartgt gtRegardsgtTradersZone Hello TradersZone Good job on the pivots sideways count and pitchforkLooks like youre ready to move on to the next part It wont be long and things will begin to fall inplace Regards Gordon Lesson 4 continued In one of his course letters Dr Andrews wrote The Law of Physics stated by Newton that Actionand Reaction are equal and opposite was first applied to prices by your Course Directors friendthe 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 youll learn how to drawand apply the ActionReaction trading method as taught by Dr Andrews in his trading course The AR method requires a centerline or CL from which to start The CL can be any of thefollowing - MPL - ML - MLH - 2P line - 2 Gap line - Peak to low line - Low to peak lineThese are the primary lines that Dr Andrews used He stressed that some pencil work and a goodeyeball was needed in order to find the best fitting CL As with most other chart lines somework 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 CLs in this lesson and the next Determining which of the above listed lines to use as the CL is the first step in the ActionReactionmethod The solution often presents itself With a little practice a quick scan of the chart understudy will be all thats needed to spot the most likely CL Well begin with the attached chart Notethe CL drawn In this example a MPL (multi-pivot line) was used as the CL A MPL is a straightline that connects three or more consecutive pivots without passing through prices Theconnecting line is then extended Ive circled the three pivots that form the MPL on the chartThere are several other places on our chart where a MPL CL can be drawn Please bear in mindthat this is just the first step of the process Identification of likely CLs is all were after here Seeif you can locate two more then draw them in and send the chart back to me Well take up fromthere

From TradersZoneTo gordonpitchforkprimercomSubject Re Next lesson attachedDate Mittwoch 23 Februar 2000 212304

gtLesson 4 continuedgt gtIn one of his course letters Dr Andrews wrote The Law of Physicsgtstated by Newton that Action and Reaction are equal and opposite wasgtfirst applied to prices by your Course Directors friend the lategtRoger Babson who attributed his earnings of several million dollars to this lawgt gtBeginning with this segment of lesson four and continuing in lessongtfive youll learn how to draw and apply the ActionReaction tradinggtmethod as taught by Dr Andrews in his trading coursegt gtThe AR method requires a centerline or CL from which to startgtThe CL can be any of the followinggt - MPLgt - MLgt - MLHgt - 2P linegt - 2 Gap linegt - Peak to low linegt - Low to peak line Hello Gordon2P line 2 Gap line Peak to low line Low to peak line ndash actually I dont know what these lines areAre they discussed in Lesson 3 I believe you havenrsquot sent me this lesson yetAnyway I found two more MPLs on the Novellus Chart and drew them in RegardsTradersZone

From PitchforkPrimerTo TradersZoneSubject Lesson 3Date Mittwoch 23 Februar 2000 235958

At 22300 92300 PM you wrotegtHello Gordongt2P line 2 Gap line Peak to low line Low to peak line - actually I dont knowgtwhat these lines are Are they discussed in Lesson 3 I believe you didntgtsent me this lesson yetgtAnyway I found two more MPLs on the Novellus Chart and drew them ingt gtRegardsgtTradersZone Hello TradersZone My apologiesI sent you an outdated version of the lesson Thanks for letting me know Musthave been my bedtime Heres the correct version Regards Gordon Lesson 3 In one of his course letters Dr Andrews wrote The Law of Physics stated by Newton that Actionand Reaction are equal and opposite was first applied to prices by your Course Directors friendthe late Roger Babson who attributed his earnings of several million dollars to this law In this lesson youll be introduced to the ActionReaction trading method as taught by Dr Andrewsin his trading course The AR method requires a centerline or CL from which to start The CL can be any of thefollowing - 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 goodeyeball was needed in order to find the best fitting CL As with most other chart lines somework better than others The task is to find the best fit as he put it You will be shown examples ofeach of the above CLs Determining which of the above listed lines to use as the CL is the first step in the ActionReactionmethod With practice a quick view of the chart under study will be all thats needed to spot themost likely CL Youll be shown later how to experiment with possible combinations in order tofind the centerline that is most in tune with the market under study Well begin with the attached chart Note the CL drawn In this example a MPL (multi-pivot line)was used as the CL A MPL is a straight line that connects three or more consecutive pivotswithout passing through prices The connecting line is then extended Ive circled the three pivotsthat form the MPL on the chart There are several other places on our chart where a MPL CL canbe drawn Please bear in mind that this is just the first step of the process Identification of likelyCLs is all were after here See if you can locate two more then draw them in and send the chartback to me

From PitchforkPrimerTo TradersZoneSubject Next segmentDate Donnerstag 24 Februar 2000 025105

At 22300 92300 PM you wroteI found two more MPLs on the Novellus Chart and drew them ingt gtRegardsgtTradersZone Hello TradersZone Your mpls were correct This next segment shows the purpose of the centerline and how it isused 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 amulti-pivot line (MPL) and represents the centerline (CL) well be using in this example Recall inthe previous segment that several types of centerlines are possible The choice is determined byexperimenting with the potential combinations on the chart under study Its best to try to locate acenterline somewhere close to the middle of the price chart in order to have sufficient past andforward 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 fordrawing an action line Dr Andrews observed that the low pivot points often seem to work bestbut that either could be used In our example a line starting at the previous significant low wasdrawn parallel to the CL It is labeled A-1 (Action line 1) because it represents the first actionline Dr Andrews called it an action line because it was drawn as a result of a previous pivot (pricereversal) that had taken place Next a parallel line was drawn to the right of the CL and labeled R-1 Notice that it is the same distance from the CL as the corresponding A-1 line It is labeled R-1because it represents the first reaction line a line where prices are likely to stop or reverseNotice how prices reacted at the R-1 line in early 98 That serves as an indication that thecenterline chosen for this study should be a good one to use Not all reaction lines cause such aclear reversal as the R1 on this chart but many do Thats why its important to experiment withvarious centerline possibilities in order to find action lines that produce reaction lines which createthe 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 isin tune with the price action of the issue under study it can be a highly effective tool for use inlocating probable reversal areas When combined with pitchfork lines the AR method can pinpointpotential reversal areas that are generally not recognized as such by others Dr Andrewstechniques for using the pitchfork and AR lines together are covered in later lessons In coming segments well study other lines that Dr Andrews used for his centerlines In themeantime experiment with the multi-pivot centerline on your own charts Then please send mean example of your work along with any questions you may have