Pristine.

com Presents

Market Preparation,
Trading Gaps, &
Trading the Open
Dan Gibby
Lead Moderator, Pristine.com Advanced Stocks and Derivatives
Trading Room, and Senior Pristine Certified Trainer
Copyright 2006, Pristine Capital Holdings, Inc.
 Legal Disclaimer
It should not be assumed that the methods, techniques, or indicators presented in this book and seminar will be
profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples in
this book and seminar are for educational purposes only. This is not a solicitation of any order to buy or sell.

“HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS.

UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL
TRADING. ALSO, SINCE THE TRADES IN THIS BOOK and SEMINAR HAVE NOT ACTUALLY BEEN
EXECUTED, THE RESULTS WE STATE MAY HAVE UNDER OR OVER COMPENSATED FOR THE IMPACT,
IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING
PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE
BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS
LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.”

The authors and publisher assume no responsibilities for actions taken by readers. The authors and publisher are not
providing investment advice. The authors and publisher do not make any claims, promises, or guarantees that any
suggestions, systems, trading strategies, or information will result in a profit, loss, or any other desired result. All
readers and seminar attendees assume all risk, including but not limited to the risk of trading losses.

Day Trading can result in large losses and may not be an activity suitable for everyone.

Copyright © 1994-2006 by Pristine Capital Holdings, Inc. All rights reserved. Printed in the United States of America.
Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or
distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of
the publisher.

2
 Table of Contents
Introduction Pre-Market Analysis
Develop trading bias
The Pristine Method®
Pristine Newsletters, Real-Time
Trading style/plan
Trading Rooms, & Pristine ESP™
Objectives News, earnings, research

Post-Market Analysis Trading Gaps

Developing trading bias
Broader markets & sectors
Market internals
News and after-hours activities
Stock scanning
Developing Focus List
Pro and novice gaps
Finding, entering and managing
Trading the Open
Manage opens; enter new ones
Update bias and monitor sectors
Pristine ESP™ Scans
Activities at reversal times 3
 What This Seminar is Not About

The intricacies of The Pristine Method® (TPM)

Tools, tactics, or setups taught in TPM Parts 1-2

Trading Plan and Managing Your Trading Business

Risk management, proper share size, psychological aspects

Futures, options, commodities, or derivatives

Classical, technical, macro, or fundamental analysis

Level II analysis or direct access trading

Other topics included at Pristine Trading University

4
Introduction to
Pristine
5
 Who is Pristine?

Established in 1994 by Oliver Velez and Greg Capra,

Pristine provides insight, intelligence and education for
the self-directed trader
Much more than stock tips and buy-sell-hold advice, The
Pristine Method®, taught in live seminars and online
services, guide both new and experienced traders to a
more intuitive understanding of the markets
The Pristine educational system helps you understand the
markets and prepare you to trade objectively
Offer worldwide educational seminars, DVDs, trading
software, real-time trading rooms, and trading newsletters 6
 Pristine Capital Holdings

ONSITE SEMINARS

DVD

REAL TIME TRADING ROOMS

ONLINE
SEMINARS

COACHING

The BOOK

Eliminating The Barriers To Entry NEWSLETTERS

7
 Pristine Public Recognition

RANKED # 1 in Trading Education

by: FEATURED by:

8
 Traits of a Successful Trader

Trading is a Business – treat it like one!

Choose a defined Method

Choose a time frame in which to trade from

Choose which stocks and/or Futures you will trade

Time entry with Market Internals

Money Management

Discipline and Patience to follow your Method

9
 Pristine Successful Trader Matrix
TRADING PLAN COMPELLING TECHNICAL PATTERN
TPM 1-2
Wealth/Income
Hardware/Software
Setups NO SETUP,
Instruments
NO TRADE!!
Listed/OTC
Reward-Risk
Share Size and #
Market Internals ENTER AND SET PROTECTIVE STOP
Management Rules
Pivots For Exits
Winning/losing
Trade Review MANAGE IN BETWEEN
Continuing Education
Demon elimination
Target Stop
Discipline/Patience 10
Post Market
Analysis
11
 Closing Bell
Trading Preparation After Market Close
Monitor post-market news and stock movers
Pristine Real-Time Trading Rooms for market analysis and lessons
Review all Watch List items:
Education and possible inclusion in next day’s Watch List
Update longer-term Watch List
Develop trading bias by analyzing:
Broader markets (S&P 500, Dow 30, NASDAQ 100, Russell 2000)
Sectors
Market internals
Exercise and start back fresh for Scanning
12
 Market Bias Based on Broader Markets
Analyze Broader Markets on Multiple Time Frames
Analyze (on multiple time frames based on type of trader):
Broader markets (Dow-30, S&P 500, NASDAQ 100 & Russell 2000)
Sectors: Airlines Banking Biotech
Big Drugs Broker/Dealers Gold
Hardware Healthcare Home builders
Insurance Internet Networking
Oil (Big) Oil Drillers Paper
Semis Software Telecom
Tobacco Transports Utilities
Created Sectors (alternative fuels, grocery stores, storage, metals)
Market Internals and Indicators
13
 Market Bias Based on Broader Markets
Determining if Broader Markets is at a Swing Pivot

Technical Setup
On major Moving Averages
On Support/Resistance
Percent Retracement
Indicators
MACD
CCI
OBV
Market Internals
14
 Moving Averages
Moving
Moving Averages
Averages are
are Superior
Superior Trend
Trend Following
Following Tools
Tools

Strong trend has up

40MA
20MA trending MAs, with
20MA & 40MA rising
in controlled manner
1515
 Retracement Analysis
How Far Did The Issue Retrace?

Retracement analysis is
used to objectively measure
the Strength or Weakness
of a move counter to the 80%
prevailing trend 30%

Fibonacci levels (38.2%,

40% 50%, and 61.8%) attempt to
predict support and
resistance levels
30%
Retracements of 40% or
HL and MA turn up
less are preferred 1616
 Oscillators and Indicators
Are Oscillators and Indicators in Alignment With Price?

Most oscillators are derivatives of price and volume

Provide overbought/oversold signals in sideways trends
Subordinate to MAs in trending stages
In uptrend, only focus on oversold readings (vice versa)
Divergences between oscillators and price give clues
Although hundreds available, simplify it:
MACD
CCI
OBV 17
 Moving Average Convergence Divergence
SPY – Daily Measures the
difference between
the 26- and 12-day
exponential moving
averages (EMA), with
the 9-day EMA being
the signal line

Divergences
MACD Sell between price and
Bearish
Confirms Signal MACD can give clues
Divergence
Alternatives are
Momentum
Indicator, Relative
Strength Index (RSI),
Buy Signal (MACD) and Stochastics 18
 On Balance Volume
SPY - Daily OBV relates
volume to price
SPY - Daily
change
Example: If SPY
was up on Monday
and had 85 mil.
Volume, it gets
added to the
Bearish “plus” column; if
Divergence down Tuesday and
Bearish had 50 mil.
(OBV) OBV
Divergence Volume, it gets
Confirms
added to the
“down” column
(MACD)
Want OBV up
trending and above
(OBV) its 40MA 19
 Commodity Channel Index
SPY - Daily CCI compares
the median price of
a security to the
security’s mean
price over X
periods ago

Valuable timing
indicator

We use a 5-
period CCI, which
can lead price

CCI under -100

and up ticking has
(CCI)
done its job 20
 Develop Bias From Daily Close
DIA – Daily SPY – Daily QQQQ – Daily

1
1 1

2
2
2

At 1, a bearish close on all Indices gave a unanimous bearish breakdown bias

At 2, gap over 60% into bearish bar gave bullish bias over 30-Min. high 21
 Sector Analysis
MRK, BMY, INTC, AMAT,
JNJ, PFE NVLS, TXN

Drug Index Semi Index

IBM, MMM, AMGN, BGEN,

MSFT, WMT GENZ, PDLI

Dow Jones 30 Biotech Index

22
22
 Stock Scanning Sectors of Interest
If there is a compelling pattern in a particular sector, scan Pristine
ESP™ Indices Module and Universe
Housing Index
– Daily

KBH – Daily

DHI – Daily
shows close NVR – Daily 23
 Market Internals Analysis

Why Use Market Internals?

Objectively tell us the breadth of market participation,

including the sentiment of those market participants
Give early warning signals of trend change by analyzing:
Trend
Support and resistance
Climactic extremes
See Pristine Trading University, Market Internals by Greg Capra
24
 TRIN for Swing Traders
Daily NYSE TRIN 5- & 10-MAs Swing traders
look at 5- and
Suggests Selling 10-MA of TRIN
SuggestsPanic
Selling
in Market
Panic in Market 5-day MA
under .80
suggests too
much buying
(bearish bias
equities)
5-day MA
over 1.20
Complacency
suggests too
TRIN measures whether market volume is much selling
going into advancing or declining issues (bullish bias)
25
 Put-Call Ratio
S&P 500 Fear or Greed?
When high,
traders fearful
(bullish stocks)

When low,
traders
complacent
Put/Call (bearish stocks)

At A, high P/C
launched rally

At B, high P/C
gave bullish bias
26
 Earnings, Splits, Economic Reports
http://finance.yahoo.com/mo
Often bullish follow
through on splitting
stocks
Big gaps on earnings
could set up trades
with the stock or
sector, or fading
opportunities (see
Trading Gaps)
Review Economic
Reports expected to
move market in
morning Reversals 27
Economic Reports, Earnings, News

Click highlighted Economic Report for

description and “importance level”
2828
 Stock
Scanning
29
 Bullish Technical Setup
Compelling Trade Setups
The Pristine Method® teaches high-odd Compelling Patterns
to trade with price voids on various time frames:
Pristine Buy/Sell Setups
CBS PBS
Climactic Buy/Sell Setups
Guerrilla Trades
Breakouts/Breakdowns
W and M Formations
Pinch Play +COG

Failed Patterns
Bearish Gap that Bullies 30
 Stock Scanning
Searching For Plays (Long and Short) After Market Bias
Simplified Scanning Page
Possible market moving stocks in the news (Pristine ESP™ Post-
Market Scans; web sites; most actives; CNBC ticker; etc.)
Sectors and Sub-sectors
Stock Universe
Pristine ESP™, favoring those consistent with your Market Bias
In-depth analysis of stocks in sectors of interest
Create long and short watch lists and log into software and logs
Check earnings on stocks of interest and sector movers; check key
economic reports (pre-market, 9:45 and 10 a.m. EST) 31
 Swing Trading Stock Scanning
Pristine ESP™ Scans
Swing Trading Module
PBS/PSS; CBS/CSS; Narrow Range 7 Setup; Daily Basing; Daily
Above Average Up/Down Volume
Guerrilla Trading Module
10/10 Buy/Sell Setup; Wide Range Up/Down Bars; Bullish/Bearish
Engulfing Bars
Micro Trading Module
Post-Market (all)
Basic Trading Module
Above Average Up/Down Volume; 52-Week High/Lows; Top 20%
Gainers/Losers
When market choppy, look to Intra-Day, 60-Min. Scans
32
 Stock Scanning
Creating Stock Universe
Stock Universe is a manageable (100 - 400) group of stocks
that represent major industry sectors, including stocks you
want to monitor daily. Considerations:
Average Daily Trading Volume
Price Range
Exchange Preferences
Good trading stocks at the time
Start with NASDAQ 100 and S&P 100 plus sector leaders;
or Pristine ESP™ Universe
Review Universe daily for compelling patterns
33
 Creating Proxy Sectors
Investor’s Business Daily tracks some 197 sectors and sub-sectors
Create Sector Page with Market Minders of every sector you follow
Protection-safety: TASR, TBUS, MACE, MAGS, IPIX, VISG, IASG
Nano technology: NANO, NANX, WGOV, TFX
Alternative energy: FCEL, MCEL, PLUG, QTWW, ESLR, HYGS
Truckers: JBHT, YELL, KNGT, ABFS, LSTR
Network storage: BRCD, EMC, NTAP, QLGC, ELX, MCDT
Satellite radio: XMSR, SIRI
Online education: CECO, COCO, APOL, UOPX, EDMC
Autos: GM, F, DCX, BWA, AZO, TRW, HDI, FLE, NAV, OSK
Grocery stores: WIN, ABS, SWY, WFMI, GAP, OATS 34
 Ranking Trades Into Tiers
Tier 1 Trades
Cherished, most compelling patterns per TPM 1-2 and Trading Plan
Broader markets, sectors and market internals confirm
Multiple time frames in alignment and relative strength
Favorable Reward-Risk
Likely requires most immediate attention for entry after open

Tier 2 Trades
Quality setups, but will most likely not require immediate attention in the
first 30-Min. (e.g., extended intra-day, sector lagging)
Set alarms pre-market

Tier 3 Trades
Setup has compelling attributes, but need more data before setup complete
Review throughout day and daily, and set alarms 35
 Tier 1 Calls For Bullish Entry at Open
Daily
Pristine ESP™
Pristine Buy Setup
Bullish pull back to
support and r20ma Compelling
pattern with 3:1
Reward-Risk
Buy over high,
20MA stop low

60-Min.

Closed strong after breakout

20MA
and consolidation over r20ma 36
 Pristine ESP™ 10/10 Buy Setup
Daily Four days down, closing at low,
on Vol.; downgraded

5-Min.

See
GET
Trading
BETT
Gaps
ER

Gapped to support Buy 5-Min.

Buy 5-Min.
high, stop low
high, stop low 3737
37
Stock Watch List
Goal at open is to have
a cherished Watch List
Set alarms and review
throughout day, revising
alarms and priority
Review after market all
Watch List items:
To see how worked
For possible
inclusion in next
day’s Watch List
Update Longer-Term
Watch List 38
 Stock Scanning: Post-Market News
Review market moving stocks in the news to see if compelling
pattern for next day in the stock, competitors or suppliers, or
sector [See Pristine Trading University, Precision Trading on
Company News]

Pristine ESP™ most active, gapping above/below high/low

Earnings and other news plays

CNBC ticker

Web searches on post-market news

Although high risk, Pristine’s Real Time Trading Rooms can

offer guidance with post-market trading on liquid stocks
39
 Earnings and Guidance
5-Min. (After Hours) We are only concerned with
people’s reaction to earnings

Earnings Guidance is often more

Announced 4:35 ET critical than earnings themselves

Competitors should move to

extent they benefit or are harmed

Competitor NTAP

NTAP - 5-Min. (After Hours)

40
 Playing Earnings After Market
5-Min. – PLMO (After Hours)

Short breakdown on
earnings warning

Trail stop
NOTE: Trading outside of regular
market hours is very high risk!

41
Pre-Market
Preparation
42
 Daily Market Routine Preparation Checklist
Pre-Market Analysis and Procedures
Proper mindset and rituals
Bias based on broader markets, sectors and market internals
Update bias based on gap in Futures
Manage open plays
Nasdaq Heatmap™ and overseas markets
Pristine Newsletters and Real-Time Trading Rooms
Pristine ESP™ and gap plays
Earnings, news and other web research
Develop strategy for entry in Tier I plays
Activities at Open and Through First Reversal
Manage opens and update Market Bias
Monitor Tier I plays for entry throughout first reversal and set alarms
Pristine ESP™ scans (Guerrillas, Gaps, Volume, etc.) 43
 Developing Proper Mindset

Successful trading is 85% psychological

Daily Routine/Ritual should include whatever steps
necessary to get you in the proper physical and emotional
state (mind and body) to trade objectively
Exercise
Healthy diet
Meditation
Yoga
Review Trading Plan
Review other “Rituals” or Rules
Self-talk
Anchoring 44
 Developing Pre-Market Bias
SPY - Daily Step 1: Analyze pattern of
SPY on multiple time frames.
Step 2: Plot where trading
pre-market (high bid or low offer
on Level 2, or prints) on the
hourly. Here, was 1/3 gap down
to support, bullish if holds.
Step 3: Repeat for DIA and
SPY - Hourly QQQQ, and watch pre-market
ES/NQ/YM to confirm/deny bias
until market open.

45
 Develop Bias From Pre-Market Gap
DIA – Daily SPY – Daily QQQQ – Daily

15-Min.
Charts on
Next Page

Bullish Gap, deep into -WRB (see opening print on green candles)
If they continue to move up, then false breakdown gives a bullish bias
46
 Develop Bias From Pre-Market Gap
S&P Futures – 15-Min. Nasdaq Futures – 15-Min.

Daily Charts
on Prior Page

Both Futures had bullish Gaps calling for a bullish strategy at the open if
they retrace in bullish manner (see Intraday Entry Patterns)
Both gave entries after partial Gap retracement (see stars) 47
 Pre-Market Economic Number
S&P Futures – 5-Min. Nasdaq Futures – 5-Min.

Both Futures had large bearish candlestick in response to 8:30 # (see stars)
Pattern into open gave confirmed bearish bias 4848
 Pre-Market Currency Trade
EURO 6E 6E
EURO – 5-Min.
– 5-Min. GOLD FUTURES (ZG)– 5-Min.
EURO - Daily

Pristine Inter-Market
Analysis DVD teaches the
relationships between
Break down at Bonds, Currencies and
8:30 ET economic Commodities
number
Price Void PRX - Hourly
(PV) under
Bear Flag

8:30 ET economic
number (moves
with EURO and
opposite US$)
49
 Pre-Market Gaps in Open Trades
Considerations in Selling Stock or Tightening Stops
Open positions are inventory: Manage them with due care!!

Trading Plans should dictate rules on selling into gaps, stops, etc.

Similar to Pre-Market Bias in Futures, plot on daily and hourly

chart where stock trading and apply The Pristine Method®

Monitor in pre-market 5-Min. charts if liquid

Pristine Trading Guidelines on longs (opposite shorts)

Excessive Gap Rule: sell at open if excessive gap after two days

Disaster Gap Rule: ½ under 5-Min. low, ½ under 30-Min. low

Do Updated Market Bias and/or gap in Sector confirm?

50
 Pre-Market Gap in Open Trades
Check Level II for gap
Sell 1/2 into strength
pre-market 5.97 Plot on daily and hourly chart
where trading and analyze
Stock gapping 8% after a
bullish run from $4.20 to $5.60
Because the daily chart was
still bullish, hold half

51
Pre-Market Heatmap®
Glimpse of what
stocks and sectors are
showing relative
strength and weakness
Here, the software
sector showed great
strength; the
networking, box
makers, and semi-
conductors were weak
This simply brings
our attention to the
charts, which tell us
whether to trade with
or against the gap
52
 Pre-Market Heatmap™

INTC causing huge gap up in semis; XLNXcausing

XLNX causinghuge
hugegap
gapdown
downin
in
sector downgrade in retail semis;GRMN
semis; GRMNup upin
inweak
weakmarket
market 5353
International Markets Support Bias?
Global markets
are related, so it
helps when they are
in agreement
But if the
technicals of our
Futures and stocks
of interest are in
alignment, what else
really matters?
U.S. often leads,
but overnight world
news often is
reflected in Asian
markets first, as they
open first 54
Pristine Advisory Letters

Setup
Tip
Action
Manage
55
 Pristine Real-Time Trading Rooms
Pre-Market Bias Discussed

Trading Rooms provide real-time education

to help internalize TPM Parts 1-2
Pre-market commentary and trade ideas
Virtual Coach
Do not follow any advisory blindly!

56
 Pristine Views On Trading News
A stock that does not act bullish on bullish news is bearish
A stock that does not act bearish on bearish news is bullish
Pristine Trained Traders (PTT) know it is traders’ perceptions to
the news that is important, NOT the news items themselves.

We’re ONLY interested in whether the

news event will ignite GREED or FEAR.

A stock’s behavior is reflected in the charts which is often the best

indication that news is on the way (e.g., ENRON).

News merely directs us to the charts of interest to see if tradable

opportunity exists based on candlestick analysis (Price is King).
57
 Pre-Market Upgrades/Downgrades
http://finance.yahoo.com/mo Rating changes
merely directs us to the
chart for tradable
opportunity (with or
against the rating
direction)
Also look at
competitors and sector

National brokerage recommendations carry great weight

Zacks Investment Research documents big discrepancies of the
stock-picking ability of brokerages
It is uncanny how some market “gurus” fortuitously serve as
excellent barometers for contrarian investing 58
 Barron’s Trashing Internet Valuations
YHOO
Claimed that “their share prices have
zoomed to ridiculous levels.” Yahoo!
Current price: $24, Real value: $15;
Amazon.com Current price: $26, Real
value: $10; ebay Current price: $88, Real
value: $60.
EBAY
Relative strength in
support area

Gap and held

Barron’s, 4/12/03 59
 Bullish Gap Despite Downgrade
CCU
Daily Daily Pristine ESP™ post-
market gapping above
prior bearish bar’s high

Downgraded by
Morgan Stanley

Gap Often we fade the

KG - -Gap/-WRB
Daily under MS
ROIAK
Hourly
direction suggested by
the Rating Change if
price action confirms
Target = Supply
The chart had a
bullish gap ignoring the
-Gap with void of demand downgrade 60
Bias From Pre-Market News/Update
The markets had a huge
gap up, creating bullish
euphoria
We had a bullish bias based
on the technicals, but often
fade large gaps
We don’t care about the
fundamentals of economic
data, only the market’s
reaction to it
Check gap on earnings
stocks
Check Yahoo’s In Play,
Briefing.com, etc. 61
 Airline Fare Cuts Gave Short Setups
Unveils stripped-down fare
structure that slashed domestic
tickets up to 60%
Select airlines matched
Was this a ploy by Delta to save
Daily Charts
bankruptcy? Would it help or hurt
revenue?
Would other airlines have to
match to stay competitive? If so,
would that hurt their income?
Will airlines not matching lose
customers and revenue?
Which vendors would be helped
Airline Sector or hurt by the move? 62
 Pre-Market News
Review market moving stocks in the news to see if compelling patterns for
the stock, competitors, suppliers, sector, or market
This news sparked rallies in the auto sector and broader markets

DCN 15-Min.

G
A
P

GM 15-Min. F 15-Min. 63
63
 Splits, Earnings, and Economic Reports

Often there is bullish

follow through on
splitting stocks

Big gaps on earnings

could set up trades with
the stock or sector

http://finance.yahoo.com/mo
Second glance at any
Economic Reports
expected to move market
during day
64
 FDX on UPS Earnings
Daily We had bullish bias on market
UPS up huge on earnings
FDX had compelling pattern

Gap from 5-Min.

bearish bar

Buy high
Hourly

Pro Gap

65
 Intra-Day Entry Patterns

Pull back Retest New high, if Pull back

into Gap first bar green following initial
move up

30-Min. high,
after initial
Failed bullish move +123
Other Bullish
Sell Setup 66
 5-Min. Pull back Entry on Daily PBS
5-Min.

Daily

Pull back in
Gap Fill

Step 1: Bullish
pattern on daily
Step 2: Can use
Intra-Day Patterns
for better entry 67
 Breakout on Positive Barron’s Mention
Daily
Daily - LU 5-Min.
5-Min.

Gap over Buy 5-Min.

resistance pull back

Positive Barron’s
mention, Stop under
confirmed by prior day’s
Price Action pivot 6868
 Logging Tier 1 Plays
Tier 1 plays should have compelling technical pattern and
generous Reward-Risk per your Trading Plan
Log into Spreadsheet (Pristine Trading Business Seminar)
Long Watch Minder Short Watch Minder

6969
Trading
Gaps
70
 Types of Gaps

Pro Gap - one that ignites

a new move up or down Pro Gap
Novice Gap – one in the
same direction of an already
extended move, and typically
ends the move Stop Loss

Continuation Gap – one

that continues a move,
There are different
typically at half-way points
types of Pro Gaps,
Bullish/Bearish Gap – a but this one from
bullish/bearish gap in the multi-bar bullish
context of the overall pattern, consolidation very
but not one of above compelling!
71
Pre-Market Gaps
Although we had a bullish “bias” based
on the technicals of the broader markets,
build a watch list of weak stocks based on
relative weakness

Scan Pre-Market Gap Below Prior Low

to find weak candidates, particularly in
strong, extended market (and vice versa)

At open, for shorts, scan Pristine ESP™

Gap Up and Weak

Gap Down and Weak

Basing Bottom 2% Daily Range

Above Average Down Volume 72

 End of Day Rally vs. Base

15-Min. 15-Min.

Gap above EOD

Base is bullish

End of Day (EOD) Rally Consolidation/base

Hourly – EOD Base
has higher odds of creates support
retracement 7373
 Gap Questions Before Trade
Does the Gap create a Compelling Pattern (note: plot on daily and
hourly charts where trading pre-market) suggesting a move up or down,
using The Pristine Method®?
What is the next area of Support and Resistance?
Is it gapping over significant pivots, or to congestion?
Did it Gap from a consolidation or from an already extended move?
Is the Gap too excessive to invalidate a favorable Reward-Risk?
What does the direction of the first 5-Min. bar indicate? Does it set up
a compelling pattern in the first 30 minutes of trading under the Intra-
Day Entry Patterns document?
Has it retraced > 50% into the Gap?
Calculate Reward-Risk, enter, and manage. 74
 Gap Under Support
Daily EXAMPLES
MORE Pattern: Breakdown
Distance to next
Support or Resistance:
Gap leaves huge overhead
resistance, little support
Gap from
consolidation: Yes
Gap too excessive to
invalidate a favorable
Reward-Risk: No
Pro Gap, no bounce,
short 5-Min. low Direction of first 5-Min.
bar: Red, weakness,
confirms short
Retrace > 50%: No
75
 PBO Daily and 15-Min.
Daily 15-Min.

Trail stop under bar’s

low since climactic

PBO after bullish Another bullish

consolidation in Gap and Go
upper 50% of +WRB

Add
Initial PBO

Stop loss
 Pro Gap and PBO
Daily 5-Min.

Gap over
resistance

G
A
Buy PBO
P
 Pro Gap From Consolidation
Daily
Daily- CVH 5-Min.
5-Min.

Bullish Gap Breakout Buy 5-Min. high

New Stop

New Stop

G
A
P
Bear gap
negated is
bullish Initial Stop
Initial stop 78
 Gap Over Resistance and Bearish Bar
Daily
CMTL - Daily
CNTF -TARO
Daily - Daily 5-Min.
5-Min. 5-Min.
5-Min.

Gap over
resistance G
A
Buy 30-Min.
P high sincebounce,
first
Shorted
bar
stopred
high
Bear Pro Gap,
shallow bounce
Gap over down trend
line and bearish candle Buy 5-Min. PBS

Are Gap Questions Satisfied?

79
 Gap Over Resistance, Price Void
Daily
KLIC - Daily
CNTF -TARO - Daily
DailyGap over 5-Min.
5-Min. 5-Min.
5-Min.
resistance
Gap over
resistance G New
A stop
P
Shorted bounce,
stop high
Bear Pro Gap,
shallow bounce
BuyBuy
5-Min. PBShigh
5-Min.
Buy 5-Min. PBS

80
 Gap Over Resistance, Price Void
DailyCNTF -TARO
Daily - Daily 5-Min. 5-Min. 5-Min.

Gap over
resistance G
A
P
Shorted bounce,
stop high
Bear Pro Gap,
shallow bounce
Buy over 5-Min.
bar’s high after
Vol. Retracement

81
 Gap Deep Into Resistance
Daily 5-Min.

Gap from base

deep into
resistance, with
next reference
point far away
First bar bullish,
buy high (but
not hit)

Buy over
prior bar’s
high, bullish
EOD Base Retracement
82
 Gap Over Red Bar to New High
Daily
Daily
5-Min.
Gap over bearish
red bar in uptrend, Bullish consolidation
no resistance at high, add 30-Min.
high

Gap from EOD

Base, buy 5-
Min. high
20MA

83
 Gap Over Bearish Bar, Price Void
Daily Pattern: Breakout
Distance to next
Resistance: Gap trapped all
bears in prior bar, with
support below and not
much overhead resistance
Gap from consolidation:
No, but same effect
Gap too excessive to
invalidate a favorable
Reward-Risk: No
Direction of first 5-Min.
bar: Strength (no tail),
confirms long
Retrace > 50%: No, buy
5-Min. high 84
 Bullish Gap Over Prior Bar
Daily
Daily
5-Min. Daily Pattern:
60-Min. Breakout
15-Min.
Distance to next
+Gap over MS,
Resistance: Gap
buy 5-Min. trapped all
high,
Daily
bears stop
in prior
under bar,
prior with
hourly
support pivot low not
below
Dailyand
- MLS
much overhead resistance
Gap from consolidation:
Yes
Gap too excessive to
Weekly Note: Bearish gap
invalidate a favorable
negated is bullish Reward-Risk: No
Direction of first 5-Min.
bar: Strength (no tail),
confirms long
Retrace > 50%: No, buy
5-Min. high 85
 Pristine ESP™ Gap Below Prior Low
5-Min.
Daily
Pro Gap from
EOD Base
Add bounce Gap under
big bullish
candle

Short 5-
Min. low

Add break Target areas

down, trail stop
86
 Bearish Gap Under Support
Daily Pro Gap 5-Min.
G
A
Bearish bar
P

Short 5-
Min. low5-Min.

Gap under Add

Support with Breakdown
no support Cover ½ after
multi-bar move

87
87
 Bearish Gap, But No Follow Through

Daily Pattern: Pro Gap Breakdown

Support-Resistance
relationship: Gap under
support, not too big, so bearish
bias

Gap from consolidation: Yes

Gap too excessive to

invalidate a favorable Reward-
Risk: No

Direction of first 5-/30-Min.

bars: Strength, trade
invalidated
Problem: Bearish Pro
Gap, but no setup Retrace > 50%: Yes, strength
88
 Counter Trend Strategies
After multiple-bar moves in one direction, particularly if the recent
bar is a wide bar, with increased volume, a gap in the opposite
direction often sets up a counter-trend play for a few days
The more prior fluid Wide Range Bars (WRB) the better
If gaps into or over the prior –WRB/+WRB, buy/short 5-Min.
high/low, stop prior bar’s low/high

Trade direction UP, Bearish Gaps

target = Resistance

Trade direction Down,

Bullish GapsPristine Capital Holdings, Inc.target = Support
89
 Bullish Gap Into -WRB
15-Min.
Daily
See Pristine Trading
University, Mastering
Breakouts and Breakdowns
20MA
20MA

Gap into –WRB Pristine ESP™ Scans:

after 5 red bars Guerrilla 10-10 Buy Setup;
Guerrilla –WRB; NYSE
Buy 5-Min. high 90
Above Average Down Volume
 Bullish Gap Into Bearish Bar
Daily 5-Min.

Gap from EOD

Decline, and held
50% retracement

Bullish Gap
into -WRB

Buy over
prior bar’s
high
91
 Bullish Gap After Multiple Red Bars
Daily
5-Min.

Could you add

breakout?
-WRB on Vol.,
after 14 red bars Buy 5-
Min. high Stop

PRX - Hourly
G
A
P

Daily (next day) Stop loss

92
 Gap Into Bearish Bar on Support
Daily 5-Min.

Gap over multi-hour

consolidation turns into
support; buy 5-Min. high

Gap after -WRB to Support Stop 93

 Bullish Gap After Multiple Red Bars

Daily
CWTR – 15-Min. 5-Min.
5-Min.
5-Min.
5-Min. Add LDBO
Add LDBO

15-Min. bar Target

closes +WRB is
signal of strength
+WRB out of 5-Min. base,
after 1/3 Retracement to mS;
Gap over buy over +WRB, stop low
+WRB
+WRB outout of 5-Min.
of 5-Min. base,
base,
Resistance Bullish
after
after 1/31/3 Retracement
Retracement
Retracement to mS;
to mS;
buybuyinto
over gap
over area,
+WRB,
+WRB, buy
stop
stop lowlow
over prior bar’s high
WHERE ENTER AND
WHY? Stop
94
94
 Bearish Gap That Bullies Resistance
Daily
Daily 60-Min.
15-Min. 5-Min.
Daily - PRX
60-Min. Buy PBS on 15-Min.
chart, provided
ATR bought holds < 1/3
Buy PBS on 5-Min. chart,
PBS on mS,
provided holds < 1/3 retracement; trail
20MA
above r20ma,
retracement pivots until target
stop under base

Bearish gap under

Pristine Gap +WRB tothrough
MR,
MS, creating and Snap after – MR, from
from bearish
bearish
gap +WRB into MR,
bearish WRBs at mS gap down
down from bearish gap
Novice Gap
expectations down
after numerous +WRB and
red bars, far GapGnS
Pristine fill; look
from
forCBSlong entry
from d20ma 95
 Bullish Gap That Bury - Core Short
Hourly
HOLX - Hourly Daily
Bull Gap
negated, -WRB Rally leaves
Price Void

-WRB after
PBO is
Bearish
consolidation,
bearish
+WRB
Slicednegated,
through
and threatening
support, shortto
crack support
break down

96
 Pristine ESP™ to Find Candidates

Go to Scans; Micro Trader; Gap Down and Strong (for

longs), and Gap Up and Weak (for shorts)
97
 Novice Gap to Support
Daily 15-Min.
Exhaustion gap in
an already
extended move

Buy 5-Min.
high
Gap to support after
many down days

98
 Bearish Gap, But Novice or Pro?
5-Min.
Daily

No compelling
setup exists on
Intra-Day Entry
Patterns to go
long or short

Bearish Gap, but in

area of Support

99
 Gap to Support
Daily 5-Min.

5-Min. bar
green; buy high
Trail stop with
target into gap

Huge gap down to

support area
100
100
 Novice Gap From Climactic Buy Setup
BOL - Daily

16 down days and 19.2%

See 5-Min. Chart
Gap down = Pristine Buy
Next Page for
Opportunity!
Entry

101
 Intra-Day Entry After Novice Gap
BOL – 5-Min. BOL - Daily

4/10 Post-
Market

4/11 Pre- Afternoon Breakout

Market

Bought 5-
Min. Retest
Buy over
102
5-Min. bar
 Shorting Euphoria
Daily 5-Min.

Bearish
consolidation in
lower 1/3 of –
WRB; short 5-
Min. PSS & 30-
Min. low

“Yes, You Can Make Money

Target raised by analysts after Buying GOOG At The Open –
positive earnings Amtech” (www.briefing.com)
103
 Novice Gap
Daily 5-Min.

Short 30-
Min. low
since first
bar bullish

Stock rallied, then

gapped over 10%
104
104
 Gap to Resistance
Daily Pattern: Gap and Crap
Support-Demand
relationship: Gap to
Opening
Resistance
Gap to
congestion Gap from consolidation:
No, gapped after extended
move
Gap create price void and
a favorable Reward-Risk:
Yes
Direction of first 5-Min.
bar: Weakness, confirms
short
Rally much at open: No,
overhead supply great 105
Activities At
Market Open
106
 Daily Market Routine Preparation Checklist
Pre-Market Analysis and Procedures
Proper mindset and rituals
Bias based on broader markets, sectors and market internals
Update bias based on gap in Futures
Manage open plays
Nasdaq Heatmap™ and overseas markets
Pristine Newsletters and Real-Time Trading Rooms
Pristine ESP™ and gap plays
Earnings, news and other web research
Develop strategy for entry in Tier I plays
Activities at Open and Through First Reversal
Manage opens and update market bias
Monitor Tier I plays for entry throughout first reversal and set alarms
Pristine ESP™ scans (Guerrillas, Gaps, Volume, etc.) 107
 Action at Market Open
Monitor and manage open trades – your Inventory!

Does size of gap in the broader markets and stock warrant

aggressive long or short entry, or waiting?

Is stock and market gapping into support or resistance?

Does first 5-Min. bar indicate strength or weakness?

Review Watch List within first 5 minutes; see Intra-Day Entry

Patterns for Tier 1.

Sort market minder of Universe based on net change above

open; apply relative strength and weakness principles.

No trades in first 5-Min. (generally 30-Min. for listed). 108

 Excessive Gap Sellable Event
Daily
Newsletter Tracking
Guidelines for
Sellable Gaps

Sell at open since

gapped over 35 cents
If > $30, $.75

If $20 - 30, $.50

If $10 - 20, $.35

If < $10, $.25

109
 Disaster Gaps on Open Plays
Mark pre-market where your stocks are gapping to
Are they gapping to support (longs) or resistance (shorts)?
Pristine Trading Guidelines address how to handle Disaster Gaps
and Excessive Gaps for most situations
5-Min.
5-Min.

Although it gapped to
support, weak bounce
and bearish consolidation
Gapping to Support and held suggested reversing short 110
 Activities at Open
Sectors Dow-30

Monitor Tier I stocks with Internals

Check top/bottom sectors and analyze
Evaluate Gap/Guerrilla trades
Check top/bottom Dow-30 and Nasdaq
100 for relative strength/weakness 111
 15-Min. Sectors Page
$SOX

$BTK

$TRAN $HGX

112
 NYSE vs. Over The Counter Stocks
Beware of Illiquid Listed!

After failed breakout,

price fell $1.55 on 9200
shares
After last 51.55 print,
bid dropped to 50.30!

NASDAQ stocks often provide better liquidity and order fills

because of Electronic Communication Networks (ECN)
Generally, it is best not to day trade listed in the first 30-Min. 113
 Sector Relationships
Relationships between various sectors and related stocks may
move together or opposite, offering clues to their direction.

Event Think (Action if Price Pattern)

Semiconductors strong Box Makers, Tech, and Nasdaq
Oil strong Market and Airlines
Gold strong Commodities , Market and US$

Transports strong Truckers, Shippers, Railroads,

Airlines, FDX/UPS, and Dow Industrials
Home Builders strong Banks, Mortgage, Consumer Durables,
Commodities, Land ; Bond Yields
Pristine Mighty Five GE, C, MSFT, GM, EBAY
114
 Sector Relationships: Oil and Airlines
Because fuel is one of the primary costs to airlines, when oil is
falling, it often boots airline stocks. Scan Airline Sector/Universe
Traders should memorize a
Pullback to few leading stocks in main
r20ma in uptrend sectors to pull from.

ATR
CCI buy signal

115
Intra-Day Internals
DOW-30

A gap up with strong

market internals
All sectors green except
for Gold, which is bullish

TICK

TICK oscillating above 0

TRIN down trending,

under 1.0 and 20ma

TRIN
116
 Pristine ESP™ Configuration: Tactics

Pristine ESP™ helps you find stocks consistent with your market
bias, in addition to those On Own Page
Customize to run scans consistent with your Trading Plan 117
 Activities at 9:35 EST

Stops, alarms, and targets on open positions

Adjust all Tier I alarms for 5-Min. highs/lows
Gap and Guerrilla trades
Stocks “On Own Page”
Scalp and Swing Trades
Pristine ESP™ Scans:
Micro Trading Module (5-Min. Gap Buy; 2/5-Min. Wide Range
Up/Down Bars; Stocks in Upper/Lower 2% Daily Range; Gap
Up/Down and Strong/Weak; 15-Min. Basing; 60-Min. CBS/CSS)
Guerrilla Trading Module
Basic Trading Module (Above Average Up/Down Volume; 52-Week
High/Lows; Top 20% Gainers/Losers

See Intra-Day Entry Patterns 118

 Trading Steel Sector On Earnings
STLD - Daily FDX - Daily X - Daily

5-Min.
Gap from base bullish
SCHN - Daily
AKS - Daily

Hourly

Buy 15-Min.
high, stop low

119
119
Hot Trend Scanner

Universe Minder

120
 Pristine ESP™: 1-Month Low
BUD ADSK Stocks that make
new monthly highs
or lows are watched
by many traders

Whenever Pristine
ESP™ alert
triggers, evaluate
the stock under your
Trading Plan and
consider reward-
risk of each under
The Pristine
Method®
121
 NASDAQ Advancer Versus Decliners
Nasdaq Adv./Dec.
Market breadth
indicator measuring
the aggregate number
of stocks advancing
B
less declining
C D
Bullish/bearish
A
pattern suggests
E longs/shorts until
reversal, with
accelerated moves
showing extreme
emotion
Nasdaq Futures 122
 Pristine ESP™ Intra-Day Scans

PRX - Hourly

Run scans consistent with your Market Bias and Trading Plan
123
 Activities at
First Reversal
124
 Activities at 9:50 - 10:10 Reversal

Adjust stops, alarms, and targets on open positions

Evaluate broader markets and sectors on multiple time frames, adjust bias
Monitor Futures during 10:00 am economic reports and be prepared to
trade affected sectors (e.g., housing)
Review all Watch List alarms, re-set alarms
Relative Strength and Weakness plays at first Reversal
Pristine ESP™ Scans:
Micro Trading Module (30-Min. Gap Buy; Stocks in Upper/Lower 2%
Daily Range; Gap Up/Down and Strong/Weak; 15-Min. Basing; 60-Min.
CBS/CSS)
Guerrilla Trading Module (all checked, but focus on +/- 20/20)
Basic Trading Module (Above Average Up/Down Volume; 52-Week
High/Lows; Top 20% Gainers/Losers)
See Intra-Day Entry Patterns for entry on Tier 1 plays 125
 Failed Breakdown at Morning Reversal
Nasdaq Futures - 5-Min. Many times
when Futures are
very oversold,
they make a new
low during a
morning Reversal
and then have No
Follow Through
Buy PBO
Gap after London
Terrorist disaster If the Reversal
New low fails and snaps
at 10:30 back into the
base, look to go
long if price void
above
126
 Pristine ESP™ 30-Min. Gap Buy/Sell
15-Min.

Pro Gap and +WRB, Triggered

consolidation at high

Stocks that gap up/down and then make new highs/lows after
the first 30-Min. session often ignite new moves
127
 30-Min. Low on 1-Month Low Alert
Morgan Stanley: Punk Ziegal
Daily
analyst on CNBC says stock
should be bought aggressively
here; those selling making mistake
(briefing.com)
5-Min.

G
A
P

Red bar and

Bear Gap under bullish shallow bounce
5-Min.
bar, deep into support Short 5/30-Min. low 128
 Pristine ESP™: 12-Month High/Low

Daily Stocks that make new

52-week highs/lows are
52-week high PBO considered strong/weak
and watched by many
Whenever Pristine
ESP™ alert triggers,
evaluate the stock under
your Trading Plan and
consider reward-risk
Initial stop, then under The Pristine
move to 30-Min. low Method®
once “under way” This offered compelling
breakout play, with no
resistance
129
 Above Average Up/Down Volume
15-Min. Volume shows the
magnitude of interest

+WRB out of Unusually high

base on Vol. up/down volume in the
opening Reversal
Period is often
associated with Pro
up/down moves

Keep Pristine ESP™

alert box open and
evaluate each issue on
multiple time frames
130
 Above Average Up Volume & 1-Month High
Daily
VTSS - 5-Min. 5-Min.
Gap over
pivots on Vol.
+WRB out of
base on Vol.

Buy 5-Min. high,

first bar green,
G bottoming tail,
A and Vol.
P

Stop
131
131
 Pristine ESP™: Stocks in Upper 2%
S&P Futures - 5-Min. RIMM - 5-Min.

If the market is stabilizing after a sell

5-Min. oversold and off, look for strong stocks that did not
bouncing after new low fall with the markets, and vice versa
132
 10:00 EST Economic Numbers
Crude - 15-Min. S&P Futures - 15-Min.

Crude tanked after

weekly Inventory Futures
Report bottomed at
same time
133
 Economic Reports: Housing
Housing Sector - 15-Min.

Blasted on
Home Sale No.
Be alert for
expanding volatility
when Economic
Reports released
Daily
Focus on stocks
most likely to move
with sector
With sector
rallying, focus on
housing and tracking
stocks (and market) 134
Concluding
Thoughts
135
Pristine Services and Education

136
 Thank You For Learning With Us!
Whether you are an active trader or investor, you now
have the information to help you objectively prepare for
each market day, trade the open, and trade all kinds of
gaps, like a true professional!

It’s up to you to work with the material and now make it

yours. Failing to spend the time doing your own research
will prevent you from developing as a self-directed trader.

In closing, Pristine wishes you great success!

137