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closest resistance is 49 to 50, which is hit on February 12th. We then raised our protective stop to 48 7/8, which would be breaking the previous days low. Stopped out the next day, we have 5 1/2 points profit. Price then breaks the low of February 7th, which at the time I thought was very important. The next day is down, followed by a gap up. The next day is a higher high, higher low. The following day is inside day. I decide that if on the 26th price breaks 47 3/4, I will get short with a protective stop at 49 5/8. The 26th brings higher high, higher low. I then remember starting to question my strategy of playing the short side. Looking back, it was exactly 90 calendar days and 135 degrees low to low. If price moves through 50 1/4, I have to buy with a protective stop at the low of that day. On January 10th, 44 days from low, price is near 53 or 360 degrees up from low at 28. We move protective stop to below previous days low, and if broken, we will look to go short. Price moves straight up, and on March 21 it hits the parallel trend line. This is, also, 135 degrees from high. It is 225 degrees from the low of 40, and 360 degrees plus 45 degrees from 28 7/8 low. We sell the long position on a break of 57. At this time, I know that a high, which starts a trend down, seldom, if ever, comes from hitting a parallel trend line. That is balancing momentum. The typical price action for an important high is to move above that price level, but it fails to reach the parallel channel line after having just recently hit it, thus showing a loss of momentum. But correction is now probable. The next day I am stopped out with 6 1/2 points profit. The next two days price moves sideways in a small range and volume dries up. I have seen this pattern many tiroes before. If prioe now breaks the support at 56 1/2, I will go short. It does so two days later on increased volume. My protective stop is above that days high. My objective is to match the previous move down- or 52 1/2 (45 degrees is 53-4, 90 degrees is 50-1), in three to five days down. I close out my short position at 52 1/2 for 4 1/2 points profit. There is a small range on April 7th, which is 45 days from low. So I will watch the next day and see if it can show any strength. It gaps up and starts to move on volume. I buy at 53. With tvro days on the side, April 9th and 10th, I put my protective stop at 53 1/4, It moves up to the old high and stalls, falls tvro points on April 22nd, then on the 4th it rallies. Now, it should start moving up fast. It stalls again on April 29th, down one day, then sideways. Then on May 6tn it gaps up, but leaves an island reversal on the seventh. If price breaks 56 1 /4, Syntex is obviously not trending and I bought it beoauee I assumecf a trend (at least) to the 15tn. I move my protective stop up to 56 1/4, stopped out (three pointe profit). Obviously, I dont know whats going on here- having thought 270, 90 and 45 days would produce a high, but instead, there will be a low. Price again hits the trend line with a 45 degree move down from high. Remember that 270 days and 360 degrees from low is a good harmonic or "setup". We buy on the move through 55 1/2. Price moves one day down on June 2nd. Price action looks encouraging. On June 27th, the 315 day cycle

expires along with the 45, 90 and 180 day cycles a few days later, and, again, back at the channel line. I bring the stop to a few ticks below the June 30th low and am stopped out with 15 points of profit. We could now be down into the one year cycle. There is that pattern again. So we go short on a break of 70 1/4. One day up on July 9th, then down through the low. We move the stop down to 68 3/4. Price holds trend line (to my surprise) and charges up to stop me out with one point profit. Obviously, I dont understand what is going on. Again, if trend were down, price should not have shewn a higher high above the previous swing high, so I will stand aside until the one year cycle expires. The one year cycle and 90 day cycle expire with price barely at a new high. At 74 to 75, price is at a significant harmonic from all the important lows (28-40-50-54-63), and 180 degrees up from the high at 58 to 59. So, we will go short on breaking a daily low, which price does 6n August 20th, with protective stop at 75 1/8. Price then moves sideways with that familiar pattern developing- a high followed with three or more small range days. I had a hotline service at the time and said on the August 26th update that Syntex is a stock that many years ago used to beat me up. I do not have a history of playing this stock well. However, this is an ideal setup. We go short on the break of 72 1/2, and, also bought a full position in puts. Price drops to 50 percent of its major range and we take our profits.

During this exercise, I was confused most of the time about how the stock was going to move. Yet, by using a disciplined approach to trading based upon normal movement of price, I still managed to take 41 points of profit out during the year it trended upward, and 20 points after that one-year trend was over. Of course, a buy and sell strategy for that year would have produced the same results after commissions. But by trading the stock, my capital was never at risk for more than 1 percent. My profits, also, were never at risk and I was positioned when a fast movement occurred. During a workshop, I once used an example of a stock which wes trending down, and we traded it from only the long side with this same discipline, and still managing not to lose any money, while being dead wrong as to the trend. Of course, the key is understanding trends and countertrend movements. Once you have mastered that, it would only take a few swings on the price chart to realize which side to trade. I hope by now you realize how important an understanding of price movement can be to a successful trading strategy.

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