Initial Process 1. 2. 3. 4. Begin by selecting two solid indicators for each sector of interest.

For each stock, look back at the recent history for a definitive upward trend, and begin recording there. In the Upward Trend column, after recording the first price, only record the price each day if it is higher than the last recorded price. Otherwise, leave the reading blank. When you see a drop of 6 points from the last recorded value in the Upward Trend column, switch to the Natural Reaction column, and underline the last reading in the Upward Trend column in red. This marks the upper pivot point for this stock. Continuing monitoring the price in the Natural Reaction column. Only record the values that are lower than the previous recorded price. Otherwise, leave the reading blank. When you see an increase of 6 points above the last recorded reading, switch to the Natural Rally column, and underline the last recorded price in the Natural Reaction column in red. This marks the lower pivotal point for this stock. Continue monitoring the Natural Rally column. Only record the values that are higher than the previous recorded price. From this point forward, follow the appropriate rules for whichever column you happen to be in.

5. 6.

7.

Column 1: Secondary Rally 1. Price Increase: a. If the price increases above the last recorded value in the Upward Trend column, switch to the Upward Trend column. b. If the price increases 3 points above the last underlined value in the Natural Rally column, switch to the Upward Trend column. c. Otherwise, if the price increases above the last recorded value of the Natural Rally column, switch to the Natural Rally column. Price Decrease: a. If the price drops more than 6 points from the last recorded value in the Natural Rally column: i. Check to see if the new low is less than the last recorded value in the Downward Trend column. If so, switch to the Downward Trend column, and underline (in black) the last recorded value in the Natural Rally column. ii. If the new low is higher than the last recorded value in the Downward Trend column, then check to see if the new low is less than the last recorded value in the Natural Reaction column. If so, switch to the Natural Reaction column, and underline (in black) the last recorded value in the Natural Rally column. iii. If the new low is greater than the last recorded value in the Natural Reaction column, switch to the Secondary Reaction column, and underline (in black) the last recorded value in the Natural Rally column.

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Column 2: Natural Rally 1. Price Increase: a. If the price increases above the last recorded value in the Upward Trend column, switch to the Upward Trend column. b. If the price increases 3 points above the last underlined value in the Natural Rally column, switch to the Upward Trend column. Price Decrease: a. If the price drops more than 6 points from the last recorded reading in this column: i. Check to see if the new low is less than the last recorded value in the Downward Trend column. If so, switch to the Downward Trend column, and underline (in black) the last recorded value in the Natural Rally column. ii. If the new low is higher than the last recorded value in the Downward Trend column, then check to see if the new low is less than the last recorded value in the Natural

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Reaction column. If so, switch to the Natural Reaction column, and underline (in black) the last recorded value in the Natural Rally column. iii. If the new low is greater than the last recorded value in the Natural Reaction column, switch to the Secondary Reaction column, and underline (in black) the last recorded value in the Natural Rally column. Column 3: Upward Trend 1. 2. Price Increase: a. Continue recording any value that is higher than the previously recorded value. Price Decrease: a. If the price drops by 6 points from the last recorded value in this column, switch to the Natural Reaction column and underline (in red) the last recorded value in the Upward Trend column.

Column 4: Downward Trend 1. Prince Increase: a. If the price increases 6 points above the last recorded value in this column, switch to the Natural Rally column and underline (in red) the last recorded value in the Downward Trend column. Price Decrease: a. Continue recording any value that is lower than the previously recorded value.

2.

Column 5: Natural Reaction 1. Price Increase: a. If the price increases more than 6 points above the last recorded value, then: i. Check to see if the new value is higher than the last recorded value of the Upward Trend column. If so, underline (in red) the last recorded value of this column, and then switch to the Upward Trend column. ii. If the new high is less than the last recorded value of the Upward Trend, the check to see if the price is higher than the last recorded value in the Natural Rally column. If so, underline (in red) the last recorded value of this column, and then switch to the Natural Rally column. iii. If the new high is less than the last recorded value in the Natural Rally column, underline (in red) the last recorded value in this column, and then switch to the Secondary Rally column. Price Decrease: a. If the price decreases below the last recorded value in the Downward Trend column, then switch to the Downward Trend column. b. If the price drops more than 3 points below the last recorded value of the Natural Reaction column, switch to the Downward Trend column.

2.

Column 6: Secondary Reaction 1. Prince Increase: a. If the price increases more than 6 points above the last recorded value in the Natural Reaction column: i. Check to see if the new value is higher than the last recorded value of the Upward Trend column. If so, underline (in red) the last recorded value of this column, and then switch to the Upward Trend column. ii. If the new high is less than the last recorded value of the Upward Trend, the check to see if the price is higher than the last recorded value in the Natural Rally column. If so, underline (in red) the last recorded value of this column, and then switch to the Natural Rally column.

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iii. If the new high is less than the last recorded value in the Natural Rally column, underline (in red) the last recorded value in this column, and then switch to the Secondary Rally column. Price Decrease: a. If the price decreases below the last recorded value in the Downward Trend column, then switch to the Downward Trend column. b. If the price drops more than 3 points below the last recorded value of the Natural Reaction column, switch to the Downward Trend column. c. Otherwise, if the price decreases below the last recorded value of the Natural Reaction column, then switch to the Natural Reaction column.

The Key Price 1. As you chart the pair of stocks from a specific sector, add each of the values together and record the sums on a separate chart. However, double the point movements (6 instead of 3, and 12 instead of 6). Otherwise, follow the exact same method as outlined above. This is the Key Price chart. All signals should be derived from the Key Price chart, and not from an individual stock chart.

2.

Identifying Signals 1. Buying a. When double black lines appear under the last recorded value of a Downward Trend, you will be looking for the next set of lines to appear under the Natural Rally, and then check the price at the beginning of the next Natural Reaction. i. Rally - Watch for the double black lines to appear under the last recorded reading of the Natural Rally. ii. Reaction - Watch for the double red lines to appear under the last recorded reading of the Natural Reaction. iii. If the the last recorded reading under the Natural Reaction is 3 or more points (6 if using the Key Price) above the last underlined reading in Downward Trend column, then this should be interpreted as a sign of a reversal. It is a good time to enter the market. Selling a. Selling signals are the opposite of buying signals. When double red lines appear under the last recorded value of the Upward Trend, watch the following Natural Reaction, and then check the values of the following Natural Rally. i. Reaction - Watch for the double red lines to appear under the last recorded reading of the Natural Reaction. ii. Rally - Watch for the double black lines to appear under the last recorded reading of the Natural Rally. iii. If the last recorded reading under the Natural Rally is 3 or more points (6 if using the Key Price) below the last underlined reading in the Upward Trend column, then should be interpreted as a sign of a reversal. It is a good time to exit the market.

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