Big Trends Toolkit Includes

The following Indicators will be added to the Indicator Quick list:

BTTK Acceleration Bands 80

BTTK Acceleration Bands 20

BTTK DMI Difference

BTTK Efficiency Ratio

BTTK Momentum Divergence: Close % / BTTK Momentum Divergence: MACD Momentum %

BTTK NASDAQ Relative Strength vs. SPX

BTTK Percent R

BTTK Percentage above 200 Day Moving Average

Understanding the Big Trends Indicators

BTTK NASDAQ Composite Relative Strength vs. SP 500 The NASDAQ vs. S&P Relative Strength Market Timing System was designed by Price Headley and is designed to highlight persistent trends which show the potential for a trend bias in the major market indices.

When the 10-day simple moving average crosses above the 21-day simple moving average of the relative strength (RS) line, this creates the bullish Setup for this indicator. It is ONLY confirmed when the NASDAQ Composite CLOSES in a future day above the NASDAQ Composite high on the day of the bullish RS crossover. This will then typically start a new uptrend phase for the markets, as the NASDAQ leads to the upside as money managers will be playing "offense" and moving more money into growth-oriented stocks. If the RS cross-over is not confirmed, then that NASDAQ Composite high is considered the top for that move, usually a peak in a trading range or an evolving downtrend.

So, when the 'lead' RS line crosses over the moving average line, it's considered a 'buy' signal for the NASDAQ vs. S&P Relative Strength Market Timing system. Traders interested in taking advantage of this opportunity should look to be bullish on growth-oriented stocks when this system is on a buy signal, and index traders can also buy the major index ETFs to benefit from the typical bias to the upside during a bullish phase. Option traders should consider intermediate-term call options out 4–6 months from expiration, as these signals can often last from 1–3 months.

The following image illustrates these trends.

When the 10-day simple moving average crosses below the 21-day simple moving average of the Relative Strength (RS) line, this creates the Bearish setup for this indicator. It is ONLY confirmed when the NASDAQ Composite CLOSES in a future day below the NASDAQ Composite low on the day of the bullish RS crossover. This will then typically start a new downtrend phase for the markets, as the NASDAQ leads to the downside as money managers will be playing "defense" and moving more money away from growth and into value-oriented stocks. If the RS cross-under is not confirmed, then that NASDAQ Composite low is considered the low for that move, usually a bottom in a trading range or an evolving uptrend.

The NASDAQ vs. S&P Relative Strength Market Timing system gives a 'sell' when the lead RS line falls under the moving average line. Traders interested in taking advantage of this opportunity should look to be bearish on growth-oriented stocks when this system is on a sell signal, and index traders can also short the major index ETFs to benefit from the typical bias to the downside during a bearish phase. Option traders should consider intermediate-term put options out 4–6 months from expiration, as these signals can often last from 1–3 months.

BTTK DMI Difference (DMI Difference & 10-bar DMI Difference Average)

The Directional Movement Indicator (DMI) was developed by Welles Wilder to find trends in the market. The Average Directional Movement (ADX) can be a measure of those trends, as I like to see the ADX trending up to define a good trend in a security. But another useful tool is the DMI Difference, which overcomes a limitation of ADX. DMI Difference is simply creates by taking the result of (+DMI) - (-DMI), and I like to use 14 bars in my DMI calculations. I then take a 10-bar simple moving average (SMA) of the DMI Difference as well, to better spot trends in the DMI. You can use the DMI Difference to better see trends up when the DMI Difference is above its 10-day SMA, or new downtrends when DMI Difference is below its 10-day SMA. This overcomes the limitation of ADX once a strong trend ends, as ADX from high levels will often go through a prolonged decline, which would imply no trend to trade. But DMI Difference will show the new trend reversal more clearly after a strong trend, where you can trade the new trend reversal the other direction more clearly.

The BTTK DMI Difference System was designed by Price Headley and is designed to highlight strong, persistent trends which show the potential for consistent price movement over relatively short periods of time (usually 3–4 weeks on a daily chart).

This system also plots the -30 extreme, as this is often where a trend will end. At the same time, super-strong downtrends below -30 can be very good for quick bearish trades in the same direction as the DMI Difference trend. And, it also plots the +30 extreme, as this is often where an uptrend will end. At the same time, super-strong uptrends above +30 can be very good for quick bullish trades in the same direction as the DMI Difference trend.

Take a look at how well JP Morgan (JPM) moved once the bullish DMI difference indicator was confirmed… 3 points in less than a month. You can also see how the uptrend stopped once the DMI difference line reached +30.

And here's JP Morgan again, only this time with a bearish DMI difference plot. And once again, the end of the trend was roughly the point when the DMI difference line got to -30.

Using the DMI Difference System Long entry example: The DMI Difference system is currently indicated several long opportunities on ConAgra Foods (CAG) below.

Traders interested in taking advantage of this opportunity should look at buying the stock, while option traders should consider intermediate-term call options out 3–4 months before expiration, as these signals can last anywhere from 1–8 weeks. Very aggressive traders will typically look at call options one strike out of the money, or near the money around the current stock price, that cost $200 or less, while conservative traders should consider the call option with more intrinsic value, usually 1 strike in the money.

Traders should look to exit this position (1) if the DMI Difference crosses under its 10day simple moving average, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Long Exit: The DMI Difference system will indicate the ends of the long opportunities, as we saw for ConAgra Foods (CAG). Traders should look to close any positions that they currently have on a security when they see these exit signals.

Short Entry: Clear Channel (CCU) saw a few short/bearish signals on the chart below from the DMI Difference system.

Traders interested in taking advantage of this opportunity should look at selling the stock, while option traders should consider intermediate-term put options out 3–4 months before expiration, as

these signals can last anywhere from 1–8 weeks. Very aggressive traders will typically look at put options one strike out of the money, or near the money around the current stock price, that cost $200 or less, while conservative traders should consider the put options with more intrinsic value, usually 1 strike in the money.

Traders should look to exit this position (1) if the DMI Difference crosses under its 10-day simple moving average, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Short Exit: The DMI Difference system is currently indicating the ends of a short trades originally signaled for Clear Channel (CCU). Traders should look to close any positions that they currently have on this security.

Acceleration Bands The Acceleration Bands System was designed by Price Headley and is designed to highlight strong, accelerating trends which show the potential for dramatic price movement over relatively short periods of time (anywhere from 1 to 100 days on a daily chart).

Acceleration Bands serve as a trading envelope that factor in an option's typical volatility over a standard time period — usually 20 bars, or 80 bars in some circumstances. However, they can be used across any time frame to define likely support and resistance levels at the lower and upper Acceleration Bands. Acceleration Bands are plotted around a simple moving average as the midpoint, and the upper and lower bands are of equal distance from this midpoint.

The principle of Acceleration is one of the most critical lessons that active traders must learn. Stock and option traders need to get the best bang for their buck. They desire to rotate capital to the best performing stocks quickly and then rotate out of those stocks when the acceleration period ends. The goal is to keep moving your capital into the best-performing stocks. And option buyers especially need to be in the best trending stocks, as the time lost while holding an option can best be overcome by stocks that move sharply in the anticipated direction. We want to achieve maximum movement in the stock over the least amount of time possible.

Price Headley started his trading career focused on trendlines as a way to buy stocks at important support points and sell stocks at resistance points. As his trading progressed, he noticed that the biggest winners were the stocks that broke out and never gave you a chance to buy them back at support. The best profits come from the parabolic stock moves. These are the stocks which don't give you easy chances to get into them — what some might call "runaway" situations.

Based on years of research and monitoring the profiles of these stocks, these runaway stocks have several factors in common:

They are usually in growth industries, like technology, communications, biotechnology and health care.

Earnings are usually growing at very fast rates, typically 30% or more and many times at 100% or more.

Some amount of media debate about the company's future prospects — the best scenario is to find a stock that is getting attention for being "overvalued" — Price often finds that Acceleration Stocks often get more overvalued until the crowd recognizes the stock as a clear winner.

Usually there is a breakout to a new high over the prior 50-bar high — these breakouts have the most longevity based on past experience. Most investors like to buy stocks near their 52-week low and hope it returns to the 52-week high. Historically, studies have shown that over 80% of the leaders for the next 12 months were typically within 15% of their highs when their upside breakouts began.

After studying many different indicators to find where this "breakout point" appeared to reside in most stocks, Price Headley developed his Acceleration Bands indicator. Here are several additional pointers:

Usually look at the last 20 bars on the Acceleration Bands — on a daily chart this incorporates roughly the last month's trading activity, while on a weekly chart this covers 4-1/2 months and a monthly chart just over 1-1/2 years of price action.

The upper and lower Acceleration Bands are plotted equidistant from the simple 20-period simple moving average (though you can also choose to use an exponential moving average, if you wish). A daily chart shows a 20-day moving average, and a weekly chart plots a 20-week moving average.

Acceleration Bands adjust for a stock's volatility — the more volatile the stock's price action over the last 20 periods, the wider the bands will be around the moving average.

Once you see two consecutive closes above the upper Acceleration Band, you get a buy signal — on trending stocks this will often lead to a major upside Acceleration move — on choppy trading range stocks, this will often be a headfake.

One close back into the Acceleration Band signals a traditional exit of the trade, as the Acceleration period is now likely to end. But with more choppy price action, you may want to add additional filters to your exit criteria to make sure you can stay with the biggest trending stocks and options.

Here are the specifics:

Headley Upper Acceleration Band If this bar's close and the prior bar's close are both greater than the upper 20-bar Acceleration Band, then this in considered a buy signal. Exit techniques vary. The most strict technique is to

exit if any future bar's close is less than the upper 20-bar Acceleration Band. A 10-bar exponential moving average (EMA) can also serve as a good trailing stop on a closing break under the 10-bar EMA.

On this chart of Goldman Sachs (GS), the second higher close above the upper Acceleration Band is indeed a good buy signal.

Headley Lower Acceleration Band If this bar's close and the prior bar's close are both less than the lower 20-bar Acceleration Band, then this in considered a sell signal. Exit techniques vary. The most strict technique is to exit if any future bar's close is greater than the lower 20-bar Acceleration Band. A 10-bar exponential moving average (EMA) can also serve as a good trailing stop on a closing break over the 10-bar EMA.

When Amgen (AMGN) finally made the lower confirming close under the lower band line, it signaled an impending downtrend.

BTTK Headley Acceleration Bands (80 and 20 bar) Signals The BTTK plug-in includes indicators and signals for both the 20 Bar as well as the 80 Bar Acceleration Band systems. We'll look at examples of both.

Long entry: On the chart of ABM Indus. (ABM) below, the 80 Bar Acceleration Bands System is currently indicating a long opportunity. If this bar's close and the prior bar's close are both greater than the upper 80 Bar Acceleration Band, then this is considered a buy signal.

Traders interested in taking advantage of this opportunity should look at buying the stock, or option traders can consider buying a call option in the 2nd expiration month, as these signals can last from 1–100 days. Very aggressive option traders will typically look at call options one strike out of the money, or near the money around the current stock price, that cost $200 or less, while conservative option traders should consider the call option with more intrinsic value, usually 1 strike in the money.

Traders should look to exit this position (1) if any future bar's close is less than the upper 80-bar Acceleration Band, or (2) any bar closes under the 20-bar exponential moving average (EMA), or (3) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Long exit: On a chart of Abbott Laboratories (ABT), the 80 Bar Acceleration Bands System is currently indicating the end of a long opportunity several days after a long entry. Traders should look to close any positions that they currently have on this security.

Short entry: On the chart of Applera Corp. (ABI) below, the 20 Bar Acceleration Bands System is currently indicating a short opportunity. If this bar's close and the prior bar's close are both less than the lower 20 Bar Acceleration Band, then this in considered a sell signal.

Traders interested in taking advantage of this opportunity should look at selling the stock, or option traders can consider buying a put option in the 2nd expiration month, as these signals can last from

1–20 days. Very aggressive option traders will typically look at put options one strike out of the money, or near the money around the current stock price, that cost $200 or less, while conservative option traders should consider the put option with more intrinsic value, usually 1 strike in the money.

Traders should look to exit this position (1) if any future bar's close is greater than the lower 20 Bar Acceleration Band, or (2) any bar closes over the 10 Bar exponential moving average (EMA), or (3) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Short Exit: The 20 Bar Acceleration Bands System is currently indicating the end of a short opportunity on Broadcom (BRCM). Traders should look to close any positions that they currently have on this security.

BTTK Efficiency Ratio Developed by Perry Kaufman, the Efficiency Ratio (ER) is defined as:

ER = Net Price Change

(Sum of price changes — as positive values)

The whole principle of a stock's "efficiency" is based on how much directional movement (or trend) you get per unit of price movement (up and down) over a defined time period. I eliminate

the less efficient movers from my watch list and focus on those stocks or options that give efficiency readings of +30 or higher for bullish plays, or -30 or lower for bearish plays.

Headley Efficiency Ratio The Efficiency Ratio System was designed by Price Headley and is designed to highlight strong, persistent trends which show very little wasted movement during a clear trend phase, over relatively short periods of time (usually 3–4 weeks on a daily chart).

If the Efficiency Ratio crosses over +30, use that bar's high as the key point that must then be Closed above that bar's high to confirm a buy signal — exit if a close is less than the low on the bar when the Efficiency Ratio crosses back under +30.

If the Efficiency Ratio crosses under -30, use that bar's low as the key point that must then be Closed below that bar's high to confirm a sell signal — exit if a close is greater than the high on the bar when the Efficiency Ratio crosses back over -30.

Microsoft's (MSFT) chart shows a near-perfect efficiency ratio reading as it moved from $24.00 to as high as $30.00.

The Efficiency ratio can spot the best of downtrends too. Despite several potential reversals of the signal, EMC Corp. (EMC) continued to trend lower while its Efficiency Ratio, kept pulling back under -30.

When the Efficiency Ratio crosses over +30, use that bar's high as the key point that must then be Closed above that bar's high to confirm a buy signal. The Efficiency Ratio indicator is also

includes as a system signal in the BTTK. Using the same Microsoft example we saw above is currently indicating a long opportunity.

Traders interested in taking advantage of this opportunity should look at buying the stock, while option traders should consider intermediate-term call options out 3–4 months before expiration, as these signals can last anywhere from 1–8 weeks. Very aggressive option traders will typically look at call options one strike out of the money, or near the money around the current stock price, that cost $200 or less, while conservative option traders should consider the call option with more intrinsic value, usually 1 strike in the money. Traders should look to exit this position (1) the close falls below the low on the day the Efficiency Ratio drops below +30, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

The Efficiency Ratio system will also highlight the end of a long opportunity, as you can also see on the Microsoft chart above. Traders should look to close any positions that they currently have on this security when they see an exit signal.

The Efficiency Ratio System can also indicate a short opportunity, as we see on the chart of Cigna (CI) below. When the Efficiency Ratio crosses under +30, use that bar's low as the key point that must then be Closed below that bar's low to confirm a sell signal. Traders interested in taking advantage of this opportunity should look at selling the stock, while option traders should consider intermediate-term put options out 3–4 months before expiration, as these signals can last anywhere from 1–8 weeks. Very aggressive option traders will typically look at put options one strike out of the money, or near the money around the current stock price, that cost $200 or less, while conservative option traders should consider the put option with more intrinsic value, usually 1 strike in the money. Traders should look to exit this position (1) the close finishes above the high on the day the Efficiency Ratio finishes above -30, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

The Efficiency Ratio system will clearly indicate the end of a short opportunity. Traders should look to close any positions that they currently have on this security.

BTTK Momentum Divergence The MACD indicator is an excellent source of divergences at major turning points, and Price Headley developed the Momentum Divergence indicator to quantify the level of divergence for a stock or an option. Momentum Divergence can only range between 0 and 100 percent. This seeks to create a level playing field of comparison across all securities, as one of the challenges of the MACD indicator is that it plots MACD levels relative to the stock's price. This means that all things being equal, a higher-priced stock will have a higher MACD reading than a lower-priced stock, even if they have the same pattern. The Momentum Divergence indicator, which normalizes MACD readings across all stocks between 0 and 100 (with 0 showing the weakest momentum and 100 showing the strongest momentum, plotted in blue on the chart below), also plots the strength of the Price from 0 to 100.

One of the challenges of the MACD indicator is that it plots MACD levels relative to the stock's price. This means that all things being equal, a higher-priced stock will have a higher MACD reading than a lower-priced stock, even if they have the same pattern. Yet as an analyst, I want to compare apples to apples, and for the exact same pattern, I want the same reading consistently of the strength or weakness inherent in that pattern, across all stocks.

As a result, the Momentum Divergence indicator was crafted, which normalizes MACD momentum readings across all stocks between 0 and 100 (with 0 showing the weakest momentum and 100 showing the strongest momentum). The Momentum % line is plotted on the same pane as the Price % line, to show potential divergences or price action in which there is no divergence, and thus a stronger, more reliable trend. The strength of the Price % is also plotted from 0 to 100. I use 40 bars, as I find it more reliable then 10, 20 or 30 bars.

When the Momentum line turns up but the Price line falls underneath the Momentum line, we have a Bullish Divergence. In contrast, when the Momentum line is headed down but the Price line moves higher above the Momentum line, then we have a Bearish divergence. That's where the Momentum Divergence indicator can really help traders versus traditional divergence analysis. Usually a trader who has traded off divergences may get in too early, before the Price action finally starts to roll over to catch up with the Divergence. Once the intermediate-term Divergence line crossed under the 30% threshold, and the Price line is just breaking down under the 90% area, I call these "air pockets" where the price action can quickly drop to catch up to the underlying momentum on the downside. Once the Price line catches up to the Momentum line (often at this point near the 0% level), then the divergence is considered filled.

Verizon's (VZ) chart looks like it started to rally in June, but notice how we actually didn't see a true momentum divergence 'buy signal' until after July. Following this signal would have kept you out of that bump from early July, and only put you into the trend for the best part of the move.

Harrah's (HET) chart is an excellent example of a bearish momentum divergence....

Trend traders can also use the Momentum Divergence line to make sure there is a strong trend in the underlying momentum, and thus NO divergence to end the trend yet. I look for the Momentum line to hit 100%, a sign of new highs in underlying momentum. At the same time, I want to see the Price line above 90% and prefer it to hold above 90%. Once both lines come back under 90%, the price uptrend is considered ended. For a bear trend, I look for the Momentum line to hit 0%, a sign of new lows in underlying momentum. At the same time, I want to see the Price line below 10% and prefer it to hold below 10% (though price action in bear trends can be more volatile and go as high as 30% without making me too concerned). Once both lines come back over 10%, the price downtrend is considered ended.

Note that for the MetaStock add-on, this is actually the combination of two indicators — one overlaid on top of the other. Momentum Divergence: Close %, and Momentum Divergence: MACD Momentum %.

The Momentum Divergence tool can also be applied as a specific buy/sell signal.

Long entries: If the MACD% line is 100% and the Close% line is 100%, this is a sign of new highs in underlying momentum which show underlying strength to support the new high in price action. This is a buy signal. Once both lines come back under 90%, the price uptrend is considered ended.

Traders interested in taking advantage of this opportunity should look at buying the stock, or a call option in the 2nd expiration month, as these moves usually last 2–20 days. Aggressive traders will typically look at call options one strike out of the money or near the money that cost $200 or less, while conservative traders typically will consider the call option with more intrinsic value, usually 1 strike in the money.

Long exit: Traders should look to exit this position (1) when the MACD% < 90 and the Close% < 90, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Short entry: If the MACD% line is 0% and the Close% line is 0%, this is a sign of new lows in underlying momentum which show underlying weakness to support the new low in price action. This is a sell signal. Once both lines come back over 10%, the price downtrend is considered ended.

Traders interested in taking advantage of this opportunity should look at selling the stock, or buying a put option in the 2nd expiration month, as these moves usually last 2–20 days. Aggressive traders will typically look at put options one strike out of the money or near the money that cost $200 or less, while conservative traders typically will consider the put option with more intrinsic value, usually 1 strike in the money.

Short exit: Traders should look to exit this position (1) when the MACD% > 10 and the Close% > 10, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Percent R

Percent R: Bullish Entry Percent R was originally developed by Larry Williams as an overbought/oversold oscillator. A Bullish Setup occurs when the 30-bar Percent R crosses over the 80% threshold. It is ―Bull Confirmed‖ when the security closes above the high of the Setup bar. If we never get the confirmation, then I turn off the setup if Percent R comes back to read 79% or lower, as a non-confirmation usually means it is the top of the trading range rather than a new uptrend. If we do get confirmation, then the next reading of 79% or lower will set my next closing stop, where an exit will then occur on any close under the low of the bar when Percent R crossed back under 80% to 79% or lower.

A bullish setup occurs when the 30-bar Percent R crosses over the 80% threshold. It is Bull Confirmed when the security closes above the high of the Setup bar. If we never get the confirmation, then I turn off the setup if Percent R comes back to read 79% or lower, as a non-confirmation usually means it is the bottom of the trading range rather than a new downtrend. If we do get confirmation, then the next reading of 79% or lower will set my next closing stop, where an exit will then occur on any close under the low of the bar when Percent R crossed back under 80% to 79% or lower.

Research in Motion (RIMM) provides a good example of such a bullish entry.

Traders interested in taking advantage of this opportunity should look at buying the stock, or buying a call option two months before expiration. Aggressive traders will typically look at call options one strike out of the money or near the money that cost $200 or less, while conservative traders typically will consider the call option with more intrinsic value, usually 1 strike in the money.

Traders should look to exit this position (1) when the close is less than the low on the bar Percent R last crossed back under 80 to give a reading of 79.00 or lower, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Percent R: Bearish Entry A bearish setup occurs when the 30-bar Percent R crosses under the 20% threshold. It is Bear Confirmed when the security closes below the low of the Setup bar. If we never get the confirmation, then I turn off the setup if Percent R comes back to read 21% or higher, as a non-confirmation usually means it is the bottom of the trading range rather than a new downtrend. If we do get confirmation, then the next reading of 21% or higher will set my next closing stop,

where an exit will then occur on any close over the high of the bar when Percent R crossed back over 20% to 21% or lower.

Research in Motion (RIMM), just before the bullish example above, was a good example of a bearish Percent R-based entry.

Percent R: Bearish Entry Percent R was originally developed by Larry Williams as an overbought/oversold oscillator. A bearish Setup occurs when the 30-bar Percent R crosses under the 20% threshold. It is Bear Confirmed when the security closes below the low of the Setup bar. If we never get the confirmation, then I turn off the setup if Percent R comes back to read 21% or higher, as a non-confirmation usually means it is the bottom of the trading range rather than a new downtrend. If we do get confirmation, then the next reading of 21% or higher will set my next closing stop, where an exit will then occur on any close over the high of the bar when Percent R crossed back over 20% to 21% or higher.

Traders interested in taking advantage of this opportunity should look at selling the stock, or buying a put option two months before expiration. Aggressive traders will typically look at put options one strike out of the money or near the money that cost $200 or less, while conservative traders typically will consider the put option with more intrinsic value, usually 1 strike in the money.

Short exit: Traders should look to exit this position (1) when the close is greater than the high on the bar Percent R last crossed back over 20 to give a reading of 21.00 or higher, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

The lesson here is that the best trends tend to STAY very overbought on the upside or very oversold on the downside. Those who bet against these trends too early can get crushed very quickly. Flip around the conventional wisdom, and you'll notice many surprising trends occur below 20% or above 80% in Percent R. This is where the truly Big Trends occur, in any timeframe.

Percent R Retest: Bullish Entry: A Bull retest setup occurs when the security becomes confirmed, that is Percent R crosses above 80% and with in five days closes below that day's low. The Retest entry is triggered if %R crosses back above 80% within 30 bars. This relative spike up in asset price provides a low risk entry for Bullish trades. We found that the risk-reward ratio for retest entrys is lower than confirmation entries. After entry on a retest, the exit setup occurs on the day Percent R crosses below 80% (entry day), that day's high will be the closing stop. Exit criteria for this position should be handled in the same manner as a Bullish entry.

Percent R Retest: Bearish Entry: The Retest System is based on lower risk entry points after which a security has confirmed bullish or bearish. A bear retest setup occurs when the security becomes confirmed, that is Percent R crosses below 20% and with in five days closes below that day's low. The Retest entry is triggered if %R crosses back above 20% within 30 bars. This relative spike up in asset price provides a low risk entry for bearish trades. We found that the risk-reward ratio for retest entrys is lower than confirmation entries. After entry on a retest, the exit setup occurs on the day Percent R crosses above 20% (entry day), that day's high will be the closing stop.

Percent R was originally developed by Larry Williams as an overbought/oversold oscillator. A bearish Setup occurs when the 30-bar Percent R crosses under the 20% threshold. It is Bear Confirmed

The BTTK add-on also includes 'Percent R of Yesterday' and 'Percent R of 2 Days Ago'. The principle is the same for both of those versions of the tool. Price primarily likes to look at scans for Percent R today versus where Percent R was the prior two days, to find low-risk entry points.

Percentage Above Long-Term Moving Averages Though most of Price's indicators are designed to monitor short-term efficiency and trends, there's still power in the long-term trends (even if in the short-term). Two of his favorite tools are designed to spot major bullish trends for individual stocks.

Note: There are no short signals for the Percentage Above The 200-Day MA System.

Percentage above 200-Day Moving Average The Percentage Above The 200-Day MA System was designed by Price Headley and is designed to highlight stocks (often small-capitalization companies that are entering a surging growth phase) which show the potential for dramatic price movement over 1–12 months.

VCG Holdings (PTT) is an excellent example of this tool in use.

Buy if the close is greater than the high of the bar when the Percentage above 200-day Simple MA crosses above 100%. Exit if the close is below the low of the bar when the Percentage above 200-day Simple MA crosses back under 100%.

Long entry: Buy when the close is greater than the high of the bar when the Percentage above 200-day Simple Moving Average (MA) crosses above 100% over the 200-day. The signal will appear as you can see on the chart of VCG Holding (PTT)

Traders interested in taking advantage of this opportunity should look at buying the stock usually, as most of these stocks will not have options yet. In cases where options exist, traders should consider longer-term options, ideally between 9–12 months until expiration as these movers can last for many months.

Aggressive traders will typically look at call options one strike out of the money that cost $200 or less, while conservative traders typically will consider the call option with more intrinsic value, usually 1 strike in the money.

Long exit: Traders should look to exit this position when the close is below the low of the bar when the Percentage above 200-Day Simple MA crosses back under 100%.

80-Bar Bollinger Bands Breakout System The 80-Bar Bollinger Bands Breakout was designed by Price Headley and is designed to highlight strong, persistent trends which show the potential for dramatic price movement over relatively short periods of time (usually 2–4 weeks on a daily chart).

Long entry: The 80-Bar Bollinger Bands Breakout System is currently indicating a long opportunity. Bollinger Bands were originally developed by John Bollinger. In find short-term Bollinger Bands tend to react too quickly for traders seeking to find an unusual trend, while the 80-bar Bollinger Band is quite effective at spotting significant new trends while not racing too quickly to catch up to the breakout until the new trend is mostly complete. I look for a first close above the upper 80-bar Bollinger Band, followed by a close above that bar's high to confirm the new uptrend.

The value of this system is evident on the Rockwell (ROC) chart you see here.

Traders interested in taking advantage of this opportunity should look at buying the stock, or buying a call option two months before expiration. Aggressive traders will typically look at call options one strike out of the money or near the money that cost $200 or less, while conservative traders typically will consider the call option with more intrinsic value, usually 1 strike in the money.

Long exit: Traders should look to exit this position (1) when the close is less than the low on any return under the 80-bar upper Bollinger band, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).

Short entry: Bollinger Bands were originally developed by John Bollinger. In find short-term Bollinger Bands tend to react too quickly for traders seeking to find an unusual trend, while the 80-bar Bollinger Band is quite effective at spotting significant new trends while not racing too quickly to catch up to the breakout until the new trend is mostly complete. I look for a first close below the lower 80-bar Bollinger Band, followed by a close below that bar's low to confirm the new downtrend.

The Weyerhaeuser (WY) chart serves as a short entry example.

Traders interested in taking advantage of this opportunity should look at selling the stock, or buying a put option two months before expiration. Aggressive traders will typically look at put options one strike out of the money or near the money that cost $200 or less, while conservative

traders typically will consider the put option with more intrinsic value, usually 1 strike in the money.

Short exit: Traders should look to exit this position (1) when the close is greater than the high on any return over the 80-bar lower Bollinger band, or (2) on the close 2 weeks before the expiration day (usually close by the first Friday of the expiration month).