At All About Trends we focus upon the only three things you need to
know to be successful in the markets.  In fact this is the cornerstone upon
which our whole philosophy is built.

Uptrends - And
how to trade them

Downtrends - And how to trade
them

Change In Trends- And how to identify
them

We've spent a lot of time on the long side recently. We talked about
Pullback Off Highs (POH) chart patterns in stocks in clearly defined uptrends
and uptrending channels so by now you should all be aware of that pattern. What
we really haven't touched upon lately is that of downtrends and how to trade
them nor "Change In Trends" and how to identify them -- they both go hand in
hand.

So let's talk about  "Change In Trends" because there always comes a
time when indexes and individual issues get to a point where they go into
corrections. We pride ourselves on being prepared in advance around here as it's
necessary for one's success. ALL successful traders share this
trait.

When it comes to change in trend patterns, in this
case from up to down for those who are long and long only it's a what to watch
out for. After all if you are long at a market top or peak you need to know when
to get out right?

For those who are opportunists and are
interested in making money regardless of what is going on in the market all in
their quest to be all that they can be it's a what to watch for from a when to
sell short perspective.

But before we get into any of that we need to talk about trend
channels.

We've been talking a lot around here about the use of trend channels
to define ones risk.

But what does it look like when an overall trend is
busted?

First off while uptrending issues are in up trend channels many
will form change in trend patterns which is an early warning alert system
pattern that tells us a change in trend MAY be near. Here is the IMPORTANT PART:
WHILE STILL WITHIN THE OVERALL UPTREND CHANNEL.

This is where change in trend patterns come into play.

The most common are Double Tops, and what we call First Thrust
Downs and POL Bear channels.

Double Top

HLF

ANGI

IART

FMX

As you can see all WERE in clearly defined uptrend channels. Until?
Until there came a time where they initially stalled and built out a few
patterns namely Double Tops And First Thrust Down patterns.

This is how you spot Wall Street selling peanuts while the circus is
in town, that and climax runs by the way. Think TASER and QCOM when they both
went on climax runs but that's another story for another
time.

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Now let's look at some current Market Leaders

Keep in mind these names lead and that means both directions, Bill
O'Neil said it best, when the market leaders roll over the rest of the market
isn't far behind. So it pays to be prepared in advance.

There are more charts showing patterns just like these, this is just
a small sampling.

We trade what we see around here and when we start seeing these to
patterns start to show up?

We need to pay attention and most importantly
to make sure YOU our clients have this brought to your attention. After all
isn't investing rule number one protection of principle. Remember part of what
you pay us for is also to keep you out of trouble and from making rookie
emotional mistakes.

That said look at all the names above. See what looks
to be developing? We say looks because they are still potentially building
out.

Will it happen? Will these patterns come to fruition?  We don't know
and neither does anyone else. What we care about is IF they do come to fruition,
if they do and start to break to the downside? You had better pay attention
regardless of whether you are long only or an opportunist on the short
side.

If they do break, consider us having done our job by making you
aware in advance vs. getting blindsided or worse start selling when everyone on
the street is saying sell sell sell AFTER the damage has already been done as
we've seen time and time again.

Which would you prefer? The former or the later.

If they don't break? We've still done our job by at least making you
aware of this and equally important that of what change in trend patterns in the
up to down variety look like.

The other thing we want you to be aware of is where they are now vs.
where they WERE. As you can see there are no low risk Pullback Off Highs (POH)
showing in any of them currently.  Which is to be expected as the real trade was
in the face of fear. This brings up interesting food for thought for all of you
to ponder. If the best lowest risk entries to be had with these examples were in
the face of fear and uncertainty what does that say about buying stocks like
these in the face of certainty with no low risk entries to be had. 

Keep in mind markets typically bottom when the news is overwhelmingly
bad and a news driven event typically takes place.  Markets typically top when
the news is good hence the sun is always brightest at its peak, that's when Wall
Street gets premium dollars for the peanuts they are selling while the circus is
in town you know.

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Remember, there are two ways to work with us. You
can trade in tandem or you can trade to the beat or your own drum ala a do it
yourselfer like many of our subscribers.  Like we've said, life is a choice and
YOU get to choose in every moment and actually are choosing in every moment. We
constantly give you the tools to work with every day around here you know. Keep
in mind that we aren't just about giving you a fish so you are fed for a day,
we're more about self empowerment and YOU "Being All That YOU Can Be" too you
know, hence the phrase "Teach you how to fish so you are fed for LIFE".

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To our NEW
SUBSCRIBERS

What we've tried to do is break our watch
list down into chart pattern
recognition structure from a visual standpoint. Learn the patterns and
the components of patterns and you'll blow those Wall Street MBAs away. You don't need a $3,000 software
program either.  All you need is a BURNING DESIRE to be the best that you can be
and we're here to help.

We have a lot of
new folks here and we thank you!  We want
you to take it easy, get to know how the routine works around here for awhile
and to feel comfortable.
We hope you
all aren't here because you are chasing performance. For us it's more
about educating and making you the best you that you can be first (that's what
we focus upon!).  Like many of our long time subscribers they have all found out
that they have no use for traditional Wall Street (and we don't blame them) and
it's our hope that over time you'll have acquired enough knowledge from us to
say the same with conviction.

One of the most important things we want to
stress is that of RISK MANAGEMENT via POSITION SIZING. You
don't need to stack your account with just a few big positions as we've seen it
time and time again that those who get into trouble are the ones who take large
positions and do not employ any risk management system IE shoot for the fences.
Those are the people who live on the fringes of extremes and yes ultimately get
burned.

As a guideline a good initial system is that of the following
example.

Let's say you have  a $100,000 portfolio and let's say that as a
guide you never place more than 10% ($10,000) into any one position.  Now let's
say that one day a news driven event hits (over which you have no control over
anyway) and one of the positions tanks 20%.  On its own that position is
sporting a $2,000 loss, while that may seem devastating on its own its really no
big deal overall.

Why?  Simple its all about risk management being
properly employed. What is the impact of a $2,000 loss to the TOTAL VALUE of the
portfolio in this example.

Answer: A whopping 2% LOSS.  Now you know why
we say no big deal. 

We can also tell you new people here that you will
get stopped out of names and you will take hits. There is nobody on the planet
living that has ever hit 18 holes in one and there never will be. We'd rather
get you grounded in reality right away vs talking about pie in the sky all the
time like a lot of other sites.  In so doing your head is screwed on straight
from the start and when those days happen (and they will) mentally it won't mean
a thing to you. To us that's what's most important is YOUR state of mind as
it's your most important asset. We hope you appreciate our honesty.

We
have a very good retention rate here at All About Trends and a lot of great
outstanding people here. We like to think that a part of that is being upfront
about what can happen (in both directions). Verses those up 500%, I turned
$50,000 into $3 million or some other absurd number to get you to bite. That's
not who we are.

1. Make a gain
2. Wash
3. Get
stopped out at a loss

Remember the market IS the boss. IT
is going to do what IT wants to do.

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