Action Reaction Course 51

FFES Letter for the week of January 7, 1985

There was no letter last week due to the holiday and shortened trade week.

Just another reminder to those who have not sent in their $25 and still wish to receive the weekly letters.

First of all there was an error in the sugar chart comments in the 12/24/84 letter. Please correct line two (down from the top) to read: “Evident when considering that the last ML of any significance that was reached by price action was.” This should make a great deal more sense to the intent of the comments.

For those members sending in questions for the professor to answer please follow these instructions. Leave an adequate amount of space on your chart or on your paper after the question for its answer.

We have had a few inquiries about option pamphlet information from subscribers. If you would like we will have our broker send you some information, just send us a note requesting this information.

Because of some of the questions sent in about our discussion of expanding pivots (EP’s) and skewed expanding pivots (SEP’s) we are going to devote this whole letter to their discussion and presentation. We had assumed that all of our members were familiar with these formations and their import upon market action that tends to follow their appearance. First, the expanding pivot is a situation where the market makes a pivot, then a lower P, then a P higher than at P1, next a P lower than at P2, and finally a P higher than at P3. This is shown schematically at the bottom of the page. A SEP is similar in that the P’s swing wider but no new lows are made, only the size of the swings increase, This is also shown schematically. Note that P3/4 is greater than P1/2 and P4/5 greater than P2/3.