Perversity is the reality of stock market. A classic trend will have many deviations from trend activity. These deviations include false breaks, congestions and springs.

Springs, the most important and strongest signal of trend turn. Market springs are market perversity. Skills need to learn is, to recognize, use and profit from them. A spring is a break of a well-defined trading range. The spring can occur with light, moderate or heavy volume. By all appearances most players will think that the stock is very weak and is likely to plunge to new lows. The reality, however is different from the perception. The reality is that the stock is strong and one of the best buying opportunities is presenting itself. The reason is that the initial risk is low while the potential profit is quite large.

The word spring come from terminal shakeout. They are terms old-time market operators used to describe how the untrained public was scared out of the holding by professionals. The vast majority of the public is looking at what rather than how. The public saw what was happening as the share plunged but the professionals were watching how it was happening.

Type of spring is subjective. You need to learn by observing and watching price action over a multi-month time frame. You learn by experience and there are no shortcuts.

Three types of springs:

• Number 1 spring: Deep penetration to new lows, heavy overwhelming supply, widespread fear, extreme price weakness, forced margin call selling, very wide price spread, also known as the terminal shakeout.
• Number 2 spring: Not as severe as the number 1 spring. Moderate volume, some widening of the price spread, some increase in price weakness, uncertainty rather than fear.
• Number 3 spring: Lack of supply, some increase in price weakness, the emotion is surprise rather than fear, narrow price spread, the most treacherous of spring pattern.