Daytrading Course
Learn to Read the Tape
Exploit Pit Pivot Points
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PIVOT MAGIC TRADING JOURNAL - EXCERPT

Good morning,

A classic FOMC day, Tuesday trading got quieter and quieter leading
up to the announcement, then once the news was out (saying exactly
what was expected, duh), extreme Volume blasted Price Action
instantaneously skyward. Pretty much could have trading Tuesday
blind, or worse, using Fundamentals. LOL!

The market has plunged over a very significant precipice.
A Red Flag warning remains in effect.

CAVEAT
Although a dangerous time for beginning traders to get wet,
this is an excellent time for paper trading and practice.

E-mini
Tuesday Dec 16, 2008

Morning session opens gap-up, inches toward the R1 and hovers, quivering in anticipation of the Fed.
In yesterday's Pivot Magic Trading Journal, PERSPECTIVE section, I suggested,
"For a frequently reliable TELL, watch the morning Price Action
for indications of the BBs true trading direction preference.
This may provide an entry decision edge following the degaussing
effect of the FOMC swing."

Now you ask, "So? Where was the TELL?"

A = Go read the tape. In face of the upcoming FOMC:

* The opening gap up (red arrow) strongly suggests that the BBs
first instinct is Bullish.

* The final Bull DVS blip before the market went silent (blue arrow)
served to keep the sideways drift up at the R1.

That's at least two dead-giveaway TELLs, revealing,
"Anticipate the market to be Bullish after the Fed degaussing."

B = Report is out! Market gausses and degausses on the first candle. We, risk-conservatively wait
a safe amount of time after the train passes before we consider entry.

1 = Aggressive entry as the red half of the 2-bar "P" Signal off the R1 clears the low of the white Bear
Dragonfly spike. By the close of the candle, jump profit-locking stop (joyfully) to "free trade".

C = Long tail of the large, red, inverted (Bull) Dragonfly skids (clear Momentum exhaustion symptom) to
tap on the R1. By the time > 2.5 points of profits are recouped, Exit Now! +/- 4.50 points

2 = Another potential aggressive entry 2-bar, but this time it is DVS-based, which PMT readers of the
tape tend not to trust for longevity. So we sit.

3 = Strong Volume (pink arrow) and the tape presents us with an aggressive entry 2-candle "S" continuation
opportunity above the R2. Initial stop, advanced under the R2, moves under the lavender line (LT SW
Channel ceiling) at the close of the candle penetrating that PL.

D = Large white candle. Per PMT stop rules, inch the profit-locking stop tighter, under the low of the
candle.

NOTE: Three candles in a row now have elongated upper wicks, implying
the erosion of Momentum. Thinking Pivot Scalp exit. Have your exit
order ready, and keep your finger on the trigger.

E = Large, white, inverted (Bear) Dragonfly (another long upper wick, be prepared). Per our rules, move
the profit-locking stop under the low of the candle.

The next candle to tape is a large red Bear Dragonfly. That's a mid-air Reversal signal (one of our PMT
Exit Now! signals). With insufficient time to Cancel-Replace, we are taken out at the stop. +/- 6 points

Following a retest of the lavender line, EOD Price Action closes docilely at the R3.

PERSPECTIVE
(Daily, bottom chart)
Looks like the Fed managed to finally boost the BBs free of the lower LT SW Channel
(lavender channel lines). After crashing the market by raising the interest rate
too rapidly to slow inflation, now the Fed has reduced interest to an all time low.
Thus, they have exhausted their ammunition in the opening volleys!

Do you believe that this not very subtle or complex patch maneuver will fix the
economy? Me too neither.

Expected headlines for next week:
Financial Free Fall Follows Fed's Fast Fix Failure

REMEMBER: Trade the tape, not my prognosis!

Asher
=] ;-)>
Pivot Magic Trading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%20Trading.html

Tuesday's PMT Chart: