Daytrading Course
Learn to Read the Tape
Exploit Pit Pivot Points
******************************

PIVOT MAGIC TRADING JOURNAL - EXCERPT

Good morning,

Well, Wednesday was good practice! On the very first trade we studied
"The Anatomy of a Scratch". LOL!

Wednesday was the large-range day we "promised" (Daily, bottom right chart,
24-hour session). Oddly, on the 5-minute, day session trading chart,
Price Action taped a modest-ranged, virtually sideways day. Profits were
modest as well.

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

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

E-mini
Wednesday Jan 14, 2009

1 = Day session opens way gap-down at the S2, with a BEAR Reversal (no less!), "S" Anomaly Signal (Overnight,
bottom left chart).

A = This large red Bear Dragonfly kickoff candle retests, spiking through the S2, and pulls us in. Initial
stop advances above the S2.

B = Rather fragile looking, marginally large, red candle stretches to almost tap on the S3. Per our stop rules,
move the profit-locking stop above the high of the candle.

The long bottom wick of the red, inverted (Bull) Dragonfly implies respect for the S3, and an appropriate slowing
of Momentum. Prepare for S2 retest.

Next candle also stretches and barely taps on the S3, and promptly retracts. Either as soon as it retracts, as
soon as it shows white, or when it completes as a white Bull Dragonfly reversal signal, are times to have left
the fray.

WORST CASE SCENARIO:
Bulls achieve the S2 Objective.
Our stop is going to be hit.

MOST LIKELY SCENARIO:
The MA Resistance holds back the Bulls from accomplishing
their S2 aspirations.
Our stop is going to be hit.

EXIT NOW! SCRATCH!!! +/- 1.75 points

Indeed our stop would have been hit, taking back most of even that mini-profit.

2 = Needless to say, having shaken out the risk-conservative traders (us), the Bears tape a massive failed test
of the MA, completing a resounding 123 continuation, "S" opportunity.

C = Pulled in on large red candle below the S3. Powerful Volume (pink arrow). By close of the bar, the tape
displays a Twin Towers. That's one of our Reading of the Tape signposts, indicating an immediate
stall/sag/retrace. Initial stop advances above the S3, and we watch.

3 = Rather mild, failed 123 test of the S3 Support-Turned-Resistance encourages those PMT traders still not
holding positions to enter. If you entered on = 2, reward your nerves by adding contracts.

D = DVS (pink arrow) pumps a large red candle, (pulling you in from = 3, stop above high of candle, or) increasing
profits from = 2. Normal PMT stop placement leaves the position in violation of the Pivot Magic Trading Maximum
Profit Giveback (MPG) rules. Mental stop at Giveback level.

E = Small exhaustion gap and continuing strong Volume tapes a large, red, inverted (Bull) Dragonfly.

HINT: The candle following is why I assumed retroactively that the small
gap was an exhaustion gap rather than a breakaway gap.

Per our PMT stop rules, move the profit-locking stop above the high of the candle. As experienced Readers the
Tape, we now prime our exit order.

F = Giant red candle puts our position in MPG violation. Mental stop to Giveback level.

NOTE: In light of the multiple exhaustion warnings, it is extra nice to
have the flexibility of a mental stop (i.e. enabling us to exit with one
stroke, with no clumsy Cancel-Replace maneuvers required.)

The next candle is a full-sized, white, Bull Dragonfly, a mid-air Reversal signal. Pretty much the same
scenarios present as in = B, above. Exit Now! (Got positive slippage!) +/- 7.75 points

The MA in fact holds, and our stop would have been hit, all just in time for the BBs to lose interest and head out
to the pubs. A Very long lunchtime sideways drift twines lazily around the MA.

2:00 - BBs return to push Price Action from mid-air, up to assault the S3. The assault fails to overrun the S3
Resistance. The BBs' push up has however made them enough room for a nice gravity-drop scalp maneuver.

4 = DT Multi top heads south. With the suckers' money. We of course are backing the BBs! As a late afternoon
scalp this move may be fast and furious, and then just as suddenly die. Be prepared.

G = Large red Bear Dragonfly kicks off the S3, pulling us in under the MA. Initial stop advances above the S3.

H = The tiny Doji retest of S3 makes this large red candle a 123 breakout ("S" Signal). As such, it is an
opportunity to add contracts. Our position is in MPG violation. Mental stop to Giveback level.

J = Inch the profit-locking stops down, above the highs of these large, but feeble, red Spinning tops. Momentum
is surely failing. Ready to pull the trigger?

K = Final exhausted stretch to nowhere. By the time Price Action reclaims 2 points of profits, Exit Now!
+/- 6.75 points

In spite of elevated Volume (representing the traders offloading their positions), trading is sluggishly
sideways at the MA to EOD.

PERSPECTIVE
(Daily, bottom right chart)

Large red day candle, about half of which was taped overnight before day
session opened, heads deep into the LT SW Channel (lavender channel lines).
Overnight Price Action crossed over the aqua line of Historical S/R with
ease, and never looked back. Meanwhile, according to the Day Tape, a
retest of the LT SW Channel floor sure looks ominously imminent.

REMEMBER: Trade the tape, not my prognosis!

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

Wednesday's PMT Chart: