BS"D

Good morning,

In yesterday's Daily Pivot Magic Trading Journal, we called it, thrice:
" . . . (1) Prepare for some vigorous Price Action tomorrow . . .
(2) Be prepared for a bit more range on Tuesday . . .
(3) anticipate a plunge to test the floor of the new LT Trend Ceiling
(Daily, bottom chart, green dashed channel lines) . . . "

Not to say we necessarily scored! Some of us, nervous from weeks of swing trading, SCRATCHED.
However, the more experienced PMT Readers of The Tape rode the move all the way down, and made
out nicely, thank you.

******************************

E-mini ES H0
Tuesday January 12, 2009

1 = Morning session opens gap-down near the S2, and continues down to test the PL. If we are hungry enough,
we might stretch it and count the large white Bull Dragonfly Reversal candle (on DVS energy) as part of the
preceding trend and call for an entry. (On the Opening Range, this is not a temptation for good ole
risk-conservative me, BTW.)

A = If so, you got pulled in on = A, with initial stop under the low of the candle.

The diminishing Volume (pink arrow) warns that this may well be a Pivot Scalp exit scenario.

When the tail of the red Bear Dragonfly taps on the S1 and retracts, experienced traders exit. +/- 1.25 points
Less experienced PMTers waited till the Higher-High-Turns-Red completes the Exit Now! Signal and SCRATCH!

2 = Failed TTT (Third Time Through) Corollary - assault on S2. Just barely enough Price Window open to the just
barely proven S2, this requires a very aggressive entry below the MA.

3 = Either (finally) move the profit-locking stop above the MA from the = 2 entry, or take the Second Chance
entry signal (a "P" Signal off the MA is a tradable "S" Signal), and advance the initial stop above the MA.
The Double Black Volume Bar of Death pre-Reversal formation makes this a positive, high-odds trade.

B = Getting a mite nervous. Seems appropriate to apply the pre-emptive 3-5 PMT Scalp Stop rules. Move
profit-locking stop to "free trade" plus a tik.

Large red candle spikes through the S2 (pixels forced me to place the PL a drop high, so the spike in only
0.25 point deep). Call this a large red candle and move the profit-locking stop above the high of the candle.
Since the S2 is vaguely proven, use a mental stop.

The DVS late in the move (pink arrow) warns of a possible bounce, so many of us Pivot Scalp exit at the first
sign of white.

When the Bulls barely respond on the next candle, others realize that there is little chance that lunchtime will
see a crossing of the MA and hold.

D = Though we'd surely hesitate to enter on this S2 123 Continuation of assault to the Extreme S3, it is a good
opportunity to move the stop above S2 and to add contracts.

E = DVS burst (pink arrow) pumps a giant red candle south. The position is now in violation of Pivot Magic
Trading Maximum Profit Giveback (MPG) rules. Mental stop at Giveback Level.

F = Black Volume Bar of Death Doji. Prepare to exit should the forward Momentum not be sufficient to complete
the assault on S3. Furthermore, assume a Pivot Scalp exit.

G = Rather than reversing, the tape reveals a large red candle stretching almost to the S3. Red Twin Towers
(pink arrow) indicates a stall/sag is next.

* Should Price Action drift south, Pivot Scalp exit gains our position +/-0.75 point.

* Should it instead sag sufficiently to test the MA we will have given back +/-1.75 points.

The R:R is unfavorable skewed. Waiting is definitely not worth the risk. Exit briskly. +/- 5.75 points

Satisfied to rest atop the S3, the market makers join the lunch crowd, never to return.

4 = If you SCTRATCHED the first trade early, you were feeling greedy about now:

* A rousing 2-bar off the S3

* Volume nominally up (pink arrow)

* S2 Resistance unproven (Price Window wide open)

Sorry, no proceeding trend! PMT rules force a "Pass".

EOD Hiccup (plum lines), right on time, with the classic "V" check mark pattern, did complete a dynamic run,
uninterupted from S3 to S2. There the day closed.

PERSPECTIVE
(Daily, bottom chart)

Tuesday's day candle described a fairly aggressive (but low Volume) Bear assault
on the new LT Trend Floor (green dashed channel lines). Finally!

Overall, Price Action remained noncommittally in the middle of the larger LT Trend
Channel (green channel lines).

Although it may only be small breather candle, anticipate a plunge to test the floor
of the new LT Trend Channel (green dashed channel lines) on Wednesday/Thursday.

REMEMBER: Trade the Tape, Not my Prognostics!

Asher
=] ;-)>

Pivot Point Daytrading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%20Trading.html

Tuesday's PMT Chart: