BS"D

RULES AND CAVEATS

Pivot Magic Trading Course
First rule:
"...Any time you don't know what is happening, get out!"

http://www.TradingThingys.com

MARKET IN REVIEW - LITE
Tuesday (07 December 2004)
_____________________

Morning session opens just slightly up from the Close/Pivot, and promptly
trades back to test the Pivot. No prior trend. No Reversal.

1 = 10:00 Reversal Time Zone. A gentle tap on the R1 Reversal. Pivot is
proven S/R. Price Window too small. Volume confusing. Entry would need
to be below the Pivot, exiting the "green fog".

Price Action again taps off the Pivot. Volume dies off as early lunch
begins.

2 = DT Multi-topped reversal off R1. This is also a lower high. Volume
is not supportive (not mandatory, but desirable here) and, of course
entry is once again only below the Pivot, exiting the "green fog" ambush
zone.

A = Reversal (= 2) not only continues, but proves TTT (Third Time
Through) the Pivot. Volume resumes (middle chart). The BBs are back
from drinking lunch. This gigantic candle falling through the S1,
enables us to enter, and to immediately place our profit-locking stop at
"free trade". That's stretching our rule a tad (stop S/B above the
candle high), but:

* Price Action has traversed quite distance.

* Price Action has punctured the S1.

* Retest of the Pivot is a serious imminent possibility.

B = 123 retest of Support-turned-Resistance at S1 and a giant Marubozu
(candle with no wicks) slams toward S2. Per our rules, move profit-locking
stop above the high of the candle.

C = Beginning PMT traders might have exited on either of these Reversals.
(Not an altogether bad, risk-conservative move. Especially on the Doji
spike. 5.75 points)

Why would advanced traders not exit or reverse here?

First Try
===========
2-bar/DT Double bottom off S2:

* Signal does not complete until two candles later,
and even then, the move does not prove.

* Volume drops to 1/3 and immediately goes Doji
(undecided, see middle chart). Bull momentum is
clearly too weak to retest the S1 at this time.

Second Try
============
Doji spike Sandwich with Desperation Volume spike:

* Again, the move does not prove.

* Volume is trending downward. Implying no Bull
momentum.

* Notice that a Descending Triangle, continuation
pattern has formed with a series of lower highs
(lavender lines). Thus, not only is the Bull
momentum weak, but the pressure is definitively
Bearish.

D = Test of MA finally fails and Price Action plunges, charging for a
TTT attempt at S2. If this assault fails, look for an opportunity to
exit. Quite happy for the chance to lock in profits, move
profit-locking stop above MA.

E = 123 test of Support-turned-Resistance, S2, yields what aggressively
might be termed second healthy red candle closing beneath S2. As we
approach the EOD hiccup Danger Time Zone, tighten profit-locking stop
above S2.

F = Large red candle. The clock is running, so we apply our rules
aggressively. Move profit-locking stop above the high of the candle.

G = Test of MA fails. Though mid-session we might be tempted to let the
position breathe by moving profit-locking stop above MA, at this late hour
take the more aggressive alternative and move the profit-locking stop
above the high of the large red candle.

Per our rules exit before the completion of the 4:10 candle.
+/- 10 points

Our prognosis Friday and Monday suggested
Price Action closing the old unclosed gap
(60-Minute chart, bottom left, = H) and
testing the long-term trend channel floor
(Daily chart, bottom right, green lines)
early in the week.

Well, Tuesday was at least an almost. Wonder
if we have taped a new trend channel floor
(pink line). The gap is only "just" closed,
so I suspect at least another stab south.

REMEMBER: Trade the Tape, not my Prognostics!

Asher
=] ;-)>
Pivot Magic Trading Course
http://www.TradingThingys.com

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Monday's PMT chart:
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