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
Monday (24 January 2005)
_____________________

Following Overnight trading, morning session opens gap-up at the Pivot
and continues north.

1 = Anomaly Signal at the Pivot (See Overnight, bottom left chart.)
Volume is decent. Break out candle is a "P" Signal in its own right,
red Bear Dragonfly.

A = Giant red candle traverses more than 2 points. As is our custom,
Opening Range entries demand aggressive stop placement; Move
profit-locking stop to "free trade".

A/2 = Desperation Volume Spike (middle chart). So early in the move?
Followed by a Doji. Momentum is flagging. White Bull Dragonfly almost
turns this into a Sandwich (incomplete?).

Next candle swings south. Price Action seems stalled at the Close.
It's 10:00 Reversal Time. In light of the zig-zagging momentum, stretch
it and call this a failed test of the MA. Tighten the profit-locking
stop above the MA.

2 = Fourth hit on the Close and Price Action finally reverses. At any
other time of day, we would exit now. Because we entered during Opening
Range, however, our stop is tight and we get taken out at our stop before
we can react. Little more than a scratch trade. +/- 1 point

RECONNOITER

PMT trading day is now pretty much over, or at
least limited. With the Close-Pivot channel proven,
we require either a clear Bull signal above the
Pivot or a clear Bear signal below the Close.
Slim pickins.

B = Price Action continues to trade sideways in the Close-Pivot channel
for the next several hours. BBs come back from lunch and immediately
spring a fake-out Bull trap. Notice how the Volume dies completely after
the Doji Spike (middle chart). I call this a revolving door maneuver.
Push, and then step aside and let those pushing the other way (often
volumeless gravity in the case of south) fly through in the opposite
direction. This time it carried through the Pivot even! With the
suckers money, of course.

Not PMT traders though, cause we need either a Bull signal above the
Pivot or a Bear signal below the Close (See Reconnoiter, above). No real
trades today, but at least, once again our risk-conservative PMT rules
kept us from being taken to the cleaners!

C = As with almost any crossing of the Pivot (especially a
late-in-the-day crossing), Price Action promptly retests the
Support-turned-Resistance at the Pivot. Too bad the Close is so
definitively proven!

Looking at the clock, we see that there is not enough time for a
PMT-acceptable move outside the channel. Turn off the monitor and find
someone in need of your assistance.

D = The sumo of all Japanese candles, large Marubozu candle (full-body
without wicks) slams against the Close. Incredible Desperation Volume
Spike (middle chart), as the Bears break out of the 5 1/2 hour long,
sideways channel.

3 = Disproving (again) the old concept of channel breakouts flying away
freely in the direction of the breakout, Price Action returns to retest
the channel floor, the Close. Support-turned Resistance holds, and the
tape presents us with a nice 123 "S" Signal - Exactly at the EOD hiccup
Danger Time Zone. Perfect for some brave scalper, but a no-no for
risk-conservative PMT traders.

PERSPECTIVE

(60-Minute, bottom center chart)
E = Thursday's opening gap still remains unfilled.
Although Monday was a Bear day, it wasn't all that
decisive. Perhaps this unfilled gap is nibbling at
the back of their collective consciousness?

(Daily, bottom right chart)
Not a whole lot to add to yesterday's comments, but
Price Action does continue to inch toward the 50%
(Fib) retracement level of the longer-term trend
(bounded by the red and green lines).

As I said, all-in-all, Monday was a pretty lousy PMT trading day.
Perhaps Price Action will swing back for a bit more tradable tape
on Turnaround Tuesday?!?

Hey, learning how and when to patiently sit and protect our trading
account is a valuable lesson too. Not so much fun maybe...

REMEMBER: Trade the Tape, not my Prognostics!

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

Monday's PMT chart: