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

Good morning,

In yesterday's PERSPECTIVE we were:
"Expecting a quick ceiling (dashed aqua line) retest, and then an continuation of the Bear assault
on the Channel floor (aqua dotted line)." Got the first half right!

Couple of decent day trades Tuesday, in spite of the FOMC interference!

In today's PERSPECTIVE we take a step back to re-examine the Support/Resistance story being
told on the Daily tape.

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E-mini
Tuesday August 05, 2008

1 = Morning session opens gap-up, tests and retests the R1, and finally takes off north, definitively crossing above the Historical S/R (aqua dashed line).
The highs of the red candle and the preceding white candle are the same. The lack of even a minimal preceding trend reduces this to a 123 continuation.
Can't justify entry on an "S" Anomaly signal. Unfortunate!

NOTE: No Overnight tape is attached today, in order to enable a clearer presentation of the Daily chart.
(See PERSPECTIVE, below.)

2 = This "S" 123 of the R2 takes off on a surge of Volume (= A, pink arrow), and we are pulled in, with the stop advancing under the MA for reduced
Undefended At Risk.

Price Action turns sideways, with a slight Bull drift.

Somewhere along the line (blue arrow), you (like good ole risk-conservative me) may have had an insight and applied the PMT Scalp Trader's pre-emptive
3-5 stop rule, goosing the profit-locking stop to "free trade".

B = Large white candle/failed test of MA. Per PMT stop rules, move the profit-locking stop under the MA.

C = Failed test of MA. Per our rules, inch the profit-locking stop a bit tighter, under the MA.

With no real resumption of Volume and the FOMC looming at 2:15, consider a scratch, or at best, a Pivot Scalp exit.

D = DVS (pink arrow) generates a desperate, but futile, stab at the R3. Unlikely that the BBs will mass another assault; no one wants to stand in front of
the FOMC train! Pivot Scalp exit. +/- 5.75 points

E = FOMC. The brief down-up flicker was of course no surprise, but still, it's kind of hard to explain even this small amount of hysteria in light of the
absolutely neutral report.

3 = Lovely recovery. 123 continuation off the R3. Volume is strong (pink arrow), confirming an aggressive entry. By the time the entry candle closes, the
position is already in violation of Pivot Magic Trading Maximum Profit Giveback rules. Mental stop at Giveback level, well above "free trade", BTW.
Our favorite kind of entry!

F = Large white candle on Twin Towers Volume (pink arrow). A stall/sag is coming and our position is in Maximum Profit Giveback violation. Per our PMT
stop rules, move the profit-locking stop under the low of the candle.

Price Action turns sideways, almost testing our stop. With:

* No convincing exit signal on the tape

* A few points of profit safely locked in

* The key primary objective in reach (Historical S/R, light blue line)

* Favorable R:R tradeoff, approximately 2:6

Hold 'em seemss the wiser choice. Exit order at the ready, as we approach the EOD Hiccup Danger Times.

G = MA Support holds, as DVS (pink arrow) blasts off skyward. Stop rules advise to move profit-locking stop under the MA, locking in a bit more profit.
Stay prepared for that emergency exit.

H = Small gap-away, and a large white candle puts our position in Maximum Profit Giveback rule violation. Mental stop at Giveback level. Finger on the
send button.

J = Just barely large white candle. Welcoming any port in a storm, move the profit-locking stop under the low of the candle.

Black Volume Bar of Death at 3:50. That gives us a start, but turns out to be only a breather, as the Bulls continue north on High/DVS Volume (pink arrow).
The Volume to Price Action ratio is disappointing, plus our position is now in PMT Maximum Profit Giveback violation with no real excuse for advancing the
profit-locking stop. Thus, one candle short of the top (at the Historical S/R, light blue line), we have an Exit Now! +/- 8.50 points

[SNIP]

PERSPECTIVE
(Daily, bottom chart)

As you have surely noticed, our Long-term Sideways Channel rules have not been overly effective of late.
Price Action rarely stays inside a newly defined LT SW Channel for more than 2 days. Curious about this
puzzling phenomenon, I first attempted to determine a bit more accurately just where the Historical S/R
was most influential, and redrew the S/R lines. Didn't seem to help much.

Tuesday's reversal and easy exit from what appeared to be the dominant LT SW Channel (aqua dotted and
dashed lines) suddenly brought the picture into focus. Observing the series of LT SW Channels on the Daily
tape has distracted us from noting that Price Action is more importantly describing a large, LT Ascending
Triangle (lavender lines).

That means that Tuesday's giant white day candle is actually a Third Time Through (TTT) attempt at the
base of the Ascending Triangle. That, in turn, means that the next couple of days will be most challenging!

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: