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Our Market Force indicators are giving strong sell signals. Look to stay on the short side of the market today.

Trade Setup Summary for Tuesday, January 20, 2004:
Buy 1137.50 or lower and sell for 2-3 points depending on entry.

*Buy BreakDown or lower/ Scalp for a few points based on current market conditions.

Recap of Tuesday's Action:
Good Morning and thank you for joining us today.

Our current new strategy of scalping a lower point amount on the TCF setups paid off today slightly by giving us a few points off the BreakDown.

We had mentioned on Friday about a new stategy we would be employing of scalping from 3-6 points on the TCF setups until we see the ranges open up some.

We got long on the BreakDown (slightly lower ideally) and saw the market move higher. Things got choppy later during most of the day in anticipation of the reaction to the "State of the Union" speech.

In following our current new defensive stategy we were able to pull up to +3 points out of the BreakDown buy as the market made a gradual move higher. The primary trading range on Tuesday was literally 3 points from approximately 1136-39 so there was really no serious action to write home about.

So we are dealing with this situation with caution and employing the best intelligence we can until things start trading seriously again. I think today may start a more serious move to the downside and get some more push and pull type trading going beyond just chopping around for a few points.

All we can do is be patient and scalp what we can. Hey, it will be good practice for us and when we look back in a few months we will have something to be proud of...that we survived just another Stock Market Phase.

Today's Call & Briefing:
Our Market Force indicators are giving us strong sell signals for today so we want to stay on the sell side of the market if possible. The best way we can do this is to be looking to catch an early push up in a positive reaction in the markets to the "State of the Union" speech and then ideally watch the trade fade that higher move.

Let's be ready to short the Sell Pivot target today and ideally get the price a little higher above 1141.75. Not sure how they will open but we can watch the +4.25 stop/pivot at 1146.00 as a price expected to hold back the buying.

We saw the Dow Crack some on Tuesday and we are expecting further follow through to the downside today. If that occurs then the Wild Card will be Thursday's action and we will look to see proof that the uptrend has been broken or if it is still intact. We will let the market actions tell us that although I expect it will be broken at least for a short while.

TCF TRADE SETUPS TO WATCH FOR TODAY: Today we want to be on the lookout for a BreakOut Sell. Because of the nature of things lately we want to be absolutely sure that we are not going to get a surprise bullish BreakOut so we would ideally look for NAZ weakness. This weakness would be in relation to any Dow strength being shown. If the TRIN is above .90 or ideally 1.00 and VXO is up +.50 or more then we should see the market crumble further.

Although not expected the day after the "State of the Union" speech, we want to be on the lookout for the lows of the Hour One (BreakDown) to sell off lower. We can still sell below the BreakDown according to our rules if we see the -4.25 stop/pivot get violated at 1129.25 which is a possibility today. Hitting this price would also put us right on the Pit Bull 10 Day Moving Average.

As mentioned above we will also be looking to sell the Sell Pivot target in the early going looking for a price slightly above 1141.75 although we may not quite get that. If prices open right on the Sell Pivot Target then give em a bit of time to attempt to push higher before shorting.

Value Area: 1,136.00 - 1,139.40
Trade that moves above the VA and then pulls back into it should be a bearish sign today.

On Tuesday we had that early, fast drop and that type of trading action is actually bullish for the first day of the weeks trading (usually Monday). A higher opening and early rally today would be a signal of potential weakness for today.

Buy Pivot Target: 1,133.50 - 1,134.50
Watch the -4.25 stop/pivot at 1129.25 to see if prices blow through this price area. If so we would be looking to get short on a reflex move higher to 1132.50 to go short. Usually when that happens and the trade is going to pan out nicely they bounce pretty quickly off that violation of the -4.25 stop/pivot to the reversal price of 1.00 below the original buy pivot (1132.50).

Be careful buying today.

Sell Pivot Target: 1,141.75 - 1,140.75
Let's go ahead and sell this Sell Pivot target as discussed above.

10 Day "Pit Bull" Moving Average: 1,128.70
If we blow through the Buy Pivot targets -4.25 stop/pivot that will put us right on top of this Pit Bull Moving average. Prices should stall here temporarily as this was/is that all important number we focused on last week...1128.75. And here it is AGAIN showing up today as the Pit Bull just when the market appears ready to go down through this area.

Let's see how they fly today...or sink.

Pro Trader's Action
Our Market Force indicators are looking for the market to sell off more today possibly with NAZ joining the parade. If we can get this 2nd level sell off it could break the upside move temporarily and we could lose 30 handles or so on the S&P500.

IF this occurs then the numbers for support moving lower are as follows:

1138.00, then 1133-34, 1128.75,1127.00, 1123.00, 1119-21.00, 1115-17.00, 1112.00, then the lower goal of 1107-8.00 based on our new calculations.

Let's see if today's action opens em up to the downside or we get more support and stagnation.

Good luck trading today, remember to scalp the TCF trade setups, and I'll see you in the action. Mohan