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[Dwer]

Market Force: Bullish. Caution still in force. We are seeing a bottoming process. Stay bullish and look to buy lower early moves today.

Trade Setup Summary for Thursday, May 6, 2004:
Trade Summary: B@1110.75/ S@1107.75 -3.00pts.

4:08 PM

Recap of Thursday's Action:
Good Morning and welcome to Friday's action.

The markets remained tricky on Thursday as we are in a bottoming process where you often find the radical volatility start to kick in. Here is how things panned out on Thursday as noted in my Wrap Up comments for our TCF Live Update Service.

"On our Headline Call and Market Force for today we were looking for bullishness yet tempered with the strong possibility we could get one more washout to the downside before the new Buy Mode kicks in.

We saw the early gap down by -7pts. warning and the Caution was well justified.

We got long on a substantial move below the Hour One BreakDown going against a very Bearish High Five but with a tight stop. Our official recorded entry was 1110.75 with our mental stop around 1108.00.

After our entry prices just sat there and so we patiently waited. Finally they started breaking and we decided to get out at our mental stop with fills coming in around 1107.50-08.00 for a small -2.75 to 3.00 loss.

There was a suggestion I had put out on the posting that we would look to get long at a lower level if we got stopped out but later after getting out I had determined the High Five were too bearish and better to just stand aside. In hindsite it would have been nice to take the risk and get back in long but money management and risk assesment is an important part of the overall picture in this business.

Lows came in at 1104.75 and price gradually rose the rest of the day inspite of the very Ugly looking market.

It was a jittery climb back through 1107.50, pressing gradually back to 1111.50, and then a springboard in the last hour stretching up to 1115.75 as the underlying bullish Market Force kicked in.

So overall our call on the markets was good but it was a higher risk day that was a bit difficult to capitalize on and I am glad we just stood aside from."

Today's Call & Briefing:
Today is showing continued Bullish Market Force although the CAUTION still remains in force due to several factors. With Greenspan speaking on Tuesday and again on Thursday it has been a rather "Pins and Needles" type week in the trading movements.

We want to continue to buy lower early moves and prepare for the possibility of a bullish BreakOut today although that will depend on the High Five structure.

Right now the key to bullishness will be to see the market cross over 1114.50, then 1119.00 and then move through the Pit Bull at 1122-23.

If we can get this upside action going then we should have a solid rally on the way. The problem I see right now is that we are in this bottoming process and you have strong conviction on both sides right now.

Let's continue to stick with the understanding that we are getting ready to move higher and buy the lower early move today if we get that after the first hour.

If the High Five are clearly in a strong bullish mode then we can also look for a BreakOut Buy to occur. Because it is Friday we want to be a bit leery of too large of a bullish move occuring.

The strong bounce off of the lows on Thursday shows the underlying bullish Market Force as we have been identifying and we want to watch for more of that.

The key right now is to see the market trade above the numbers mentioned above and HOLD ABOVE THEM.

Value Area: 1,106.50 - 1,114.30
We have the important 1114.50 right here at the top of the Value Area which will provide additional confirmation if we can rise above this area.

The best thing for early today would be to see a LOWER OPENING and a push down to test the lower third of the VA. Then, see if we can bounce above 1114.50 to solidify the bullish action.

Buy Pivot Target: 1,105.75 - 1,106.75
Look for Trailblazer Level 3 moves down to this area during the first hour of trading. We can look to trade at this Pivot early today if we get a move down here.

Sell Pivot Target: 1,119.50 - 1,118.50
Watch for moves up here to be supported with a strong High Five to continue to rally above here and show the strong bullish trade.

+4.25 is 1123.75 and would be a resistance point for today that if blown through to the upside is going to be very positive. Due to being Friday I am rather expecting more of a mild rally today and then some consolidation.

10 Day "Pit Bull" Moving Average: 1,122.50
We really need to get above this number to get the upside cranking again. I am not talking about a mild confrontation with the Pit Bull either. We need to see prices move higher and take out this number like it wasn't even there. This would show a truly strong bullish Market Force appearance.

If we do not get this type of action soon it will put us on ALERT for a possibility of a continued lower move and a further hammering stretch down to 1085.00 area.

Although I am expecting a new Buy Mode to kick in whenever we are anticipating that we are constantly monitoring key levels to determine if the Buy Mode is going to be thwarted by resisting certain price levels (such as the ones mentioned above).

If this occurs then we can prepare to go short for more downside work. I'll keep you posted on this each day here and in our Live Update Service.

Pro Trader's Action
Today is going to be another tricky day in the sense that we have some good signals for the Bullish Market Force yet we are holding out to see if the key prices are going to get taken out to the upside.

We will continue to trade on the long side or as appropriate based on the opening and the early 30-60 minute move but we are just keeping a cautious stance right now until we see a little more aggressive confirmation on the long side.

Good Luck with your trading today and remember that each day is so vital to developing your market skills. Mistakes or missed entries/exits are all just part of the learning and growing process in S&P500 trading. As you grow in your skill gradually you will see more and more S&P points accumulating as you learn to manage the trades you put on.

Have a great weekend. Mohan