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[Dwer]

Market Force: Bullish. Look for an early move lower that holds lower beyond the first hour of trading to reverse to the upside off the lows.

Trade Setup Summary for Friday, May 7, 2004:
1) B@1106.75/S@1115.50 +8.75

2)B@1110.75/S@1108.50 -2.25

3)S@1109.75/S@1106.50 +3.25

4)B@1101.75/S@1100.00 -1.75

TOTAL: +7.75

Recap of Friday's Action:
Our Headline Call on Friday was for a bullish move if we could get the High Five bullish and the market to get above and HOLD ABOVE 1114.50. We had urged Caution of a possible continued lower move without the above support numbers coming in.

We got a quick drop on the open to the Buy Pivot target of 1106.75 which we recommended buying in the "Buy Pivot Target" section. Prices made a rapid climb up to 1116.00 just above 1114.50 and a fast decline. After failing to hold above 1110.00 (what to speak of 1114.50 mentioned) it was downhill for the markets.

Surprisingly we made the bulk of our profits on the long side on Friday. Here is the Wrap Up summary comments I made on our Live Update Service.

"We were looking for lower early moves to get bought up on Friday and under the "Buy Pivot Section" had specifically mentioned buying the Buy Pivot if it occurs in the first hour.

We traded below 1106.75 on the open and got long there. I did not get that on the live service before it occured but I am assuming everyone or most were ready to buy there.

The market took off from that early 6 point gap lower and ran up quickly to the 1115-16 area where we suggested liquidating the long trade for an up to +9.00 profit if entered below 1107.00.

We were fortunate that we put out the call to liquidate right at the highs as the prices pulled back quickly.

We attempted another long on a pullback to 1110.75 with a very tight stop and as prices tried to push higher but failed we got out at 1108.50 for a -2.25 loss.

We then got short seeing the underlying strong bearish indications and went short at 1109.75. It was a long patient hold as NAZ and TRIN were very bullish. Finally the market cracked and we were looking at the BreakDown price of 1105.50 as a target. Prices ran down there and we were able to cover at 1106.50 for a +3.25 profit.

Today was a crazy day. I had decided we would stop trading for the day but later the market squashed the prices down below 1102.00 which was an area we wanted to attempt a buy. I came back in and stated that BRAVE traders could attempt a Buy Scalp for a small, quick run up in prices. 1101.50 was our official price and we had a tight stop at 1100.00 even handle. Market continued to be a real mess and we got out at that stop for a -1.75 loss.

They ran up a bit to 1102 later and then came crashing down to 1094 area on the lows. A total hammering for the week. On balance of 4 total trades for the day we closed the day with +7.75.

Today's Call & Briefing:
Our Call today is for bullish action under specific conditions.

If we see the market open lower, which is a good possibility, and HOLD LOWER THROUGH THE FIRST HOUR of trading then there is a good chance we could see a decent bounce off of the lows.

The bounce could still occur without this conditon but this type of setup would be more reliable for the bullish turnaround especially after the hard squashing on Friday.

We want to exercise caution getting long today but at the same time move with conviction if the setup we want occurs.

I'll be updating the action in great detail on our NEW Live Intraday Update Service. If we get the lower action early we will be looking for very specific Trailblazer patterns to get us long as we look for one more washout most likely near the 1085-86.00 area.

Be looking for formations below the Hour One BreakOut price if we can get the early lower prices to hold down to the first hour. If they rally at all FIRST after the opening then we will need to exercise CAUTION on an early higher move in which the High Five are only Neutral in their bias.

Value Area: 1,101.80 - 1,116.80
Value Area zone was higher up than the close substantially as that is where the highest volume was exhibited. Later in the session prices just drifted off with very low S&P500 pit volume and no traders there to support the prices.

Let's see the response to the lower prices today. Good support expected to come in as we start rolling to the new Buy Mode as the Bears get their conviction stronger from these lower moves.

Buy Pivot Target: 1,088.00 - 1,089.00
Watch for the Hour One low to be below this area slightly and the opening price so we can find a zone of confirmation linking the 3 (opening price, Hour One low, and this Buy Pivot).

-4.25 stop/pivot is 1083.50 which we would look for strong support at.

Sell Pivot Target: 1,109.75 - 1,108.75
We could get up here on a lower opening and really strong rally strength off the early lows. However, if they open under 1090.00 then a move up here is going to be unlikely today. Still it could happen if the new Buy Mode is ready to begin today. It is most likely expected to be after a day of consolidation after the shock drop on Friday.

10 Day "Pit Bull" Moving Average: 1,118.10
We tried to blow through the Pit Bull to the upside mid last week and Failed. This in turn caused the prices to hold below the PB and turn down sharply now.

It is expected that the new Buy Mode will start soon, prices will consolidate and then rally strongly. We could then see the Pit Bull get challenged and the new Buy Mode powering the prices through the 10 Day Moving Average.

This is expected to happen this week.

Pro Trader's Action
Well, they smacked em hard after we had been bullish but continuing to urge Caution. That early fast rally off the Buy Pivot target was what threw water on the upside. It was too fast of a bullish reaction and later on Friday in spite of a bullish NAZ and TRIN we still got hammered.

This fooled a lot of traders and it was odd seeing this but on our live service we detected the aberration and got short just below 1110.00. Problem was although we had expected to see 1102.00 with that bullish High Five action it caused us to deliberatly get out of the trade just near the BreakDown as I though they would pop back up too.

We are faced in 2004 with an entirely different market as in 2003. I detected this very early in the year and RE-TOOLED our methodology partly in Mid January on the UPDATE Section of our TCF Trading Handbook. I have since added several retools using the Trailblazer Charting Method/Indicator and other ideas. I am sharing those with traders on our New Live Service.


Good luck today with your trades, get ready to get long if we get the proper setup and I'll see you in the action. Mohan