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[Dwer]

Market Force: Bullish (Caution: on large early rallies). Look to Buy early pullbacks for continued higher prices.

Trade Setup Summary for Tuesday, May 25, 2004:
1) S@1097.50/B@1102.50 -5.00 pts.

2) S@1104.50/B@1107.25 -2.75 pts.

TOTAL: -7.75

Recap of Tuesday's Action:
Good Morning and thanks for joining with us today.

Well, it appears we got the big Opening Day for the new Buy Mode I have been talking about.

It came at a time when I had practically thrown in the towel and was looking for another run to the downside. Our Headline Indicators for Tuesday were wrong as they had been looking for Bearish Market Force.

The early drop was there to 1090.00 support we had been talking about and they ran up to the Sell Pivot target and hung up there. There was little in the way of a signal that we were about to breakout so strong other than the advancing issues being stronger than the decliners. Otherwise the High 5 and other indicators were not bullish but were actually leaning towards Bearish.

This day snuck up on a lot of traders and although we had been waiting for this and expecting it I found it surprising coming out of hiding this strong.

Here are my Wrap Up comments for Tuesday's Live Trading Updates.

"The Market came on strong today after reversing off of the early 1090 area support.

We had marked today as being a more bearish type of day and instead the bull came out of hiding. After the first hour of trading there was not anything bullish looking about the market and we got short up just above the first hour High at 1097.50.

Prices at first pulled back towards 1095.50 but them gradually pushed higher. The way the prices were structured today in the chart patterns was very quiet and subtle but the main clue was there were not any pullbacks to get out of shorts on.

We had our stop in at 1102.50 and after holding just above 1101.00 they ran up there and stopped us out for a -5.00 loss.

We waited some time and then saw another run up just under 1106.00 which was the Sell Pivot +4.25. I knew we could use a tight stop just above that so we got short again at 1104.50 giving the short side another shot. Very little pullback and up they went again so we got out at 1107.25 for a -2.75 loss.

At that point it was feasable to stand aside as the market was at that point looking stronger justifying the bullish move.

This BreakOut came on in a very sneaky fashion and it tied in with our idea of waiting and expecting an "Opening Day" to come for a new Buy Mode. I had mentioned a few sessions ago if we had an Opening Day on the buy side the goal up of the first move would be 1116 and we came in at the highs today at 1113.75.

So we missed this one but will look at seeing how this stacks up for tomorrow."

Today's Call & Briefing:
Our Market Force indicators are bullish for today but with a CAUTION if we get an early, strong rally.

This new Buy Mode has plently of room to go to the upside but if they get overcooked today on an early rally then we simply want to be a bit Cautious.

The more likely scenario is that we will get some early pullback and should be able to get long after the first hour or so.

This market, as evidenced from yesterday's price action (look at that chart),appears to be moving into what I call "Close your eyes and buy" type condition. This is when it appears very difficult to Buy (like yesterday) but there are no realy pullbacks to get long so you just have to pick a spot and get in. Very difficult trades to make.

So I am not suggesting we necessarily need to do this today or should do this but we want to be aware that such a market condition could be upon us. When this happens you look back after a couple of days and the market is 50 handles higher. The Bears are making all kinds of excuses at that time, the bulls who somehow just jumped in long are happy, and the rest of the traders that kept waiting for a pullback spot to get in are scratching their heads. Definitely not easy trading markets.

ACTION TO WATCH FOR TODAY: I will be looking for a pullback off the opening price area for Trailblazer chart patterns that find a support spot to get long into.

If they rally first with the public jumping in head over heel then we want to be cautious on the long side and find the exhaustion spot where we can make some money on a reflex pullback reaction from such a move.

I will be narrating the action on my new Live Update Service and you can get a FREE TRIAL for a week to the service by calling (800)806-4801.

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Value Area: 1,096.90 - 1,113.70
We have initial resistance up above the Value Area at 1116-1117.00, then 1119.75-20.75 (Sell Pivot target) and then the +4.25 stop/pivot at 1125.00.

Watch for any pullbacks within 50% of the Value Area range to be a possible support zone around 1104-06.00.

Buy Pivot Target: 1,097.00 - 1,098.00
If they run below the above mentioned support area at 1104 then this is the next support. Not expected today.

Sell Pivot Target: 1,120.75 - 1,119.75
We discussed this above along with the Stop/Pivot number at 1125.00.

We would not necessarily want to sell this target today but compare it to the BreakOut Hour One high and see how it stacks up with that. We could then look for a short trade above that area IF it is part of an overcooked early rally.

10 Day "Pit Bull" Moving Average: 1,094.20
We blew through the Pit Bull pretty solidly yesterday as prices moved up towards the Sell Pivot target around 1096 and then upwards towards 1100.00. We would now look to be in a mindset that is focused on Buying Drops on flat type openings. We will still be selling rallies but with pullbacks towards the lows of upcoming days we will look to stay on the buy side.

Pro Trader's Action
The bullishness we were discussing in relation to the Memorial Holiday weekend coming up got off to a bang on Tuesday. Although we missed the disguised move we can at least recognize what is going on and expect more surprise higher moves.

Right now we are going to be on the lookout for any early pullbacks at the appropriate Trailblazer charting formations to get long for higher prices. If things pan out as expected we should get a gradual rise over the next 2 days.

The market will most likely try and keep the public out of the move so there will be some unusual trading patterns I expect. Watch for the Nasdaq composite index to stay in a strong pattern and also TRIN.

Let's see if we can get some nice upside going and participate in that along the way.

Good luck with your trading today and I'll see you in the action. Mohan