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[Dwer]

We still want to stay on the sell side of the market. Higher early prices today to sell off later in the session.

Trade Setup Summary for Tuesday, October 14, 2003:
Sell BreakOut at 1043.25/ Cover for up to -4pts.loss.

Market stayed stuck in small 5 pt. range until final half hour. Trade should have been covered in last hour for small loss only.

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

We had another rather grinding day on Tuesday with the market trading in a small range of around 5 points until the final half hour of the session when prices began to climb through the highs. Most of this was positive expectations towards company earnings reports due after the close.

The High Five maintained mostly a neutral to slightly bullish bias with the higher prices succeeding in drawing in more bulls which is what we suggested yesterday would be necessary to get the downside going stronger. The prices missed catching the B/D by ONE TICK which would have triggered a buy for us Tuesday but we held the short in line with our rules with the neutral High Five.

A quick note on our sell bias: For those new to our Morning Call briefings you may have noticed the last 4 days or so we have continuously made Headline Calls suggesting staying on the sell side while the market has seemed to move higher.

Today's result was really the recovery of last Thursday's late afternoon squash in prices that we caught for up to +10 points on the short side. Today merely recovered to those highs and took the indexes back up just slightly above the highs of that session (last Thursday 10/09/03).

Now if you look at the charts on our Morning Call archives for the last 4 sessions that we have been calling to Sell early rallies primarily you can see on the charts clearly that the bias has been towards that side.

That is the unique feature of our Market Force indicators. I have been saying that we are in a Buy Mode on the primary Market Force but a few sessions ago noticed the strong possibility of an Aberration on that buy force and have suggested hitting the higher prices with short sales. We have yet to see that aberration really kick in which is rather surprising but don't be fooled by the "Illusion of the Markets". The market "appears" to be moving higher but it is really just trading in a small range since last Thursday. In this go nowhere market of the last few days we have been able to rack up some good S&P500 handles while preserving capital at the same time. That is what REAL S&P500 trading is about.

Now as far as taking the loss today. You would have wanted to cover up that trade and not wait for the full 6 point stop loss which only would have been hit later in the final minutes of the session. Once we get into that final hour and have been brave soldiers holding out on a TCF Trade setup yet the trade has not gone anywhere it only behooves us to just find a spot to get out. If you see pressure mounting to the upside like today but not stopping out the trade and it's (like today) the final half hour you just have to say "uncle" and look to cut the trade. So on balance we could have got out today with a small loss of up to - 4 pts.

Today's Call & Briefing:
Ok, so on to today's action. Once again we want to stay on the sell side if possible. As mentioned, we now got the bulls entrenched on the buy side and this should "feed" the sell side that we are looking to be prominent. With the earnings reports out after the close on Tuesday there doesn't appear to be any specific problem with the market over night but in line with our Day to Day sequencing patterns they should hit em to the downside today.

Based on this let's look for continued early higher prices that we can attempt to get short into. We got the sell pivot target at a spot that although tight and close to the closing price should be worth a shot at shorting. I am going to suggest trying to use the similar idea we used on Monday of watching the +4.25 spot for big resistance (at 1056.00) and then trying to get short anywhere above the original Sell Pivot target. If it makes you more comfortable you can wait for the return to the sell pivot and then go short as a confirmation but I usually like to get a better price if possible above the pivot such as in today's (and Monday's) case. Good luck with this. Monitor a 5 point stop above the Sell Pivot target and if you get short higher give the stop another point of room.

Again, I am not "Bearish" on the market or any such thing but merely reporting to you what our Market Force indicators are suggesting the easiest side of the market to make money on will be. As Intra Day traders we don't really care about so-called "Bullish or Bearish" as it is an illusion for day traders. The markets are consistently fading or going against consensus Bullish or Bearish intraday viewpoints and they should be avoided like the plague.

Overnight I am seeing some long red candles as markets are stretching off the highs around 1050.00 so it is hard to say how the opening will go.

Look to stay on the sell side if possible and be on the lookout (as always but especially now) for a surprise Bear Ugly day to show up.

TCF TRADE SETUPS TO WATCH FOR: Today we may see the Hour One BreakDown Pivot get hit first. If so we will need to determine if this is going to be a Bear Ugly trade setup or we have the strong possibility of an extremely rare (what I call) "Sneak Down Bear Ugly Day". Now I have only identified these recently and although it makes these days a little more complicated to discover I can only report to you what is going on. When these occur you will see the prices just fail to rally more than a few points off the lows and keep getting pushed down lower as the High Five gradually "sneak" into Bear Ugly readings.

You can try to identify these days and trade em or if they just seem too complicated or confusing to you ...then big deal, simply don't trade. Remeber, YOU DON'T HAVE TO TRADE just because the market is open. If you ever feel confusion or you are just not on top of your game that day for whatever reason, then for God's sake please don't trade the S&P500 markets.

If the High Five is not in such bad shape and we see the Hour One BreakDown hit first then we are going to want to try and buy that B/D. Now you can see from Tuesday's action that they missed hitting the B/D by one tick and then rallied 10 points off that B/D low. This is a very rare occurance and you need to realize that...It doesn't matter. The trade does not set up UNLESS the prices trade at or through the BreakDown price. We only want the trades that setup according to our rules and once in a while you may see this type of deal occur. Again, it's no big deal. Following the TCF rules will make you more money in the long run then just one random day.

We can continue to Sell the BreakOut if we get that chance again. Just be sure they are not setting up for a BreakOut buy signal as explained on yesterdays Morning Call and in the Trading Handbook.

Value Area: 1,039.00 - 1,045.80
Once again, like we mentioned and saw yesterday, this 1039.00 area is becoming a real important number. Today we see it is the bottom of the Value Area and as such will be strong support. The Buy Pivot target is right above this so if we see prices blow through this area, move -4.25 pts. below the Buy Pivot Target (at 1037.00) and stabalize BELOW 1039.00 then we should head lower most of the day.

Buy Pivot Target: 1,041.25 - 1,042.25
As mentioned above, let's just watch this area for support and to see how the prices react to this zone. Compare to the BreakDown and see if we are getting a failure of prices to hold at this level for lower action or continued support (based on the High Five readings) for another slow grind up. I am rather expecting the lower price action as you know.

Sell Pivot Target: 1,051.75 - 1,050.75
We talked about this in the "Today's Call and Breifing" section extensively and you can use the advice there to trade this area. We definitely want to see if we can get short around this zone or slightly higher if the market gives us that near the opening prices.

10 Day "Pit Bull" Moving Average: 1,034.10
Wow. Today you can really see the gap closing in on the Pit Bull. When we get the pullback started then we will drop very close to this area and form a Crossover Alert.

If I am right on the Buy Mode aberration starting then we could run through this 1034.00 area quickly. Keep an eye on the reaction here and we will know more.

Overall the market is strong coming into the close of an 3rd year Presidential term. I have mentioned this positive bias phenomena since we were in the middle of the Blood and Guts of the so-called Iraq war suggesting a bullish turn around to our subscribers. Now prices have rallied substantially from there. You should have seen all the emails I got at that time telling me how NUTS I was to be bullish and how "Can't You see Mohan that it is 'different' this time?".

Well, I know it was hard to see anything positive at that time but look where we are today. The rest of the year holds the similar promise of higher prices but right now I am looking for a temporary aberration on our Buy Mode Market Force indicators and we are hitting the rallies with short sales.

Pro Trader's Action
I don't mean the Headline Calls to sound like a broken record or anything. I can only report to you what our proprietary Market Force indicators are suggesting will be the easiest and "safest" way to make money (is S&P500 trading ever "safe"?...LOL).

Our job as professional S&P500 traders is to PROTECT CAPITAL and then consider the trades that will accumulate S&P500 points with the goal of giving us a substantially higher return on our money than any other instrument. Indeed, I like to view each day as a day of "going to work and earning a paycheck". This is a "working class" S&P500 traders attitude. I WANT MY 8-10 POINTS IN THE SAFEST AND QUICKEST WAY POSSIBLE and with as little grind as possible. Well, in the regular day to day world of trading those "grind days" are just grist for the mill as we say. It is part of showing up to work each day and taking a shot on a TCF setup that we are looking to make 8-10 points on (if the damn ranges will ever open up more).

I am confident some of the craziness and fear of trading is slowly draining out of traders and the general public and hopefully we will get back to some extended ranges again soon. We as S&P500 emini traders are always hopeful of more volatility and wider ranges as it's our lifeblood. Until then we just have to pick off as many points as we can and keep our stops under control when a trade is not working out going into the later part of the session.

Good luck today with your trading. We have option expiration coming up on Friday so there will be no Headline Call. I will work on an extension of the "Ask Mohan" section this week to answer all of your more recent questions since the seminar I did in San Diego. I've had to prepare many things including our next (and final one of it's kind) seminar in Florida on November 1-2 (we only have a few seats left).

JOIN US FOR A SUBSCRIPTION TODAY if you are on trial and are seeing how the market reacts in relationship to our Morning Call. You will be joining an elite group of traders in the Hedge Fund community, floor traders, Mutual Fund managers and many other professionals in the industry. We welcome beginners too as you might as well start at the top. Our service is less that a buck$ a day, less than a cup of coffee (or a spot of tea) so kindly join us today and get immediate access to my Trading Handbook where I explain all of our trading methods and S&P500 setups.

All the best of luck and success. I'll see you in the action. Mohan