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Enviado: 29/7/2003 10:50
Trade Setup Summary for Monday, July 28, 2003:
Buy 991.50/ Sell 997.50-998.50 +6-7 pts. (Buy B/D -- Neutral High 5)
Recap of Monday's Action:
Welcome to the Morning Call for Tuesday.
Our Headline Call for Monday was looking for the market to continue to move higher and we were expecting a close in the upper third of the range. We did not get a large, "Too Much Too Soon" type rally off the opening area.
Well, we got the higher prices we were expecting but all contained basically within the later day session numbers on Friday and also contracted within a tiny 8 point range. In spite of this, following our TCF Trade setup to buy the BreakDown would have gotten you long right near the lows and exiting the trade on the second stab at the 998.00 area near the highs coming into the final hour.
When you see the market push higher like it did on Tuesday with a small range, pull back and then attempt to push up again it is usually better to grab some profits rather than waiting for the full 8 points. This is often visible when you see that the High 5 are not doing anything spectacular as the case was on Monday's action. There were 3 attempts (as seen on the chart) at hitting the BreakOut first which is what we were expecting and each one MISSED THE B/O BY A TICK.
Some of you got short anyway and caught the 7 point pullback down to the B/D so that was good. Although tempting, I am not going to show this as an official TCF Trade setup on Monday although we were clearly looking for this B/O to hit first and on the 2-3rd attempt traders would have taken the clue to short em.
Either way the purpose of our Trade Setup Summary is to stick with the EXACT TCF setups that occurred without question and report to you on those. As your ability to read and digest our briefings increases along with your trading skills in relation to our methods you will be able to capture more and more of these intraday moves even though they may not be mentioned or recommended in these Market Call briefings. If you are new to following the Morning Call though don't be anxious to try and elaborate on the methods or get too tricky just yet. Perfect your ability to DUPLICATE the results shown here on the recap FIRST and then you will find your natural skill arising out of your concerted effort and concentration.
Today's Call & Briefing:
Our Headline Call is a double sided one today which we occasionally find necessary when the market is at a Cross Roads of some sort. Today we find this type of day with the S&P500 hovering around the Pit Bull and the Market Force indicators along with the High 5 giving us signals of a pending large move.
If we get a LOWER OPENING below the 993.00 area and an early push lower then we are going to be looking for prices to continue to rise. Upon this occurring our next level up to stretch for will be 1007.00 and then 1010.50. This price rally would be associated with a BREAKOUT BUY signal off the Hour One pivot and would most likely be very obvious and powerful. Will that occur today? I am not sure what kind of pent up energy is there. I am more inclined to expect the upwards move to occur.
On the other side if we get a HIGHER OPENING and an early push up then we will look for a Dow rally but with a weak NAZ (our nickname for the Nasdaq composite index) following the Dow. Our definition of a weak NAZ is seeing the Dow rallying perhaps +80 or so and the NAZ holding back only being up +10 or less. With an early set up like this we are going to be looking to hoooold short all day expecting the lowest prices coming into the closing hour.
.Some interesting points for the bullish case this year: Although we stress here on the Market Call that we are not stuck in the mood of being a "Bull or a Bear" there are some important elements that tend to make a case for higher prices this year. First, the 3rd year of a presidential term is traditionally bullish as the ruling party does everything they can to win votes for re-election. Right now it appears the only hope for the current administration is to get the economy on a roll and THE STOCK MARKET RALLYING. Rest assured that every effort possible will be made to accomplish this goal by the end of the year. We have already seen the beginnings of this over the last several months. Next, we have massive pension dollars seeking a home. General Motors, the largest corporate pension plan sponsor in the United States has in excess of 65 billion dollars. Recently they sold off 13 billion in Bond type instruments and plan to place substantially all of those proceeds into their pension funds. THAT'S JUST ONE COMPANY! Now that the appetite for risk is coming back all we need is a level up in the stock prices creating a newsworthy positive mood and we could see an avalanche of new pension money flooding into the stock market.
Again, I am not trying to be "a bull" here looking for alternative "bear" arguments (which I know exist) but am merely pointing out why the simple case for higher prices may outweigh the bearish case going into the end of the year. We have had 3 bummer down years of a Bear with War, SARS threats, and endless sable rattling while the people are getting sick of the pressure and want some good news. These are 3 very basic underlying market forces that are bubbling under the stock market right now. It will be interesting to see what transpires.
Either way we are ready as we focus only on the microcosm of the intraday time frame to get our 8-10 points and earn our paycheck for the day.
TCF TRADE SETUPS TO WATCH FOR TODAY: We are going to be on the lookout today for a trade in relation to how the market opens and reacts in the first half hour or so. If we get a higher opening then we are going to look for a SHORT TRADE at the BreakOut most likely.
Be on the lookout for the strong possibility of a BreakOut Buy trade if the Dow is up +50-60 or less and the NAZ is strong being up +12-15 or even higher. If you see a low TRIN below .80 then we have the ingredients for a possible BreakOut buy setup. However, if we see the NAZ holding back on such a setup being only up +10 or less with a higher TRIN and with VIX up ideally +.50 or more then the early rally should fizzle out later in the day as prices HEAD BACK BELOW THE OPEN.
Be sure to watch the prices in relation to the opening.
If we hit the BreakDown today as the first Hour One pivot the odds have increased substantially that we will be getting a sell off below the lows with a Bear Ugly High 5. The tricky part for today is that a lower opening and a lower early move we expect will be bullish for prices later in the day. If we get a GAP LOWER OPENING we need to be very astute in determining whether there is any strong, bad news associated with this lower gap opening. Coupled with this would be a very heavy feel the market with the High 5 all showing Bear Ugly characteristics pretty early in the first half hour session. For our subscribers who have seen a true Bear Ugly day this is not a mystery at all and is quite obvious to observe.
So without the presence of a really negative news based gap lower open we are going to be looking to buy early lower moves that find support near the Buy Pivot target and the Pit Bull which happen to be closely situated together today.
Value Area: 993.00 - 997.60
With the tight range action we have a tight Value Area of only about 4.5 points and the market closing right in this area. The low of the VA is situated just above the Pit Bull and the Buy Pivot target. With the lower early move we would be looking for to create higher prices later in the day today's morning reading is going to be challenging to say the least. We will be watching all of this 990.00 area for hints of support if we get a lower opening and especially the --4.25 stop/pivot at 986.25.
Buy Pivot Target: 990.50 - 991.50
No direct trade at this pivot today but watch for support or reversals to occur here. As mentioned above, let's be on the lookout for support at the 986.25 level to see if we are going to get a move up later in the day OR if we get a higher opening and a push down here that blows out this pivot to the downside.
If this is the case then we will be looking for a reflex rally back to the 989.50 area to go short if the High 5 are bearish. This exact trade setup is described in the 21st Century Trading Handbook available on the site by becoming a subscriber. In this Handbook you will find all the methods you need to successfully nail an 8-10 point move almost every day on the S&P500 like our experienced subscribers do.
Sell Pivot Target: 998.50 - 997.50
Again, with the tight range of the market on Monday it pushed these Buy/Sell Pivot targets too close together for comfort to do anything but watch for support/resistance or reversals on a move +/-4.25 beyond the pivots. Use the Hour One pivots and the reversal methods clearly described in the S&P500 Handbook to set up your trades surrounding these pivots.
10 Day "Pit Bull" Moving Average: 990.60
We have discussed this above in the Buy Pivot target section. Look for support to come in here combined with the Buy Pivot target or if the prices blow through this area to the downside then we are most likely on our way back to test 977.00 again with pit stops at 986.00 and the 981.00 levels.
Pro Trader's Action
Today is a special "Line in the Sand" type day where based on the opening and early reaction to the opening we are going to base our trade bias.
I think I have clearly described above what needs to be done and using our TCF trade setups described in the manual you should easily be able to ID what is going on and where to place the trade.
If for any reason things are not clear to you or you are quite new to our briefings then just observe the action around the different setups mentioned and over time you will be able to develop faith and confidence in the ideas as so many astute traders have. Depending on the experience and skill level of the subscriber we find that between 2 --6 weeks is normal for traders who seriously follow our briefings without past programming bias to be able to successfully begin capturing the 8-10 point moves.
The "trading experts" who already got everything figured out will most likely never accept that they can get 8-10 points on a move because they have been ingrained with opposing ideas from what they have learned from others who can't do this.
So the best policy if you are serious about MAKING MONEY instead of just talking B.S. is to really study our manual and the methods along with our recap each day. Try to let go of your past trading programming and just give our approach a chance to put some dough$ in your pocket regardless of your past painful trading experiences or losses. I am here each day to try to assist you in any way I can.
I will be doing an extensive "Ask Mohan" section to cover some of your important questions but the real questions are answered just by reading the briefings carefully OVER TIME as mentioned and watching the action. There is really no great or secret mystery in what we are doing. Just good old fashioned hard work, research, patience and nerves of steel to "hold the trade to the stop or the fruition of the trade". This is the essence of any trading approach.
Let's see which side sets up today and get ready to make 8-10 points on a larger scale move. All the best of luck and success. I'll see you in the action. Mohan