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[Figas]

Trade Setup Summary for Tuesday, July 29, 2003:
Sell 989.50/ cover 993.50 -4pts. (Buy Pivot becomes Sell resistance with a Bear High 5)

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

Our Headline Call on Tuesday was a double sided call looking for an early lower move to be bullish for the market while a higher move up in the early session was expected to drop substantially. What we got was a flat opening with the S&P500 opening up about 2 points and then immediately selling off hard on a weaker then expected July consumer confidence index. We had warned you that if the BreakDown was the first Hour One pivot hit (which it was) it was going to be tricky to determine if the market was really Bear Ugly. This is exactly what occured as the High 5 had a very Bear Ugly appearance but the news about the CCI was no big deal really. This is NOT the kind of really bad or "ugly" news associated with a market that is going to be weighed down and move 8-10 points below the Hour One pivot lows.

The prices dropped just 2 points below the B/D and then rallied substantially as we had suggested they would on a lower early move. Because the High 5 were extremely bearish we opted for Selling the reflex rally up to the Buy Pivot Target minus 1 point (according to our new re-tooled rule) for a "Buy Pivot becomes sell resistance" trade. Our stop on such a trade is placed 3 points above the original Buy Pivot which was 990.50 and we were stopped out at 993.50 as they pushed higher. So on balance it was a total 4 point loss on this trade.

Some of you may have tried to "front run" the Bear Ugly market appearance looking for the BreakDown but because we had SPECIFICALLY called for a lower early drop to be bullish this would not have been the correct strategy although not necessarily a wrong idea. Under any other circumstances the market with it's super Bearish TRIN (above 1.50) and high VIX would have crashed 8-10 points below the opening. Our TCF Market Force indicators however clearly gave us this reading about the lower early move being bullish and that is why I put it specifically in the Headline Call.

So overall Tuesday was a rather treacherous day and the early confusion of the early drop and the mega bearish High Five in hindsite would have probably been better off avoided as a trade. Our TCF system trade was appropriate for sure but looking back it is always wise to be willing to stand aside when the market information is conflicting or confusing. That is always the best policy for a pro trader. We DO NOT have to trade. There is nothing to prove especially when you know you got 4000 trading days left as a career trader. Right?!

Today's Call & Briefing:
Our Headline Call for today is similar to Tuesday's in the sense that we are offering a double sided projection on the correct side to trade. The difference is that we expect some resolution today one way or the other to finish off a pattern that has been setting up. Our bias is mildly bullish but the opening action and the High Five need to be seen to fully determine this.

Today is a TRIN Sell on the open: We use a special TRIN gauge to discover additional information about the market bias. The gauge is based on an old mechanical trade idea that has about a 65% probability of success. The setup for today is for a Sell off the opening price. THIS IS NOT AN OFFICIAL TCF TRADE SETUP AND YOU SHOULD NOT SELL ON THE OPENING. We only use this as a monitor and if indeed the market is going to be bearish we expect the prices to HOLD BELOW THE OPENING. In this way we can gauge the effect of the trade setup. Prices holding ABOVE the opening put the trade idea in aberration and we should see higher prices continue. The trade idea is meant to be held until the mid session on Thursday so if the market is bearish, we get a strong bearish High Five, and the prices melt down then we expect it will hold through Thursday.

We want to be on the lookout for a long overdue BREAKOUT BUY off the first Hour One pivot High getting hit. We would be looking for a flat to lower opening that picks up off the lows, moves cautiously towards the Hour One high after the first hour has transpired with a FLAT DOW being up +50 or less. The surprise to watch for will be a STRONG NAZ(our nickname for the Nasdaq composite index) being up +12-15 or more. With a corresponding bullish TRIN being below .80 or less and a lower VIX the market should slowly BreakOut.

If we find that the Dow has soared over +80 points or more BUT the NAZ is holding back being up +10 OR LESS then we would want to look to short the BreakOut and look for a pullback off that high. We would also want to see a high TRIN ideally above .90 to 1.00 or higher.

Be on the alert also today for a full on Bear Ugly type day with some serious bad news that has the market GAPPING LOWER and with a real heavy feeling to the whole group of indexes. In your mind upon seeing a TRUE BEAR UGLY DAY you will immediately be thinking, "Oh, Oh...this could get Ugly". However, be very careful to not PROJECT A BEAR UGLY MARKET on to a trading enviroment that is NOT like this. Bear Ugly days are EXTREMELY RARE and maybe occur once a month at most and maybe twice in a really heavy bearish environment. We are not in such an environment right now but these days can and do sneak up on us and we, as Morning Call subscribers, are ALWAYS PREPARED for that Ugly action.

Value Area: 983.80 - 992.80
We got the wider range VA today which is going to give us more room to estimate today's trade value. An early drop with a neutral or bearish High 5 would be expected to find support at the 984.00 area if they are bullish for later in the day. With the Buy Pivot target sitting right below this area it will form a double floor of support. Blowing through this area is going to be a strong sign of bearish action.

Buy Pivot Target: 981.25 - 982.25
No Trade at this target today. Watch the good old 977.00 area which has been holding the support up in recent days. If things get Ugly then we will blow this pivot out at 977.00 and should get the Sell reversal we were looking for yesterday which failed. Because of our Headline Call showing us at a Crossroads we don't want to project this occuring today but just watch to see if a surprise occurs.

Sell Pivot Target: 997.25 - 996.25
Although tempting as a short let's not trade at this target today but wait and see if a Bullish BreakOut does occur. If so they will take this number out and move back into the 1000 S&P500 handle which has been a problem getting back into lately. Although we have a mild bullish bias for today let's not be too anxious until we see the proof as to the reaction to the BreakOut as described above in the "TCF trade seutps to watch for today".

10 Day "Pit Bull" Moving Average: 989.20
Look at that stubborn Pit Bull holding up the lower action but drawing the higher rally attempts back like a magnet. You gotta admit, the Pit Bull is rather amazing in its accuracy and importance. The fact that we got a semi -10/+10 with the early drop on Tuesday and the rally off the lows back above this area is BULLISH. But as you can see we are at a CROSSOVER ALERT and Crossroads with this 10 day Moving Average, hence our Headline Call. As mentioned, we expect some resolution on a current unfolding pattern today. So let's see if we can move out of "limbo".

Pro Trader's Action
As mentioned throughout the theme of today's Market Call let's be a little more cautious than usual today and really let the market tell us what it wants to do to resolve this "Crossroads" location.

Let's keep an eye on the Value Area range and see how the prices react on the downside to the double support around 980.00 and the overhead resistance at the 1000 handle. If we can't really punch through either one then it will just be continued range bound action which is typical of this time in the summer.

Good Luck today and let's see if we can grab 8-10 points on a correct TCF trade setup that kicks in.

All the best of success, Mohan

[Figas]

July 30, 2003

Market still at a Crossroad today. A higher opening which holds BELOW the open is bearish. Lower opening holding ABOVE the open is bullish. Resolution expected today with a mild Bullish Bias.