Mohan 23/09/03
Enviado: 23/9/2003 9:30Look for early rally attempts to reverse to the downside again. Key will be to see prices holding below the opening price after the early higher move.
Recap of Monday's Action:
Good Morning and thank you for joining with us today.
On Monday we got an early drop in the market which definitely turned into a Bear Ugly scenario. There was very negative news on the Dollar$ getting slammed in relation to the Yen and other such correlations.
However, we never got the reflex bounce to turn our Buy Pivot target into a Sell reversal nor did we get the B/D Sell at the 1017.75 as seen on the chart. Later in the session prices hit the BreakDown price level but that was after our 1:30 est cut off time for TCF trade setups.
So no trades to report today as the market did it's heavy selling early and then just hovered in a tight range leaving traders a bit shell shocked.
A quick note on the VIX: The VIX which is one of the components of the High Five was changed on Monday by the CBOE to reflect the use of the SPX options now instead of the OEX options. We here at the Morning Call will simply continue to use the NEW VIX based on the SPX and in most cases the symbol on your quote vendors services will not change You may need to check with them to see if there is a new symbol. Otherwise just continue using the new VIX with the same symbol. We will be watching closely to notice if there is any important differences in the fluctuations in relation to the reading of the High Five. It is expected that it will be even more accurate now for our purposes. If you desire a complete explanation of the change you can visit the www.cboe.com site for all the details.
Today's Call & Briefing:
Today is expected to be a volatile day. On our Headline Call we are looking for an early rally or push up in prices that will turn around and fizzle out moving lower. There is a good possibility of much more rapid trading movement today so be on the lookout for that.
We saw the market hit the B/D later in the day on Monday and then rally right up to just below the Pit Bull at the 1022.00 area. You can see from our briefing yesterday and continued commentary today that this is going to be a wall of upside resistance now. If they do plough through this area today we are going to be watching for a reversal back below the Pit Bull and heading back towards the bottom of the Value Area again to around 1018.00
The key thing to watch for today to confirm this call and strategy is to see the prices rally and then hold below the OPENING PRICE. If this occurs we could end up reaching our lower initial target goal of the 998 area pretty soon.
One thing that did occur on Monday was that we saw lots of bears piling on to the early drop but then lightening up some later in the afternoon. This suggests an "everything is going to be OK" attitude after the initial early panic. That is a formula for lower prices so let's see how this pans out.
TCF TRADE SETUPS TO WATCH FOR TODAY: Look to sell the BreakOut today if we get a higher opening and early move up that attempts to pop out of the Hour One High after the first hour has transpired. We can add 2-4 points if the High Five is really strong on the bullish side but most likely we will just be hitting the B/O as it occurs. If I am right on this and this setup occurs then we will see prices move above the Sell Pivot Target most likely. Because of this possibility we need to watch the +4.25 stop/pivot (1029.75) above that carefully. Ideally they will stall before that or right at the B/O and we can get a nice short off. This may be too easy for the markets to hand us this "gift" and may make us work/sweat a little harder for it than that but we shall see.
If the BreakDown is the first Hour One pivot hit then we need to take a strong look at Buying the B/D as it crosses below that B/D and look for the higher prices later in the day. This trade would be acceptable and recommended especially if we get A LOWER OPENING today.
Value Area: 1,018.40 - 1,022.00
The top of the VA is right at the same area as the Pit Bull forming a double wall of resistance. However, they are closing near this area so it is too close to say for sure what will happen. A move up to the Sell Pivot target which fails will be considered increasingly bearish if they pull back into the VA. Watch for prices to hold in the VA for 2-3 minutes and then retrace 75% of the Value Area near the lows. It's a tight range so we have to be a little more microscopic in our views compared to a 6-8 point VA range.
Buy Pivot Target: 1,016.50 - 1,017.50
If the market opens LOWER and moves lower FIRST right off the opening half hour then let's go ahead and BUY this Buy Pivot target. Use a 5 point stop and hold long for a move up towards the Pit Bull/ Top of Value Area at least.
Sell Pivot Target: 1,025.50 - 1,024.50
No trade at this target today as it is too near the close. As described above watch this zone in relation to the Hour One BreakOut and see if they can hold below 1029.75 for a short today that pushes BELOW THE OPENING PRICE which will confirm bearishness later in the session.
10 Day "Pit Bull" Moving Average: 1,022.70
We are on CROSSOVER ALERT as we are within 10 points of this Pit Bull price on the close. Watch for a move above this price to come back and hold below it for a bearish market mood.
Pro Trader's Action
Light trading, tight ranges and slow price movement continue to dominate the market. Even though we got some panic drop action on Monday after the selling abated the whole market went back to the flip flop small range trading. Don't be discouraged or feel frustration as it is simply the way things are. As traders we can stay the most clear and focused when we are not bound by our emotions as far as how the markets are trading or not trading. We just have to constantly use PROFESSIONAL PATIENCE and wait it out. I often look at the market in "chunks of time" and have full confidence that a "chunck of time will pass and I will have been able to pull out a series of 8 point S&P500 point moves". If in that chunk of time I pull a few less out due to the slow nature of the markets then it is really like any seasonal cycle in a business. Slow periods for the travel industry hit at certain times while other industries are booming. Some businesses like Skiing rely on snow occuring. If no snow then no business. Practially any business can be seen in this way. So for us as S&P500 traders usually there is always some work to do, some nice TCF setup to catch and some action. Lately its been a little slow but that will change soon.
Let's see if we can catch a rally today to sell into. Good luck today and I'll see you in the action. All the best, Mohan
Recap of Monday's Action:
Good Morning and thank you for joining with us today.
On Monday we got an early drop in the market which definitely turned into a Bear Ugly scenario. There was very negative news on the Dollar$ getting slammed in relation to the Yen and other such correlations.
However, we never got the reflex bounce to turn our Buy Pivot target into a Sell reversal nor did we get the B/D Sell at the 1017.75 as seen on the chart. Later in the session prices hit the BreakDown price level but that was after our 1:30 est cut off time for TCF trade setups.
So no trades to report today as the market did it's heavy selling early and then just hovered in a tight range leaving traders a bit shell shocked.
A quick note on the VIX: The VIX which is one of the components of the High Five was changed on Monday by the CBOE to reflect the use of the SPX options now instead of the OEX options. We here at the Morning Call will simply continue to use the NEW VIX based on the SPX and in most cases the symbol on your quote vendors services will not change You may need to check with them to see if there is a new symbol. Otherwise just continue using the new VIX with the same symbol. We will be watching closely to notice if there is any important differences in the fluctuations in relation to the reading of the High Five. It is expected that it will be even more accurate now for our purposes. If you desire a complete explanation of the change you can visit the www.cboe.com site for all the details.
Today's Call & Briefing:
Today is expected to be a volatile day. On our Headline Call we are looking for an early rally or push up in prices that will turn around and fizzle out moving lower. There is a good possibility of much more rapid trading movement today so be on the lookout for that.
We saw the market hit the B/D later in the day on Monday and then rally right up to just below the Pit Bull at the 1022.00 area. You can see from our briefing yesterday and continued commentary today that this is going to be a wall of upside resistance now. If they do plough through this area today we are going to be watching for a reversal back below the Pit Bull and heading back towards the bottom of the Value Area again to around 1018.00
The key thing to watch for today to confirm this call and strategy is to see the prices rally and then hold below the OPENING PRICE. If this occurs we could end up reaching our lower initial target goal of the 998 area pretty soon.
One thing that did occur on Monday was that we saw lots of bears piling on to the early drop but then lightening up some later in the afternoon. This suggests an "everything is going to be OK" attitude after the initial early panic. That is a formula for lower prices so let's see how this pans out.
TCF TRADE SETUPS TO WATCH FOR TODAY: Look to sell the BreakOut today if we get a higher opening and early move up that attempts to pop out of the Hour One High after the first hour has transpired. We can add 2-4 points if the High Five is really strong on the bullish side but most likely we will just be hitting the B/O as it occurs. If I am right on this and this setup occurs then we will see prices move above the Sell Pivot Target most likely. Because of this possibility we need to watch the +4.25 stop/pivot (1029.75) above that carefully. Ideally they will stall before that or right at the B/O and we can get a nice short off. This may be too easy for the markets to hand us this "gift" and may make us work/sweat a little harder for it than that but we shall see.
If the BreakDown is the first Hour One pivot hit then we need to take a strong look at Buying the B/D as it crosses below that B/D and look for the higher prices later in the day. This trade would be acceptable and recommended especially if we get A LOWER OPENING today.
Value Area: 1,018.40 - 1,022.00
The top of the VA is right at the same area as the Pit Bull forming a double wall of resistance. However, they are closing near this area so it is too close to say for sure what will happen. A move up to the Sell Pivot target which fails will be considered increasingly bearish if they pull back into the VA. Watch for prices to hold in the VA for 2-3 minutes and then retrace 75% of the Value Area near the lows. It's a tight range so we have to be a little more microscopic in our views compared to a 6-8 point VA range.
Buy Pivot Target: 1,016.50 - 1,017.50
If the market opens LOWER and moves lower FIRST right off the opening half hour then let's go ahead and BUY this Buy Pivot target. Use a 5 point stop and hold long for a move up towards the Pit Bull/ Top of Value Area at least.
Sell Pivot Target: 1,025.50 - 1,024.50
No trade at this target today as it is too near the close. As described above watch this zone in relation to the Hour One BreakOut and see if they can hold below 1029.75 for a short today that pushes BELOW THE OPENING PRICE which will confirm bearishness later in the session.
10 Day "Pit Bull" Moving Average: 1,022.70
We are on CROSSOVER ALERT as we are within 10 points of this Pit Bull price on the close. Watch for a move above this price to come back and hold below it for a bearish market mood.
Pro Trader's Action
Light trading, tight ranges and slow price movement continue to dominate the market. Even though we got some panic drop action on Monday after the selling abated the whole market went back to the flip flop small range trading. Don't be discouraged or feel frustration as it is simply the way things are. As traders we can stay the most clear and focused when we are not bound by our emotions as far as how the markets are trading or not trading. We just have to constantly use PROFESSIONAL PATIENCE and wait it out. I often look at the market in "chunks of time" and have full confidence that a "chunck of time will pass and I will have been able to pull out a series of 8 point S&P500 point moves". If in that chunk of time I pull a few less out due to the slow nature of the markets then it is really like any seasonal cycle in a business. Slow periods for the travel industry hit at certain times while other industries are booming. Some businesses like Skiing rely on snow occuring. If no snow then no business. Practially any business can be seen in this way. So for us as S&P500 traders usually there is always some work to do, some nice TCF setup to catch and some action. Lately its been a little slow but that will change soon.
Let's see if we can catch a rally today to sell into. Good luck today and I'll see you in the action. All the best, Mohan