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[Dwer]

Market Force: Bullish on drops today. Look to buy the BreakDown area if market opens lower and moves lower early in the session.

Trade Setup Summary for Friday, March 19, 2004:
No TCF setups or Headline Call due to Options expiration on Friday.

Recap of Friday's Action:
Good Morning and welcome back from the weekend.

Friday was Options expiration and we do not make Headline Calls or look for TCF setups on those days. Although the TCF setups can and do still function on those days we stand aside due to the many underlying forces of options expiration days. On these days larger traders and commercials enter new strategies for their portfolios using options and the underlying futures. This can often cause erratic volume and price action so we have traditionally simply stood aside on these days as well as Contract Rollover days.

We saw the prices run up and hit the BreakOut on Friday and push lower. After the 1:30est time period prices took a further nose dive back to test the washout area of 1105.00 which we saw earlier last week on Monday and Tuesday.

We are looking for an early washout today which could fufill the 1097 price area mentioned last week for a final washout before prices start moving higher again. Here is the scoop.

Today's Call & Briefing:
We had mentioned on mid last week about a further washout which we were expecting. On Friday's action the proof of the markets desire to do this was revealed as prices hit the skids after touching the BreakOut on Friday.

For today we are ideally going to get some early weakness and form another LOWER WASHOUT PRICE possibly in the 1097 area discussed last week in the Morning Call.

We had the 3 day mild rally off of the 1101.00 area low and now we are close to being back there. If we can get the early push lower early in the session we feel this could be a good washout area for the lower prices.

We had identified the "rolling to a buy mode" on Thursday the 11th with prices closing at 1104.30 and on Monday and Tuesday the following week got the washout lows in the 1101-04 area.

Now with the weak rally taking off and then returning to this price area Friday we are either going to get one more washout and then rally and HOLD or we are going to see any rallies FAIL off of (ideally) this mornings early washout in prices.

The evidence for the new Buy Mode to be in Aberration would be to see prices holding below 1105.00. If they do then we will be looking for 1078.00 as our first, major goal lower but if we see prices rallying off of an early washout today and HOLDING ABOVE 1105 then we should start moving higher again with the goal as mentioned on Thursday of 1135 as the first target.

So in this sense this morning and first half of today's session will be very important to determine what is about to occur.

Holding above the OPENING PRICE will be very important as an indicator today also.

Trading action for today: We will be focusing on the BreakDown Hour One pivot today as the first Hour One pivot to get hit. We will want to see how this reacts to the Buy Pivot and the -4.25 stop/pivot at 1097.50. You can see how this price also CORRELATES TO THE 1097 price projection we gave you last week as a key "washout low" target number.

This price of 1097 will now also become an important pivot for turning the market around to the upside as we are expecting or upon holding below it see prices start heading for 1078.00 as mentioned above.

Let the games begin!

Value Area: 1,113.40 - 1,121.50
We are closing below the Value Area which is a bearish sign.

Key now is to see if a "washout low" can come in early today and we can get back into the Value Area. This would be vital to seeing the market become bullish again.

Buy Pivot Target: 1,101.75 - 1,102.75
As mentioned above ("Trading Action for Today") look for the 1097 area to hold up the market -4.25 below the Buy Pivot target otherwise we are heading towards 1078 as a first goal lower.

We are expecting an early washout to find support and start to move higher as we enter the new Buy Mode HOLDING ABOVE 1105.00. If that fails to occur then the Buy Mode will be in aberration and heading lower most likely.

Sell Pivot Target: 1,117.25 - 1,116.25
No Trade at this target today but watch for a HIGHER OPENING AND EARLY RALLY UP TO THIS PRICE to fail. We do not want to trade this morning before the first hour is complete and such a rally up here on a higher opening could sell off which is always disappointing to miss. However, we want to follow a certain discipline on Monday's especially and wait for the first hour to complete so we can get the best reading of the price action and the High Five.

The High Five never really fully get out of bed until the first hour is over.

10 Day "Pit Bull" Moving Average: 1,119.40
Prices are Holding below the Pit Bull after nearly Crossing over it on Friday. This is a sign of continued weakness which would have been negated stronger had prices at least attempted a crossover. With prices pushing strongly lower on Friday after a rally attempt is what we were referring to in Friday's Morning Call briefing. This is what I had said.

"As mentioned before (Thursday/Friday 11-12th) we have moved to a BUY MODE and we identified the washout of lower prices below 1105.00. Our Headline Call on Tuesday was looking for a final washout around 1097.00 before moving up but the market gapped up that day and moved higher. I expect we are preparing for that lower washout very soon now. Trade below 1119.00 should send em lower and we could see some dramatic downside action."

This is EXACTLY what happened on Friday as prices tried to rally but failed at the 1121 BreakOut, held below 1119, and then got hammered later in the session.

Pro Trader's Action
As described clearly above we are going to be looking to today as a PIVOTAL DAY with prices either catching support on an early washout price drop and pushing above and holding steadily above 1105.00 or failing this process.

If we see the failure of the market to catch support and hold above 1105 then we are most likely heading towards 1078 for a more dramatic washout which should load all those old, super convinced (yet highly fickle pickle) Bears back into their old story. That old story is that the world is going to Hell and a Handbasket...etc., etc....we've been hearing about this for years.

If that needs to occur that should load all the bears in sufficiently enough to power the markets higher again this year.

It's not for sure that this won't begin right in this price area. It's a bit hard to tell right now as we did see some bearishness re-emerge on Friday but it may require a more dramatic move lower.

So far though we are clearly calling for the higher prices from an early washout today.

I believe I have given you all the necessary number and criteria to look for one of two scenarios today. If the High Five support a lower, early move to get long by NOT being mega bearish then we should give that our best shot.

Let the market prove it's not going to rally in which case if we get long we can tighten our stop.

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