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[Figas]

Trade Setup Summary for Tuesday, July 8, 2003:
Sell 1003.75/ Cover at break even or better (Sell B/O)

Recap of Tuesday's Action:
Good Morning and welcome to the Morning Call for Wednesday.

Our Headline Call on Tuesday was looking for the market to push higher during the session with the expectation of a pullback later into the close. We had also mentioned in the briefing that we expected an early drop to find support from which the market would push higher. The early drop occurred, support came in and we pushed higher from there. However, later in the session we had a very bullish NAZ (our nickname for the Nasdaq composite index) and VIX which held the market up above the Hour One BreakOut pivot. Hence, our call for a sell off in the later session did not pan out as planned.

As you can see on the chart above, there were 3 attempts to sell off which all held support. Additional support came in with the excessive amount of bears shorting the market and thus holding the market up. We had recommended Selling the BreakOut if that was the first pivot hit of the Hour One pivots. The B/O did occur first at 10:37est at 1003.75 and some traders may have gotten short a little higher as the prices pushed 2 points above the B/O before falling back as shown on the chart. The trade was held short but our subscribers were able to recognize the clearly bullish NAZ and VIX as roadblocks to lower prices.

After the 3rd attempt to push lower and with the day getting late the trade would have been covered at break even or maybe with a slight profit. Over time watching these briefings you will become completely familiar with the trading ideas we show you. These methods will teach you how to read the market very clearly and know when to hold trades or scratch em when they are obviously not going to work out.

BE SURE TO READ OUR REGULARLY UPDATED "ASK MOHAN" SECTION. I address many important trading questions in relation to the daily trades and other ideas at length. I am excited about this section as it is going to be a vital part of your subscription to the Morning Call. On the "Ask Mohan" section it is my chance to hang loose a little bit and really answer in depth all of your most pressing questions.

Today's Call & Briefing:
Today's Headline Call is similar to Tuesday's in that we are looking for a higher opening and early push up in prices to pull back later in the session. Today we have given specific criteria in relation to the opening above 1007.60 (which is Tuesday's close) to be vital in seeing a sell off from an early rally. Why is this?

TODAY IS AN LSS SELL DAY What this means to us as traders is very important. I describe what the LSS system is in the ASK MOHAN section and "Basics of S&P500 trading" on our sites home page. Briefly it is part of a method developed by a trader named Taylor back in the 1950's. One of his main premises was that the market was controlled by large money interests to rig prices in their favor . We have demonstrated for over a year now on these Morning Call briefings that our Headline Calls are very accurate in predicting the markets moves the next day. A good portion of our Headline Call is based on our decoding of Taylor's book method and we agree in many ways with this core premise.

Many have tried to understand Taylor's system and many have failed but we feel we have "cracked the code" so to speak on what he overall was trying to accomplish. That goal is to know where the market is going over the next day or two. Our plan for today is to look for lower prices on a higher open which "feeds" the LSS Sell day coupled with an early push up. Watching the opening price will be vital to seeing how the LSS Sell day is reacting to the opening price range.

If we get a LOWER OPENING and early push lower then we will expect prices to find support and consolidate HIGHER today. Our overall expectation is that the market will crack to the downside today mid session or later.

TCF TRADE SETUPS TO WATCH FOR TODAY:We are going to take a chance and go short on a higher opening and rise up to the Sell Pivot target early in the session (even during the first hour). More on this below.

If we get the BreakOut again today as the first pivot hit of the Hour One pivots then we are going to look to sell the B/O. We will be on the lookout today for a surprise rally just in case although we are NOT expecting this. The signs of a BreakOut Buy rally will be seeing the Dow FLAT at the time of the BreakOut. Our definition of flat is when the Dow is trading up +50 or LESS. If the Dow is flat but we see the NAZ is leading the market being up +12-15 points or higher and the TRIN is below .80 along with a bullish VIX down -.50 or lower then we have a setup for a bullish B/O buy.

If this setup IS NOT occurring then we have the formula in place to Sell the BreakOut. IE: Look for the NAZ to be lower than +10 at the time of the BreakOut with the TRIN above .90 or more and VIX trading higher like +.40 or more. Look for a weak MER and that should seal the fate of any further rally for today.

There is a good chance we will see the BreakDown hit first today and if this occurs it will be more challenging. Usually we will be looking to Buy the BreakDown unless we are in a Bear Ugly market situation. I explain this in depth in our S&P500 Handbook available on the site to subscribers. A Bear Ugly market is NOT just the condition of the High Five although that is an important component. Our subscribers who have been with us a while have seen several true Bear Ugly days and they are very OBVIOUS when they are occurring once you know what to look for. On these type of trading setups we are going to short the lows and are asking the market to give us a 10 handle move lower. That's asking a lot of the market and it needs to be in really bad shape for that to occur.

So re-read the chapter on TCF setups to prepare for the possibility of this Bear Ugly type of setup today. I fully expect all of our serious subscribers to MEMORIZE these TCF trading setups. I have worked very hard to write this book and start this daily newsletter so YOU CAN PROFIT from this S&P500 market. But you have to be willing to take the massive research I have done and put it to good use by becoming the professional I know you can be.

If the market is NOT Bear Ugly today and we hit the B/D as the first Hour One pivot then we are going to be looking to Buy the B/D. If the High Five are bearish then there is a chance (but not a guarantee) that you will be able to get long 2-4 points below the BreakDown. Don't attempt this if you are new. Just either watch the action and develop faith in the setups like so many hundreds of traders have or use the exact pivot as your entry. Remember, If you recall from yesterdays briefing we have got over 4000 trading days left so if you are new be willing to educate yourself through observation and research.

Value Area: 999.80 - 1,005.80
If we are able to get short with the correct TCF setup we will first be looking for the market to hold BELOW the 1005.00 top of the Value Area. Holding in the Value Area will be essential for a short from higher levels. We will then look for a retracement of 75% of the VA which would take us down to the 1001.30 area. Pushing below that under the low of the VA would be a stronger bearish sign. We may find that if they rally first in the early going to higher prices as we expect then this bottom of the VA could become strong support. We are expecting a larger scale drop soon of which today could just be the beginning if the market sets up according to our LSS Sell day script.

Buy Pivot Target: 1,000.50 - 1,001.50
We have the Buy Pivot target right on the 75% retrace of the Value Area which should at first provide double support. If not then this will be a strong clue for lower prices. Depending on the opening this could show up as first level support and then later a new price ceiling if we get the higher opening and the subsequent LSS Sell day sell off. Let's NOT Buy at this pivot today but see how it acts after the opening and first hour movements. If our Headline Call pans out and we get a sell off this may turn into a pivot for reversing short. We will know more when we get there and can view the High Five along with the opening reaction.

Sell Pivot Target: 1,011.50 - 1,010.50
Sell the Sell Pivot target today and look for the prices ideally to pull back right off of it especially on a higher opening. Watch the +4.25 stop/pivot and place a 5 point stop at 1016.50 if filled short. IF THE MARKET OPENS ON THIS SELL PIVOT CANCEL TRADE AND WAIT. This is a long standing rule we have for these Buy/Sell pivots. Just let the first hour pass if they open right on the pivot and then re-evaluate later.

10 Day "Pit Bull" Moving Average: 985.10
We are still in a "Buy Drops" mentality as long as we are above the Pit Bull 10 day Moving Average. If we get the drop we expect on a higher opening then support should come in above this first at 997.00, then 996.25 (-4.25 stop/pivot on the Buy Pivot Target), then 992.00. The next level lower for support will be right on this Pit Bull and with a strong LSS Sell day we could possibly see this today.

Pro Trader's Action
The Holiday trading and the odd events that occurred during this period are getting washed out of the market now and we should see more clearly defined patterns. The last few days have been somewhat convoluted but fortunately we side stepped most of it. We stood aside on Thursday which went no where to speak, stood aside on Monday's insider favored gap up (a gift to the riggers who participated in the "accidental" order imbalance on the Mini Dow Thursday) and Tuesday we got short but no damage or cigar on the trade. So let's see if we can get some nice action today.

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

[Figas]

Market to sell off on an open above 1007.60 after early push higher