Mohan 22/07/2003
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Trade Setup Summary for Monday, July 21, 2003:
No TCF Trade setup on Monday.
Recap of Monday's Action:
Good Morning and thanks for joining us today. A special welcome to all the new subscribers and visiting traders from around the globe.
Our Headline Call on Monday was looking for a move higher that would sell off. We had also cautioned that a fast, early rally would reverse quickly. Well, the market wanted to sell off quicker than we had expected as the prices opened flat and quickly sold off with High Five Bear Ugly tape readings showing up right away.
Our definition of a Bear Ugly day is when the market gaps lower with some bad news being broadcast as the reason for the move. A trader who recognized this pattern will see the High Five going Bear Ugly and think..."things could get ugly here". That's how Bear Ugly gets its name. IE: a real serious looking negative situation in the stock market that is immediately reflected on the open.
When a Bear Ugly High Five occurs near the open like this then any trades to Buy are cancelled whether at the Buy Pivot target or the B/D as lower prices will almost always follow a Bear Ugly setup like this. On Monday we got the flat open and then the tempered erosion with the Bear Ugly High Five showing up right away with the TRIN over 1.30 right off the open. The rest of the High Five followed and when we got to the BreakDown Hour One pivot after the first hour our rule would have been to stand aside on the trade. Why? Plain and simple, because it was not an official Bear Ugly setup according to the rules shown.
Now there is a condition we see occasionally which we refer to as a "sneak down Bear Ugly day" and although this resembled such a day in some ways it was actually not. There are many different factors involved in such a day showing up and our Market Force indicators will usually be able to see it coming and we alert the subscribers in the Headline Call.
Monday's action was not like this as the market did not really sell off from the B/D with substantial force. Some of you may have attempted to "fight the tape" (the High Five) and try to follow the idea of Buying the B/D --4 points or so to compensate for the Bear Ugly High Five. This idea was not entirely incorrect and if you did follow through on this trade you would have made a small profit or got stopped out with a small loss at worst.
So there is not much to say about Monday other than we were expecting a move higher first to show some strength of some kind before fizzling out. The Bulls were jumping all over the drop on Monday and it tells me that we have lower to go...at least testing the lows on Monday and most likely lower.
Today's Call & Briefing:
On our Headline Call for today we are going to be looking for a rally attempt that continues to get hit with selling. Our Market Force indicators are signaling for a one day reversal but conflicting indicators are suggesting that there are too many bulls expecting a counter rally and they are sure to be disappointed as the day wears on. Let's get right into the TCF setups.
TCF TRADING SETUPS TO WATCH FOR :As mentioned above, we are looking for a rally attempt today that will get hit with more selling. Our expectation is for an early attempt to rally with the BreakOut Hour One pivot most likely getting hit first. Be on the lookout for a "Too Much Too Soon" type of early rally where we see the Dow up +80 or more but with the NAZ (our nickname for the Nasdaq composite index) holding back and being up only +10 or less. This will be our first clue for more weakness to set in. We would then look at the TRIN being above .90 or higher for the second clue to look to go short if the "Too Much Too Soon" setup does occur.
If we get a slow steady rise either off the early low B/D or right off the open up to the BreakOut then we can use this same criteria with the High Five to determine if we want to go short. We are not expecting a BreakOut buy today but should always be prepared to trade long if it shows up.
After the first hour if we do get the BreakOut as the first Hour One pivot and the Dow has moved ahead strongly over +60 or more and the NAZ is bullish but not over +20 then we will still be looking to sell that BreakOut. If we see this occurring plus we have the TRIN below .80 and the VIX down then we will want to add 2-4 points to the B/O High and short from that point.
Overall we are looking for prices to attempt to break through the lows put in on Monday. This may not occur on today's action but we are expecting that first before we see a reversal to the upside. We need to see more Bears shorting the market before we can get a serious rally going again. This is accomplished by a drop in prices and a fast exit towards the door by traders with the bulls giving up some of their positions and ideally getting short. Let's see if today's action can accomplish that.
Value Area: 974.50 - 980.40
Prices managed to push up near the top of the Value Area on Monday which still leaves the market in a neutral position. An attempt to rally above 981.00 area that falls back into the VA is going to be a bearish move. Trade holding below 974.50 is very bearish as this was the low area of Monday.
Buy Pivot Target: 971.00 - 972.00
If the market opens LOWER ONLY then we can go ahead and buy this Buy Pivot target here at 971-972.00. Place a stop 5 points below at 966.00 and watch for the --4.25 stop/pivot to hold up the selling.
We should rally off this Buy Pivot on the lower opening unless once again the High Five open up Bear Ugly. This is not expected today however. To exit the trade we would watch to see if the BreakOut is going to occur as the first Hour One pivot and then depending on the set up occurring with the B/O exit accordingly.
I have had times where I bought the buy pivot, it held and created the lower zone for the day, had em rally up to the B/O which turned out to be a bullish BreakOut that rallied another 10 points higher from there. Now, of course that is the ideal but you can never know what could occur. If I didn't tell you about this ideal situation then you wouldn't have anything to compare it with. So check to see if this is the case. Otherwise, it is still good to remember the possibility of these type of trades setting up on days like this when the chance is there.
Sell Pivot Target: 987.50 - 986.50
No trade at this pivot today. If we do rally up here then compare the prices to the BreakOut to get a fix on what to do. We want to watch the +4.25 stop/pivot at 991.75 for any sign of reversals with corresponding High Five indicators.
10 Day "Pit Bull" Moving Average: 994.20
We are below the Pit Bull and maintaining a "Sell Rallies" mentality for moves up to this area. You can see how effective the Pit Bull can be in keeping you focused on the right side of the market. We use the Pit Bull to establish the mind set of "Buy Drops" when we are ABOVE the Pit Bull and "Sell Rallies" when we are BELOW the Pit Bull. We will still take counter moves but when we see, such as in today's case, a rally moving up towards the 994.00 area then we are prepared to sell the rally up there with the correct conditions.
Pro Trader's Action
We are looking for a reversal attempt to the upside today which we expect will get hit with selling.
We want to be willing to buy on a lower opening and see if we can get long into those higher prices. If this works out then we will be vigilant to sell at the appropriate TCF Trade Setup and most likely be able to get a short on too.
Just like yesterday's action with the odd appearance of a Bear Ugly High Five but without any real strong open gap lower and associated news you can see that we really didn't miss much standing aside. Some of you scalped short the B/D for 4-6 points and that is fine although not the official trade. Also some of you reported to me about buying the B/D minus up to 4-5 points and catching a small rally back to 980.00 area. Again, this is fine but if you stand back you can see that neither of these trades gave us a full 8-10 point move associated with a TCF setup. So it's important to understand the setups plus ways you can make money around them or at least stay on the correct side of the market.
Let's see which side the market gives us today for setting up a trade. Same thing for today as yesterday: If the exact, clear TCF trade setup is not occurring then just stand aside.
Good luck today and all the best of success. Mohan
No TCF Trade setup on Monday.
Recap of Monday's Action:
Good Morning and thanks for joining us today. A special welcome to all the new subscribers and visiting traders from around the globe.
Our Headline Call on Monday was looking for a move higher that would sell off. We had also cautioned that a fast, early rally would reverse quickly. Well, the market wanted to sell off quicker than we had expected as the prices opened flat and quickly sold off with High Five Bear Ugly tape readings showing up right away.
Our definition of a Bear Ugly day is when the market gaps lower with some bad news being broadcast as the reason for the move. A trader who recognized this pattern will see the High Five going Bear Ugly and think..."things could get ugly here". That's how Bear Ugly gets its name. IE: a real serious looking negative situation in the stock market that is immediately reflected on the open.
When a Bear Ugly High Five occurs near the open like this then any trades to Buy are cancelled whether at the Buy Pivot target or the B/D as lower prices will almost always follow a Bear Ugly setup like this. On Monday we got the flat open and then the tempered erosion with the Bear Ugly High Five showing up right away with the TRIN over 1.30 right off the open. The rest of the High Five followed and when we got to the BreakDown Hour One pivot after the first hour our rule would have been to stand aside on the trade. Why? Plain and simple, because it was not an official Bear Ugly setup according to the rules shown.
Now there is a condition we see occasionally which we refer to as a "sneak down Bear Ugly day" and although this resembled such a day in some ways it was actually not. There are many different factors involved in such a day showing up and our Market Force indicators will usually be able to see it coming and we alert the subscribers in the Headline Call.
Monday's action was not like this as the market did not really sell off from the B/D with substantial force. Some of you may have attempted to "fight the tape" (the High Five) and try to follow the idea of Buying the B/D --4 points or so to compensate for the Bear Ugly High Five. This idea was not entirely incorrect and if you did follow through on this trade you would have made a small profit or got stopped out with a small loss at worst.
So there is not much to say about Monday other than we were expecting a move higher first to show some strength of some kind before fizzling out. The Bulls were jumping all over the drop on Monday and it tells me that we have lower to go...at least testing the lows on Monday and most likely lower.
Today's Call & Briefing:
On our Headline Call for today we are going to be looking for a rally attempt that continues to get hit with selling. Our Market Force indicators are signaling for a one day reversal but conflicting indicators are suggesting that there are too many bulls expecting a counter rally and they are sure to be disappointed as the day wears on. Let's get right into the TCF setups.
TCF TRADING SETUPS TO WATCH FOR :As mentioned above, we are looking for a rally attempt today that will get hit with more selling. Our expectation is for an early attempt to rally with the BreakOut Hour One pivot most likely getting hit first. Be on the lookout for a "Too Much Too Soon" type of early rally where we see the Dow up +80 or more but with the NAZ (our nickname for the Nasdaq composite index) holding back and being up only +10 or less. This will be our first clue for more weakness to set in. We would then look at the TRIN being above .90 or higher for the second clue to look to go short if the "Too Much Too Soon" setup does occur.
If we get a slow steady rise either off the early low B/D or right off the open up to the BreakOut then we can use this same criteria with the High Five to determine if we want to go short. We are not expecting a BreakOut buy today but should always be prepared to trade long if it shows up.
After the first hour if we do get the BreakOut as the first Hour One pivot and the Dow has moved ahead strongly over +60 or more and the NAZ is bullish but not over +20 then we will still be looking to sell that BreakOut. If we see this occurring plus we have the TRIN below .80 and the VIX down then we will want to add 2-4 points to the B/O High and short from that point.
Overall we are looking for prices to attempt to break through the lows put in on Monday. This may not occur on today's action but we are expecting that first before we see a reversal to the upside. We need to see more Bears shorting the market before we can get a serious rally going again. This is accomplished by a drop in prices and a fast exit towards the door by traders with the bulls giving up some of their positions and ideally getting short. Let's see if today's action can accomplish that.
Value Area: 974.50 - 980.40
Prices managed to push up near the top of the Value Area on Monday which still leaves the market in a neutral position. An attempt to rally above 981.00 area that falls back into the VA is going to be a bearish move. Trade holding below 974.50 is very bearish as this was the low area of Monday.
Buy Pivot Target: 971.00 - 972.00
If the market opens LOWER ONLY then we can go ahead and buy this Buy Pivot target here at 971-972.00. Place a stop 5 points below at 966.00 and watch for the --4.25 stop/pivot to hold up the selling.
We should rally off this Buy Pivot on the lower opening unless once again the High Five open up Bear Ugly. This is not expected today however. To exit the trade we would watch to see if the BreakOut is going to occur as the first Hour One pivot and then depending on the set up occurring with the B/O exit accordingly.
I have had times where I bought the buy pivot, it held and created the lower zone for the day, had em rally up to the B/O which turned out to be a bullish BreakOut that rallied another 10 points higher from there. Now, of course that is the ideal but you can never know what could occur. If I didn't tell you about this ideal situation then you wouldn't have anything to compare it with. So check to see if this is the case. Otherwise, it is still good to remember the possibility of these type of trades setting up on days like this when the chance is there.
Sell Pivot Target: 987.50 - 986.50
No trade at this pivot today. If we do rally up here then compare the prices to the BreakOut to get a fix on what to do. We want to watch the +4.25 stop/pivot at 991.75 for any sign of reversals with corresponding High Five indicators.
10 Day "Pit Bull" Moving Average: 994.20
We are below the Pit Bull and maintaining a "Sell Rallies" mentality for moves up to this area. You can see how effective the Pit Bull can be in keeping you focused on the right side of the market. We use the Pit Bull to establish the mind set of "Buy Drops" when we are ABOVE the Pit Bull and "Sell Rallies" when we are BELOW the Pit Bull. We will still take counter moves but when we see, such as in today's case, a rally moving up towards the 994.00 area then we are prepared to sell the rally up there with the correct conditions.
Pro Trader's Action
We are looking for a reversal attempt to the upside today which we expect will get hit with selling.
We want to be willing to buy on a lower opening and see if we can get long into those higher prices. If this works out then we will be vigilant to sell at the appropriate TCF Trade Setup and most likely be able to get a short on too.
Just like yesterday's action with the odd appearance of a Bear Ugly High Five but without any real strong open gap lower and associated news you can see that we really didn't miss much standing aside. Some of you scalped short the B/D for 4-6 points and that is fine although not the official trade. Also some of you reported to me about buying the B/D minus up to 4-5 points and catching a small rally back to 980.00 area. Again, this is fine but if you stand back you can see that neither of these trades gave us a full 8-10 point move associated with a TCF setup. So it's important to understand the setups plus ways you can make money around them or at least stay on the correct side of the market.
Let's see which side the market gives us today for setting up a trade. Same thing for today as yesterday: If the exact, clear TCF trade setup is not occurring then just stand aside.
Good luck today and all the best of success. Mohan
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- Mensagens: 620
- Registado: 5/11/2002 2:26
Mohan 22/07/2003
Market to attempt to rally today but we want to keep shorting the higher moves.
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- Mensagens: 620
- Registado: 5/11/2002 2:26
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