The FOMC announcement itself didn't make very big waves
in the market, but it was sufficient to tip the scale,
triggering the Bear move that has been teetering at the
LT SW Channel Ceiling (Daily, bottom chart, lavender
We scored nicely, or extremely nicely if you were brazen!
A breather on Thursday? More likely, the Bears will
follow through on Wednesday's Momentum.
Enjoy and be well,
DAILY PIVOT MAGIC TRADING JOURNAL - EXCERPT
"Don't gamble; take all your savings and buy some
good stock and hold it till it goes up, then sell it.
If it don't go up, don't buy it."
E-mini ES Z1
Wednesday September 21, 2011
1 = Morning session opens at the Close. After a few bounces above the PL, Price Action
tapes a 123 test of the Support-turned-Resistance.
A = We are pulled in, with the initial stop advancing above the Low.
B = Large red candle. Per our stop rules, move the profit-locking stop above the high
of the candle. The elongated bottom wick warns of slowing Momentum. Stay alert.
The next candle tapes a mid-air Reversal. The large ABS (suggesting expanded stop, exit,
and MPG placements) might have implied an S-trap, but most of us Exit Now!/SCRATCH!
The S1 Support is rock hard, holding Price Action in check in anticipation of the 2:15
C = DVS spike (blue arrow) is possibly a TELL. Regardless of the Fed, the BBs seem to
prefer a bearish attitude.
D = Silence, and then massive Volume (pink arrow) at the FOMC announcement. Price Action
adjusts, and 123s off the S1. Too soon to enter in front of the FOMC train.
2 = Price Action struggles with S2 Support, finally breaking through the S2.
E = It is a bit late, but encouraged by the TELL, = C, and the strong Bear Volume, we
enter heading south. The breakout is a 2-candle 123, so entry with multiple contracts
F = Giant red candle puts our position in Pivot Magic Trading Maximum Profit Giveback
(MPG) violation. Mental stop at Giveback Level locks in profit.
G = Another giant red candle through the MidW. Depending on how much we expanded stop,
exit, and MPG placement for bloated ABS, either place the stop above the MidW or at
The next candle taps on S3 and slightly retracts. This can be read (by good ole
risk-conservative me, for example) as a Pivot Scalp exit Signal. +/- 10.25 points
H = (Brave) Advanced readers of the tape note that large Bull Volume only generated the
smallest of white candles, and therefore held through the S-trap. Since there are some
interesting lessons to learn, let's go on that assumption. Move the profit-locking stop
above the high of the candle.
J = Large red candle. Normal stop leaves the position in MPG violation. Mental stop at
K = Late-in-the-Move DVS (pink arrow) pumps a giant red candle into MPG violation, AND
probably exhausts Momentum. Mental stop at Giveback Level.
L = Black Volume Bar of Death (pink arrow) Doji. Normally, we would hold to see if the
next candle shows white before exiting; however:
* Our trading rules obligate us to exit on the next candle either way.
* Late-in-the-Move DVS (= K) warned that the Momentum is wrung dry.
Exit Now! +/- 19.50 points Delicious!
(Daily, bottom chart)
The feeble Fed announcement was still just enough to
trigger the Bear move that the tape has been suggesting
for the past couple of days. Wednesday taped a very
large red day candle, diving well into the safety of the LT
SW Channel (lavender channel lines).
It is quite probable that the Bears won't even stop to
breath before pushing Price Action closer to the Channel
Floor test we have been anticipating.
BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!
REMEMBER: Trade the Tape, Not my Prognostics!
Wednesday's PMT Chart: