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Protecting Funds From Erosion *LINK* *PIC*


Good morning,

In yesterday's Pivot Magic Trading Journal, PERSPECTIVE:
section, we predicted, "Even though the Volume was punk,
a Ceiling test/breather does seem likely on Tuesday."
It wasn't exactly a breather, but Tuesday surely tested
(and lost to) the LT SW Channel Ceiling (Daily, bottom
chart, lavender channel lines).

We had one rather nice score in the late morning, but
sat sidelined for the rest of the day, with our
risk-conservative PMT Money Management rules protecting
our funds from erosion.

FOMC announcemnt at 12:30. Beware the Fed. Our rules
remind us, Don't stand in front of a fast moving train."

Enjoy and be well,


"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."
Will Rogers


E-mini ES Z1
Tuesday November 01, 2011

Following overnight trading, Tuesday morning opens with a huge gap down, below the
S3, well back into the LT SW Channel (Daily, bottom chart, lavender channel lines).

1 = Though we might consider this 2-candle 123 entry signal, the Doji and lessened
Volume following discourage.

2 = A 123 atop the S3 gives us hope, but Volume is again not supportive.
Price Action struggles with the LT SW Channel Ceiling (lavender line) for the next
hour or so.

3 = Finally a Signal! This 2-bar "P" Signal through the lavender line (and at the MA)
surely qualifies.

A = We are pulled in below the MA, with our stop advancing above the MA.

B = Giant red candle puts our position in Pivot Magic Trading Maximum Profit Giveback
(MPG) violation. Mental stop at Giveback Level.

NOTE: ABS is bloated. To avoid getting stopped out
at every Price swing, expand the exit, stop, and
MPG placements.

C = Small though it appears, this candle is a 2-pointer, and it puts our position once
again in MPG violation. Per our stop rules, move the profit-locking stop above the
high of the candle/Giveback Level. Since we are so close to the next Objective (S3),
make that a mental stop in case the PL Support holds.

D = Large red candle penetrates the S3. Per our stop rules, move the profit-locking
stop above the S3.

Our expanded stop is just missed by the top wick of a large red Spinning Top candle.

E = Large red candle. Per our stop rules, move the profit-locking stop above the high
of the candle/Giveback Level. The elongated bottom wick is a sign of exhaustion.

A Doji stall on the next candle suggests that we convert our stop to a mental stop and
prepare to exit on white.

F = Large red inverted (Bull) Dragonfly. Per our stop rules, move the profit-locking
stop above the high of the candle. The long bottom wick skid mark suggests that the
wheels are spinning as the Bulls take back Momentum. With almost 2 points recouped
by the tail of this candle, it seems prudent to place the stop 0.75 points above the
close of the candle. And there we are taken out. +/- 8.25 points

Although Volume doesn't drop off all that much, lunchtime sideways drift ensues at
the S3. Volume remains either low or confused for the rest of the day. Price Action
is trapped in the S3-lavender line channel.

EOD Hiccup (plum lines) is on time with a classic "V" check mark. Price Action can
not overcome the S3 Support and bounces once again to close EOC at the LT SW
Channel Ceiling (lavender line).

(Daily, bottom chart)

Tuesday tapes a giant red day candle, spiking well into
the LT SW Channel (lavender channel lines). At day's
end, Price Action halts pressed up against the Channel

Since the FOMC is unlikely to provide answers to the
economic doldrums, Price Action will likely now settle
back into the sideways safety of the LT SW Channel for
a while.


REMEMBER: Trade the Tape, Not my Prognostics!

=] ;-)>

Tuesday's PMT Chart: