BS"D
Good morning,
Wednesday's tape was very hard to read, and to trade; heck,
it was even hard to see. Due to the large opening gap,the
vertical/Price axis was stretched requiring a 2-point skip.
The actual ABS was average to small for most of the day,
leading to a lot of squinting and chuntering in my beard.
Rollover day ES U2.
Enjoy and be well,
DAILY PIVOT MAGIC TRADING JOURNAL - EXCERPT
******************************
Pivot Magic Trading
First rule:
"Any time you don't know what
is happening, get out!"
******************************
E-mini ES U2
Wednesday 06 June 2012
Wednesday opens gap-up, tapes a 123, and continues upward through the R2. Just out of range
to qualify as a PMT signal, Price Action almost taps out a 123 "S" Signal, but not!
Price Action climbs unhindered to the R3. Make note that opening range Volume is rather low,
as is often the case on pre-Rollover Day.
1 = Nice Signal. A DT Multi-top/Doji Sandwich/2-bar combo-signal off the R3. Bull Volume is
up. Traders seem anxious to close the gap.
A = We are pulled in on a large red candle. Advance the initial stop above the high of the
candle to reduce At Risk. The elongated bottom wick and diminishing Volume (pink line) warn
us a SCRATCH! may be coming.
Volume diminishes further, generating a small red Doji Dragonfly. The Bears clearly will not
recover. Exit on white. SCRATCH!
2 = A 123 through the R3. Volume is strong (for today), so some of us greedily enter
aggressively (and prematurely).
B = The rest of us are pulled in when the 4th candle (our maximum wait for a breakout to be
considered linked to a preceding Signal), a large white candle, springs north. Move the stop
under the MidW for reduced At Risk.
C = Following the protracted difficulty earlier of breaking free from the R3, and the explosive
resulting breakout at = B, we assume the correct tape reading is a "Breakaway gap", and a large
white candle.
BTW, The assumption that this is a Breakaway gap, also leads us to assume that the Volume is
up (pink arrow), and not a DVS exhaustion. Be risk conservative and hedge your bets. Apply
my convention. Slip the stop into the gap, which is well better than Free Trade.
D = Volume continues to surge (pink arrow, DVS?). Large white candle. Per our stop rules,
move the profit-locking stop under the low of the candle.
E = Large white candle eases north. PMT stop rules direct us to move the profit-locking stop
a drop tighter, under the low of the candle.
F = The next average sized candle (red Bull Dragonfly) stalls, but doesn't signal an exit. Get
ready to jump, however.
The tiny Doji following it does little but keep the stall alive and undecided.
The Bulls don't yet recover. This tiny red candle and lunchtime Volume suggest a longer stall,
or even an R3 retest. Those of us who are ulcer prone (like good ole risk-conservative me)
exited already mid-story! +/- 3 points
Lunchtime sideways drift floats along the MA, beyond the R3, with almost no Trading
interest/Volume all afternoon. Finally, EOD, the BBs offload their holdings, boosting Price
Action a bit higher for pre-Rollover close.
PERSPECTIVE
(Daily, bottom chart)
Wednesday, being the last day for this contract month,
the BBs drove Price up with a massive white day candle.
The healthy white day candle continued the bounce off
the Historical S/R (light blue dashed line), ripping
easily through the next major level of Historical S/R
(light blue line).
BUT READERS OF THE TAPE KNOW A SECRET:
This is fiction.
Price and Time are only 2 dimensions or elements of
the tape. Taking note of the 3rd element of the
trading picture, we observe a Bull move without Volume
confirmation/support. Back to basic TA: The Price
advance is unreliable.
Actually, all eyes are on the new forward month.
As awkward as Rollover generally is, on Thursday we
are extremely likely to witness, at best, a small
breather, or, equally likely, a collapse retesting
the light blue line.
REMEMBER: Trade the Tape, Not my Prognostics!
BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!
Asher
=] ;-)>
Wednesday's PMT Chart:
