BS"D

Good morning,

Got what we expected on Monday, ". . . probably a breather day."

We did take a couple of decent bites out of the day. Missed
the EOD monster move though.

Tuesday?

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 Z2
Monday 22 October 2012

Monday's opening (white) candle is slightly gap-up, thrusting back inside the LT Trend Channel Floor
(blue line). Candle two (red) re-exits and starts the dive to close the opening gap.

1 = Surely a Reversal signal. Safe to call it a 2-bar. Volume is strong (pink arrow) for another
Trend Channel reentry try. Enter aggressively. At the close of the candle, move the stop under the
MA, per our rules.

A = Giant white candle puts our position in PMT Maximum Profit Giveback (MPG) violation. Mental
stop at Giveback Level.

B = Large white candle. Per PMT stop rules, move the profit-locking stop under the low of the candle.

The next candle (red) retraces 62%, mid air reversal, and we prepare to exit on red. +/- 3.50 points

2 = Triple-plunger slingshot of the MA/Double Bottom at the Close. No open Price Window to the blue
line. Even though the blue line is not a PL outside the Channel, it has proven to be a serious S/R
today. It is almost lunchtime and Volume is low. Not much of an opportunity, even as the DVS
breakout exhausts Momentum.

Lunchtime sideways drift is noticeably brief, with Price Action taping a powerful Descending Triangle
(green lines) for TTT pressure through the Close.

3 = Triangle breakout, with a retest and 123 exiting the fog. Volume is aroused (pink arrow).

C = Volume surges (pink arrow), and we are pulled in on a giant red Bull Dragonfly. Reduce risk with
a stop above the candle high. The elongated bottom wick is unnerving.

The petite Doji stall invites us to move the stop to Free Trade.

D = Giant Doji Dragonfly. What's with these long bottom wicks? Inch the stop down a tik or two.

E = Exhaustion gap and a large red candle. Volume isn't much either. This is a good time to apply
my convention and move the stop into the gap.

F = White S-trap stall resolved as a small white inverted Dragonfly.

We suggest aggressive action on the next, average-sized red candle. Move the stop above the high of
the candle.

G = Large red candle (and another elongated bottom wick). Can this really be the end...? Stop
above the high of the candle = Giveback Level. Let's be prepared. Use a mental stop.

The next (white) candle retraces >62 and, per our rules, we exit. +/- 4 points

4 = Lunchtime drift resumes with very confused Volume (pink oval). Even though the Bull TELL (blue
arrow) should have given it away, we passed on this "P" off the MA.

EOD Hiccup (plum lines) is on time, and traces a classic "V" check mark pattern, as Price Action rips
through the Close and re-enters the LT Trend Channel (blue line) to close EOD.

PERSPECTIVE
(Daily, bottom chart)
Monday's small white Bull Dragonfly day candle taped a breather
at the LT Trend Channel Floor (blue trend channel lines).

The fact that the candle spent most of the day outside the
Channel leaves the market looking down.

Depends how traders line up on the "winner" of the debate,
probably. 'Tis the season!

REMEMBER: Trade the Tape, Not my Prognostics!

BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!

Asher
=] ;-)>

Monday's PMT Chart: