BS"D

Good morning,

We took a couple of decent bites out of Thursday morning's
Bear run, but the mid-run swinging encounter with the
Pivot-Close cost us a few bucks.

Trading stopped cold at noon for a most boring few hours.

Prepare for a possible breakout (and of course traps) on
Friday.

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
Thursday 25 October 2012

1 = Morning session opens gap-up with an Anomaly (Overnight, bottom left chart) 2-bar Bear Signal
at the R1.

Price Action struggles (123 above) at R1 Support.

2 = Not yet released from the pull of the R1, Price Action tapes a 123 below the R1. For those
of us who entered aggressively, misreading the DVS (pink) as a show of strength, let's hope you
exited/SCRATCHed just as aggressively.

3 = With a bit of ingenuity, this powerful 123 retest can be red as a "P" Signal. Either way,
we are pulled in at the 10:30 Reversal Time, as the giant red candle crosses the MA. Advance
initial stop above the MA to reduce At Risk.

A = Large red candle. Standard PMT profit-locking stop placement, above the high of the candle,
leaves our position in Maximum Profit Giveback (MPG) violation. Mental stop at Giveback Level.

NOTE: ABS is bloated today. To avoid getting taken out at every swing/adjustment, expand the
stop, exit, and MPG spacings.

B = Large red candle. Again, standard PMT stop placement, above the high of the candle, leaves
our position in MPG violation. Mental stop at Giveback Level. We are getting close to the dense
Pivot-Close Support band. Prepare to Pivot Scalp Exit.

C = Large red Marubozu (full-bodied candle without wicks) slams through the Pivot. Per our stop
rules, move the profit-locking stop above the Pivot. Since the troops very often don't swarm
into the hole punched by one of these sumo candles, use a mental stop to facilitate quick exit
(no Cancel-Replace).

D = Black Volume Bar of Death (pink arrow) Doji. Not exactly a rally! The Doji feebly
suicidally stretches to tap on the close and retracts. Pivot Scalp Exit is obviously the
appropriate call. No sense waiting to see if the next candle turns white. BTW, it does.
+/- 6 points

4 = Doji Sandwich of both the Close and the Pivot. Volume (sorry, unmarked) is strong.

E = We enter on a small Spinning Top. Not at all encouraging. Stay sharp and aggressive.

F = Second white candle closes above the Mid. Though neither white candle was overly "healthy",
we will aggressively take any excuse to tighten our stop. Under the Mid, or under the MA, or
simply at Free Trade will do nicely. The position closes out promptly at breakeven.

5 = Either this is the breakout of a small 2-bar (= F), or a 2-candle 123. No matter, as Volume
is taking a breather and we don't like to enter into the green fog (except on a fast moving
freight train).

6 = DVS (pink arrow) drives a powerful 2-candle 123 at the Close to exit the fog and pull us
in aggressively.

G = Unpleasant stall before a Twin Towers (pink arrow) generates a giant red candle. The
position is in MPG violation. Wary of a stall/sag, we jump a mental stop to Giveback Level.

H = The stall indicated by the above Twin Towers Volume pattern (pink arrow, = G) begins to
resolve, but doesn't let us tighten the stop appreciably.

A giant spidery Doji expires after first expending all the Momentum to tap on the S1 and retract.
That sudden stretch signals a Pivot Scalp Exit Now! +/- 3.75 points

Just as suddenly, everybody runs out to lunch. Volume dies and Price Action drifts sideways
mid-air.

Around 1:00 things get even worse, as the sideways lunchtime drift settles into the Pivot-Close
Channel and runs out the day.

PERSPECTIVE
(Daily, bottom right chart)

Thursday, trading continued to breathe with a small Doji
day candle adjacent to Wednesday's little breather candle.

The attitude of the tape still feels ominously Bearish.
Even though it wasn't important enough for the debates,
maybe the candidates really should be concerned about
the economy?!? Just a thought.

REMEMBER: Trade the Tape, Not my Prognostics!

BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!

Asher
=] ;-)>

Thursday's PMT Chart: