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Commodity and Futures - Physical commodity and financial futures markets.
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Posted by on May 18, 2006, 8:29 am
BS"D
RULES AND CAVEATS
Pivot Magic Trading Course
First rule:
"...Any time you don't know what is happening, get out!"
http://www.TradingThingys.com
MARKET IN REVIEW - LITE
Wednesday (17 May 2006)
_____________________
Nasty! Looks like the Fed finally crashed the market.
Raising the interest rate in stages, at a 1/4% a time,
is like seeding (adding more) solute to an
over-saturated solution. Eventually, the solvent can
hold no more, and solute precipitates, massive fallout.
i.e. The stock indexes crash. Wonder how the men in the
ivory tower plan to bring things back into balance?!?
Nice trading range for PMT traders though!
******************************
Morning session opens gap-down at the S2.
1 = 10:00 Reversal time, but we need to observe the Overnight (bottom
left chart) to see
the trend leading up to this signal. (Does that make it an Anomaly???)
On the 10-Minute
tape (bottom center chart), the Doji spike Sandwich reversal displays
as a red Bear
Dragonfly. No doubts here. It's a "P"!
A = Failed test of MA. Briskly follow the rules and move
profit-locking stop above MA,
minimizing Undefended At Risk.
B = Following a long battle at S2 Support, failed test of MA. Move
profit-locking stop
to "free trade" plus.
Note: Got 5 good points to S3 and lunchtime drift.
C = Second healthy red candle below S2. Per our stop rules, move the
profit-locking stop
tighter, above the S2.
D = Price Action is playing with the S3. Large red candle. Move
profit-locking stop
above the high of the candle.
E = Sort of a 123 encounter at the S3 and then a giant red candle. The
accompanying DVS
(middle chart) tells us that this was a desperation move and warns of
S3 retest potential.
F = Look at that DVS Reversal (middle chart). That's about a third of
an average day's
Volume in 10 minutes! White Bull Dragonfly spikes and Price Action
reverses. Mid-air
makes this less of a threat, but the upward push going into lunch
increases the likelihood
of the S3 retest. That's a lot of points to risk giving back. Trading
below the S3 is
dangerous at best. This is an "Exit Now". +/- 10.5 points.
Not too shabby!
FOR THE MORE GREEDY AMONG US
(This is a not-risk-conservative mistake, but lucky this time.
Presented as stop movement exercise only. NOT A PMT HOLD POSITION):
If you were to hang on instead and weather the S3 retest, this Doji
Spike Sandwich warmed
your greedy heart!
G = Failed test of MA. Move profit-locking stop above the MA. Surely
don't want to give
those points back a second time!!!
H = Failed test of MA. Move profit-locking stop above the MA. Got the
points back;
secured this time!
J = Large red candle. Move profit-locking stop above the high of the
candle.
K = Red Bull Dragonfly spike Sandwich reversal. Clear Volume reversal
too (middle chart).
Sooner you spotted this the more extra profit you extracted. Worst
case scenario, taken
out at the stop, this mistaken hold picked up 2.5-3.0 more points.
NOTE: Although this time trading the mistake was profitable,
it was bad money management. It is clearly not worth risking
7.0+ points to gain 3.0 points.
Lousy R:R, but a fun stop movement lesson!!!
PERSPECTIVE
(Daily, bottom right chart)
EOD closed with Price Action dipping almost to the contract low.
That's quite a swing: From contract high (red line) to contract
low (blue line). Three month's Bull trend achievement retaken in
5 days of trading!
Looks to me that Greenspan got out just in time to avoid the blame!
Hehehe!
REMEMBER: Trade the Tape, Not my Prognostics!
Asher
=] ;-)>
Pivot Magic Trading Course
http://www.TradingThingys.com
Wednesday's PMT Chart:
Http://www.TradingThingys.com/PMTJ/PivotMagic051706.gif
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