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Commodity and Futures - Physical commodity and financial futures markets.
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Posted by on June 30, 2006, 8:43 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
Thursday (29 June 2006)
_____________________
Good morning,
So what should we call this?
FOMC Report Day
or
Fooey on fundamentals; It's TA For Me!
No trades. Short and sweat.
It's been a tough week (sigh).
TGIF!!!
************************
Following overnight bull activity, Thursday opens gap-up, at the R1.
A = Classically, pre-report trading was all sideways, between the R1
and R2. As
report time approached, Volume (middle chart) became a whisper as
trading suspended.
As you can see on the 10-Minute (bottom left chart), the protracted
sideways trading
(Time axis change continues while Price axis froze) caused the (non)
Price Action to
meander out of the 2-day trend channel (green channel lines).
B = FOMC hysteria.
Whopping DVS (middle chart). Giant white candle rips through defenses
at R2, HighW
(exiting the L-T Sideways Channel ceiling), and finally overruns R3.
There's the fast moving train!!!
Normally, the FOMC hysteria now reverses and swings wildly in the
opposite direction
of the initial response. Eventually, the swinging subsides, and
"normal" trading
resumes.
C = Large white candle with a spike tail, almost a Bear Dragonfly.
Twin-towers DVS
(middle chart), which we recognize as a sign of high probability of
impending stall
and reversal. Next swing coming?
Not really.
FUNDAMENTALLY FLABERGASTED
Let's review our Econ. and Fin. (Money & Banking 101) notes:
* The Fed raised the interest rate.
* The purpose for raising the interest rate is to slow inflation.
Net: Should be negative to the markets and positive to savings or such.
Thus, one would expect the hysteria swing to (initially at least) be
Bearish.
Thursday, Price Action leapt forward instead.
OK. Fundamentally, that means either:
* The Fed announcement was what was WANTED (doubt that)
* The contents of the FOMC had been expected, and thus
already factored into earlier buy/sell activity.
i.e. Already reflected in Price.
Great!
Now, since the Fed did what was expected, and the worst case scenario
played
out, the current trend continues (10-Minute chart, = G). This logic
leads to
only one possible conclusion under current circumstances:
Worst Fed decision or Best Fed decision, Bull trading.
Since everyone expected this increase, FOMC report left Price at 2:30
pretty
much where it would have gone without the report interfering with
trading
activity.
Now there's the rub. Why should trading go flat leading up to a Fed
announcement when the worst announcement would yield vigorous Bull
trading?
Fooey on Fundamentals; It's TA for Me!!!
1 = That is a 123 "S" second chance to enter the ongoing move.
No risk-conservative PMT trader is very likely to enter above the R3,
on an
"S" signal, with less than hour to go to EOD Danger time.
JUST FOR FUN AND DISCUSSION, PRETEND WE ENTERED
NOTE: Although risk-conservative theory says to wait till Price
proves above the peak of the 123 to enter, I'd enter a bit
earlier, 0.75 beyond the open of the preceding red candle.
D = Very steep climb with no opportunity to advance our stop. For all
the reasons
given in = 1, above, I'd apply the Advanced PMT traders 3-5 Scalp Stop
Rule and jump
profit-locking stop to "free trade". PMT traders always trade with an
eye to reducing
Undefended At Risk!
E = Failed test of MA. Per the stop rules, move profit-locking stop
under the MA.
F = Momentum is mighty thin. Look at those wimpy candles. Protect your
profits. Call
this a failed test of MA and move profit-locking stop a bit tighter,
under the MA.
Per our rules, exit before the end of 4:10 candle.
PERSPECTIVE
(Daily, bottom right chart)
So, the post breakout retest of the 50%/middle of the pennant
succeeded.
Even blasted through the possible L-T Sideways Channel ceiling
(lavender
line).
Price Action is now up around the next S/R congestion level from end of
May.
Such a mighty lunge will surely require either retest of the lavender
line or
tape some other breather candle.
With an unclosed opening gap yawning below (60-Minute, bottom center
chart, = H),
a retest seems even more likely.
But, of course, recently Fridays have been full of surprises.
Beware the traps!!!
REMEMBER: Trade the Tape, Not my Prognostics!
Asher
=] ;-)>
Pivot Magic Trading Course
http://www.TradingThingys.com
Thursday's PMT Chart:
Http://www.TradingThingys.com/PMTJ/PivotMagic062906.gif
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