BS"D

Good morning,

The ABS (Average Bar Size) was very bloated on Thursday, making every small
foray quite profitable. We did nicely throughout the jagged, large-range
plunge.

TGIF!!!

Enjoy and be well,

DAILY PIVOT MAGIC TRADING JOURNAL - EXCERPT

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"Don't gamble; take all your savings and buy some
good stock and hold it till it goes up, then sell it.
If it don't go up, don't buy it."
Will Rogers

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E-mini ES U1
Thursday August 04, 2011

Session opens gap-down at the S1, crosses below, and returns to retest the PL Resistance.

1 = Red Bear Dragonfly completes the 123 retest of S1 Support-turned-Resistance. We are pulled
in on the next red candle (blue arrow). Initial stop above the S1.

A = Large red inverted (Bull) Dragonfly. Per our stop rules, move the profit-locking stop above
the high.

B = Large red candle through the Low. Per PMT stop rules, move the profit-locking stop above
the Low.

We are stopped out on the next (white) candle. +/-4 points

NOTE: Even these apparently small candles in actuality demonstrate
bloated ABS, which, as the day progresses, has an average size of
approx. 3 points! Thus, even a brief move has the potential to be
quite profitable (or hazardous). Expanded exit, stop, and MPG
placements are recommended.

2 = A 2-bar Reversal retest of the S1.

C = We are pulled in on a large red candle through the MA. Initial stop advances above the MA.

D = DVS (pink arrow) generates a red inverted Dragonfly. Stop rules say to move the
profit-locking stop above the Low.

E = Twin Towers (pink arrow) indicates a stall/sag is coming on the next candle. The small
(for today) red candle with a long bottom wick is a second warning of exhausted Momentum.
Convert to a mental stop.

The next candle is a mid-air Reversal signal, large, but wispy, white Bull Dragonfly. With
>3.50 points retraced, we are forced to call it an Exit Now! rather than a simple stall
(which it turns out to be. Drat). +/-5.50 points

3 = The lunchtime clock and the DVS exhausting Momentum (pink arrow) keep us out of a brief
2-candle 123 move.

Volume droops somewhat, as we begin lunchtime sideways drift atop the S2 Support.

4 = Volume has perked up (pink arrow), and we are pulled in aggressively on the completion
candle of this 123 test of the S2 Support-turned-Resistance.

F = Large red candle. PMT stop rules advise to move the profit-locking stop above the high
of the candle.

G = Large red Spinning Top (stall or pre-stall candle) on vaguely Late-in-the-Move DVS Volume
(pink arrow). Readers of the tape know that the move is almost over. Place a mental stop
above the high of the candle in preparation for a Pivot Scalp exit.

H = DVS (pink arrow) exhausts the last bit of Momentum driving Price Action to tap on S3 and
retract. We Pivot Scalp exit. +/- 7.50 points

The following white candle is a DVS-based 2-candle Reversal, which we don't trust for longevity.
Pass.

5 = Moments before the PMT entry clock runs out, the tape presents us with a lovely large Double
Top pattern.

J = Even with the S3 proven, we have half a dozen point of safe Price Window. We are pulled in
on the first sign of red, and aggressively advance the stop to Free Trade and a tik at the close
of this large red candle. So close to the S3 (close due to the large ABS), we might use a mental
stop for quick exit (no Cancel-Replace needed).

K = Large red candle blasts through the S3 Support. Per our stop rules, move the profit-locking
stop above the S3.
Depending on how much you expanded the exit placement, you either were taken out here,
+/-4.75 points, or accepted a retrace of >3.50 points and got a free ride on the EOD Hiccup
(classic "V" check mark, plum lines) for an additional 7-8 points.

PERSPECTIVE
(Daily, bottom chart)

Thursday taped another gigantic red day candle, as Price
Action plunged even deeper in the anti-response to the
Debt Solution. Confidence is ebbing. As a citizen, I sure
hope things stabilize. As a day trader, make hay while the
sun shines!

BEWARE OF TRAPS ON FRIDAY!

BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!

REMEMBER: Trade the Tape, Not my Prognostics!

Asher
=] ;-)>

Thursday's PMT Chart: