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[Figas]

Trade Setup Summary for Thursday, July 31, 2003:
Buy 991.50/Sell 1001.50 +10 pts. (Sell Pivot becomes Buy reversal support)

Recap of Thursday's Action:
Good Morning and thank you for joining with us today. A special welcome to our new subscribers and visiting traders from around the globe who have joined us.

Our Headline Call on Thursday was for the market to push higher. I had mentioned that although I expected a larger scale rally due to the recent small ranges I was reluctant to be too bullish. Well, we got the large rally action in the morning session and they held up until just after the New York lunch session before hitting the skids. We had seen this phenomena last Thursday and had specifically mentioned how it appears the large mutual fund managers like to prune their portfolios around 1:30est and we saw this same thing occur again this Thursday.

On the early moves the market staged a gap opening of about 6 handles and blew through the +4.25 stop/pivot over the 991.50 Sell Pivot target at 995.75. When the market opens up at or above the Sell pivot target and moves through the stop/pivot we do not look to make an entry before the first hour is complete even if we like the trade idea. We wait and carefully analyse the High 5 to see if they can justify a reversal trade. They sure did on Thursday and our strong expectation mentioned for the B/O being the first Hour One Pivot hit also fueled the Buy reversal. Getting long on the pullback to 991.50 area was a peach as they pushed up higher right away and hit the BreakOut at 997.50. The High 5 at the time were very bullish but NOT SETTING UP FOR A BREAKOUT BUY. We had the Dow up over +130 and the NAZ was very strong over +15 at the time of the B/O. TRIN was below .60 but oddly the VIX was hanging up over +.30-.40 mostly during this period.

Because we were in a succesful trade from the Buy reversal with a strong, bullish High 5 we were looking to take profits on a 10 point move which we got at our target of 1001.50. Very quick profits occured on this trade within about 25 minutes which is always a pleasant experience. Congratulations to those of you who saw this setup and nailed this trade.

A Quick Note on Selling the BreakOut: One may ask why we did not record the very succesful (and nervous,patiently held) Sell the BreakOut +2-4 points at 999.50-1001.50. The reason is that we were in a succesful and clear 10 point move on the Buy Reversal, the High 5 were real strong, and our overall Headline Call and Briefing was bullish. It made sense to us to just take the money and let the day just play out. Certainly nervously holding this setup all day was ACTUALLY A CORRECT TCF TRADE SETUP but I opted not to record it here. Even though that trade was good for another +10 points on the short side, on certain days such as this one it is quite appropriate sometimes to just take your profits and let the feelings of success run through your neurological system. Some of you shorted later in the day and avoided the mid day grind which was top notch if you could see what was going on. Right David! Congratulations to those who did. Myself, I continued to monitor the markets but had to have some time consuming computer reconfiguring done so there went my day spent with the techies. Well, that's part of the play as traders. You gotta have top notch technology working for you.

Today's Call & Briefing:
Our Headline Call today is looking for prices to continue to slide either from an early push up or just from a flat opening and slow grind lower. Our TCF Market Force indicators are all bearish at this point and we are expecting to run down to first support at 977.00. Our first level larger scale goal lower is 967.00 before we get some tougher support. The early move up off the gap up opening and the later squash into the close on Thursday which took prices BACK BELOW THE OPENING PRICE RANGE is especially bearish forming a bigger picture +10/-10. Usually these continue further in the direction of the reversal which in this case was down.

There are TOO MANY BULLS IN THE MARKET RIGHT NOW and when this gets to lopsided in one camp those happy campers are bound to have the picnic ruined by a Bear Raid. If we are correct on this call we could very possibly see the 977.00 area get crushed further if the High Five get mega bearish and see a move down to 972.00-973.00.

There are two drawbacks to this scenario. First is the end of the month bullishness I talked about yesterday as we close out the last day and the second is simply THAT TODAY IS FRIDAY. Friday's very often are flat range days especially after larger scale moves or reversals like we had on Thursday. So keep these ideas in mind if the TCF trade setups are not clearly visible or not setting up right. We never need to force a trade.

TCF SETUPS TO WATCH FOR TODAY: If we get sharply lower prices early let's look to buy the BreakDown if the High 5 are not Bear Ugly and we are not getting a Bear Ugly trade day setup.

We must be on the alert today for the Bear Ugly scenario which will be visible right off the open with a gap down and heavy, bad news associated with the markets drop. Read up in the Trading Handbook how to handle this for selling the BreakDown. These are rare days but with Thursday's +10/-10 larger scale move we need to be prepared for this possibility.

There is another chance of another more succesful BreakOut rally attempt. According to our Market Force indicators this is NOT in the cards but due to the end of the month action it could occur. This would make our Headline Call bomb and they would slowly move up all day. Not expected however for today.

Value Area: 987.50 - 999.00
This wide Value Area range covers most of Thursday's trading range. Look for prices to hold BELOW 987.50 to confirm our Bearish outlook for today. If they drop below this range but then rise back up the test will be to see if prices can sustain themselves in the VA opening lower 2-3 point range.

Buy Pivot Target: 983.00 - 984.00
No Trade at this pivot today. Watch 978.75 (-4.25 stop/pivot) for the big support area of the last week. Blowing through this to the downside will begin the stretch lower for our first goal of 967.00 with pit stops along the way at 975.50, 972-3.00, and then 969.00 first.

Sell Pivot Target: 999.75 - 998.75
Let's sell this Sell Pivot Target today in the early going or on a lift up off the open past the first hour. Use a 5 point stop on the trade. Be careful if the BreakOut occurs after the first hour near this Sell Pivot Target. Compare the stop parameters and look to short at the higher number between the two. IE: If the B/O is occuring at 997.00 or so then wait and try to get short at the Sell Pivot target.

10 Day "Pit Bull" Moving Average: 987.20
Even though we had such a nice rally on the early going Thursday look how the price keep getting pulled back to this Pit Bull area. Now yesterday I had talked about how with the constant dropping and rising up to the Pit Bull was Bullish I am now inclined to think that our round trip up above and then back to this number on Thursday looks rather ominous. Market is expected now to punch through the Pit Bull and head lower.

Pro Trader's Action
Today is Friday and we tend to be a little more willing to not trade on Friday's then other days in the week. With this in mind we will be looking to carefully handpick the correct TCF trade setup that is occuring today. The tricky part of today will be that we are looking for lower prices according to our Market Force indicators but are not necessarily expecting a Bear Ugly day. So to sell the market we essentially need to look for a bearish High 5 up around the Sell Pivot target or the BreakOut if that is what occurs first in the early trading session. If we get short and the market moves lower but keeps rising off the drops be willing to let the end of the month bullish effect have it's way. You don't want to fight this and when these days occur on Friday's there often isn't anywhere to get in saftely on either side of the market. So keep this in mind, don't get frustrated if this occurs, and just take the day off.

We have had a great week hitting the TCF setups and steadily building up S&P500 points. This is the goal of a true professional S&P500 trader. You almost want to be making what I call "Boring Profits". This is my concept of PERFECT TRADING. These markets offer so much daily excitement and opportunities for extreme pain and upset that you want to first follow a time tested, proven system like our TCF methods and strive to make the profits as steady and routine as possible. On some of my best trading rolls where I would see day after day of profits I came to realize the value of this idea "boring profit". Thinking like this tends to temper your mind and set you on the right course. Good luck trading today and have a great weekend, All the best to you and your family who support you in your trading business. Mohan

[Figas]

Market expected to sell off further and consolidate near the lower third of the range.