THE MARKET MECHANIC for 05/02/2012

Welcome to the Market Mechanic daily blog
The Market Mechanic has developed 3 proprietary indexes and oscillators: the Trend Index Aggressive (TI agg), the Delta Trend Index (DTI) and the Trend Index (TIndex).  These 3 proprietary indicators combined with the Directional Movement Index (DMI), the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) give us 7 distinct, high probability set ups that are used to day trade the e mini S&P market. These indexes and oscillators are applied on time frames from 5 minutes to 60 minutes (5, 10, 15, 20, 30, 45 and 60) and these 7 set ups are traded on all time frames. The final product of the combination of these proprietary and non proprietary oscillators and indexes is a mechanical system and methodology for identifying entry points into the market that completely sidelines emotion and allows its user to concentrate on the money management part of the trading equation.
The philosophy of the Market Mechanic is not to predict the market but to anticipate likely market scenarios that the market will produce on a daily basis and the best way to exploit these opportunities. These 7 set ups are designed to profitably and consistently exploit these market scenarios.
Markets are opportunity generating machines; my software and methodology strive to take advantage of these opportunities as they arise and provide its users a consistent and reliable profit making trading set ups.

TODAYS' ACTION: ADP payroll numbers sets the early morning tone to the downside. Our proprietary indicator the 10 minute DTI turns positive at 10:40 PM, putting us in the buy mode. The market then switches its attention to upcoming news, mainly the fact that the 6 biggest banks were meeting with Fed officials to discuss up coming rules and regulation changes and they were due to make comments at 2:00 PM. Comments were made and the market did little. Bottom line sideways action pretty much all day, limits trading opportunities.

TODAYS' SIGNALS
8:45 AM sell signal emini S&P price  1393.50.The set up on the 5 minute chart; with the 5, 10 and 20 minute  DTI’s and 5 minute MACD all with negative readings, in conjunction with a plus 25 reading of the ADX on the 5 minute chart: the trigger, the first cross of the day of the 5 minute fast stochastic from positive to negative generates  a sell signal. Subsequent low 1389.25.

9:00 AM sell signal emini S&P price  1393.75. On the 10 minute chart, the set up; with the 5, 10 and 20 minute  DTI’s and 5 minute MACD all with negative readings, in conjunction with a plus 25 reading of the ADX on the 10 minute chart, the trigger, the first cross of the 10 minute fast stochastic from positive to negative generates  a sell signal. Subsequent low 1389.25.

11:20 AM buy signal emini S&P price 1397.00. The set up on the 10 minute chart the DTI and the TI agg both have positive readings, the triggers, when the 5 minute MACD, the 5 minute RSI and the 5 minute Chaikin Oscillator all turn positive, a buy signal is issued. Subsequent high 1399.50.

12:55 PM buy signal emini S&P price 1397.75. The set up on the 10 minute chart the DTI and the TI agg both have positive readings, the triggers, when the 5 minute MACD, the 5 minute RSI and the 5 minute Chaikin Oscillator all turn positive, a buy signal is issued. Subsequent high 1399.50.

AFTER THE BELL: Today was an inside day, todays trading range was inside yesterdays trading range. A sideways day is usually followed by a day with a good trading range, let's hope so.
The DTI's on the 5,10 and 20 minute charts are all positive suggesting short term higher prices.The TIndex on the 60 minute chart is positive with prices in the lower half of the Keltner Channel Band, making this a potentially good spot for the market to stage a rally.

TODAYS' CHART