Price Action Chronicles – Volume 2

194 Pages·2012·36.25 MB·English

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PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
The
PRICE ACTION
V2 Chronicles

Price Action in the S&P500 stock index futures

The V2 volume continues on from
Chronicles V1 in July 2007
The two volumes now cover 12 months of
S&P 500 from April 2007

[C] Bryce Gilmore 2007

All rights reserved:
Bryce Gilmore & Associates Pty Ltd.
Queensland. Australia.

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PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007

PRICE ACTION CHRONICLES

PRICE ACTION METHOD:
Our price action method is an approach to short term trading
opportunity created out of the market money flow and the repetitive
ongoing geometric swing structures that dynamically repeat over and
over again.

Our method is also based on the continual and repeating habits
employed by “smart money” market participants.

It is amazing how you can predict and participate in a lot of the
shorter term market moves with this method on a day to day basis.

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PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
Price Action Chronicles – Volume 2

CONTENTS:

Cover, Contents and disclaimers 1-4

Chapters:

1 The FOMC June 28th, 2007 5-21

2 End of Q2 and the 1st Half 22-27

3 4th July Holiday week 28-33

4 Back to business as usual 34-56

5 Q2 Earnings Period 57-78

6 Back from holidays 79-114

7 Chart Roundup 115-117

8 Is the high for the year in? 118-142

9. After Thanks Giving day 143-163

10. Sub Prime woes continue 2008 164-175

11. Appendix 176

12. Appendix 2 - April 2008 177-193

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PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
This communication has been authored by Bryce Gilmore certain proprietary terms and routines are
subject to personal copyright: Some rights extend back to 1987.

Bryce T. Gilmore [C] 2007

It is illegal to transmit, copy, print or pass any portion of this book to any party without the permission of
the author. - please read all of our disclaimers below.

Price Action Chronicles V2 – One day at a time – Edition – [c]2007-8

DISCLAIMER : Edited by Bryce Gilmore (C) 2007

Conditions of supply : read this

This communication has not been prepared by taking into account the financial circumstances and
investment needs of any particular investor; and investors using this book as advice should therefore assess
whether it is really suitable to their own circumstances and investment plans; and before acting on any
educational investment advice contained in this book, you should contact your own licensed investment
adviser to consider whether the advice is appropriate in light of your particular investment needs.

Technical education is a hypothetical study of markets and because it may have worked in the past there is
no guarantee it will work in the future. You must understand that trading approaches using technical
analysis is a matter of probabilities, as is every avenue of speculation.

The author is not a Broker or registered Investment Adviser and therefore is not licensed to give trading
advice of any sort or make specific trading recommendations.
All charts and comments are offered for educational purposes and are the personal opinion of the author.
The author's opinion is not meant to be construed as an invitation or solicitation to trade, for trading advice
consult your broker or licensed investment advisor.

Notice read this - To comply with the ASIC IDS guidelines (Internet Communication of security
information)
ASIC recommends before acting on the basis of what is said in this communication you should review:-
(1) Asic's web site at www.asic.gov.au has a list of licensed advisors.
(2) Visit Asic's consumer website www.watchdog.asic.gov.au for general guidance about investing.

For a further overview of the purchase terms and conditions see:

http://www.wavetrader2004.com/

PUBLISHED BY:
Bryce Gilmore & Associates Pty Ltd
Bryce Gilmore - Proprietor
Inc. 1983 - ABN 63 006 187 686
6 Heywood Place, Helensvale. QLD 4212.
Australia

Phone/Fax [phone] - Mobile [phone] - Email: [email protected]
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PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
Chapter 1

The June 28th FOMC announcement is not far away:

We are continuing on from the CHRONICLES Volume 1. Today is only the 22nd
June, 2007 so there are a few or more days to go before the market either
receives good news or bad news and right now the speculators are positioning
around their own views.

It is worth a look at the overall SPX position at the moment as it could hold a
conflicting technical view to the OEX as just the other day the OEX went to a
new high and the SPX couldn’t quite do the same.

I guess before we go on I should say that the current price action in the past 2
days has been extremely volatile. There is a side to this market who think the
BULL PARTY is never going to end and another more sensible side who are
unloading risky positions. Then there are the BEARS, these guys are selling at
every technical opportunity presented.

Underlying all of this is the day trading money that is just buying or selling short
term opportunity on technical support or resistance levels as they come along.

So you could say that right now there is a battle going on between the giants
and the day traders are taking advantage of it backwards and forwards. This has
been going on for 3 weeks now in larger than normal daily ranges.
Chapter 1 5
PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
Technically the big picture position of the SPX is still potentially up in the MAJOR
degree, but every indication in the lesser degree swings point a picture to a
downtrend in progress. This is not to say we are set up for a crash, yet the BUY
side only appears to be an option to me if you have less than a 2 hour time
horizon right now.

These recent highs are turning into a 15 round fight for the bulls where the
bears get them on the ropes time and time again yet they can’t put them away.
Or maybe some would say it is the other way around, but if you look at the
charts over the past 3 years you would have to be siding with the bears at this
time.

Just the other day the bulls showed how vulnerable they were to the market
action when they couldn’t hold the market up.

It was only yesterday when an OEX 61.8 reversed the market up for the rest of
the day, yet today we went down to a lower low after only a 1 day correction.

SPX:

This is the recent price action for the SPX as we enter the last week of June.

As you can see it has been a wild ride for both sides during the past 3 weeks.
The bears seem to have the upper hand in what we could describe as the larger
degree swing formation. Nevertheless the decline from 6/1/07 – 6/8/07 was
down 53 points and their remains 3 technical support levels below today’s low.
Chapter 1 6
PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
In order the larger degree implied supports are:-

1. The 6/13/07 pivot Low.
2. The 6/8/07 pivot Low
3. -53 as a 1:1 down from the 6/15/07 High.

The MAJOR DEGREE position would imply that until all of these supports are
broken we cannot rule out analysis that suggests this corrective phase is what
could be described as an Elliott wave correction.

Chapter 1 7
PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
I don’t want to start the Volume 2 Chronicles off looking like a born again bear,
all I am doing is pointing out the guidelines I normally follow.

These are that swings expand and contract in varying degrees based on Elliott
Wave theory.

The magnitudes of swing size range up in the following order:-

1. smaller to small.
2. small to medium.
3. medium to large.
4. large to larger.
5. larger to major, and major to cycle degree.

A strong trend either up or down is usually comprised of 3 or 4 impulse legs
where the corrections usually do not exceed the prior corrections in price
amplitude; if they do then the wave degree increases up to a higher degree.

Corrections in most trends, either up or down, usually unfold in 2 to 3 impulse
legs of similar degree. If the corrections unfold in 3 impulse legs the inner
corrections should not exceed the prior corrections to maintain that degree of
trend; although it is possible sometimes that a future corrective swing will
exceed a prior corrective swing by a relationship of 1.618 to 1.

These are simple rules to follow if you are a trader and most times they will give
you a good read over the market direction and a chance to enter trades at
extreme points where reversals often take place.
Chapter 1 8
PRICE ACTION CHRONICLES (Volume 2) - © Bryce Gilmore 2007
The rules also tell you when a continuation to another level of swing degree is
taking place.

When you combine the simple rules with price levels of 38.2, 50, 61.8, double
tops and double bottoms it becomes clear to you why the market is heading one
way or the other on an intraday or day by day basis.

One of my best rules for determining a continuation of trend when you already
have 2 impulse legs and a breakout to new levels is that the next correction
should not exceed 1:1 with the prior correction of similar degree and the
retracement to all gains from the beginning of the series does not exceed 38.2 of
the existing swing series.

Now when you add pattern analysis to the equation the market direction can
become a lot clearer. It is all because of trader’s habits and how they view
technical support and resistance levels.

When it comes to taking trades our aim is to only identify when one side, either
the buyers or the sellers are in a weaker position than normal; because each side
has their own weaknesses and if you can identify them you can make easy
money. You must also remember that the smarter guys in the weaker position
will also react to the situation and help exacerbate what you maybe thinking.
When conditions dictate the market has no discernable direction based on any of
the above criteria it pays to sit on the fence and wait.

In the trading business you will never get rewarded for guessing, all this will lead
to is over trading and eventual losses.

I have always said that you should have at least 3 good reasons for taking any
trade and the direction of the trade you are taking should be based on some
recognizable geometric set up that is either present at the time or the market is
progressing along from a previous set up of higher swing degree.

Now I hope this makes sense to you as it does to me. I do realize that not
everything I say is exactly clear to everyone on the first read. I found the same
thing out myself when I was studying Gann’s work years ago and I used to
spend hours and hours re-reading his material before I could completely grasp
his writing style. I suspect many of you will have the same issue with my writing
style, but if you persevere you will eventually get it; better to spend the time to
understand than to go elsewhere as this stuff I am teaching you is the best in
the business.

I have already pointed out many of the standard set ups I use in the PAC
Volume-1 but if they are not enough to teach you then this Volume-2 should be.
Chapter 1 9