SHOGUN TRADING STRATEGY
DAILY ANALYSIS FOR 05/08/06

(Use this chart and commentary to plan your trades. The goal is to trade with the market, never against it. This chart will show our expectation, projection and commentary. This is a very important tool for you.)

SHORT TERM ANALYSIS

Notice the chop, the sharp moves to either side that lack follow through. They are fragments of moves and not complete waves or trends. These cause stop outs.

LONG TERM ANALYSIS

The market is back above the 1700 level. The down trend is not in the agenda for now.

TRADING CONDITIONS

Last week was one of the choppiest weeks we have seen in a while. Almost every morning, the market gapped and then turned the other way. At the end of the week, we broke support levels, broke back above them and ended the week up 7 points on the NDX, the top 100 NASDAQ stocks.

One a longer term basis, even though we are still in an up trend on the weekly charts, we are showing some weakness. In other words, the market is ready for a correction, even a sideways correction. For the market to breakout into an up trend, for this correction to end, the market needs to break the 1750.

In other words, "freedom" from the choppiness, will come when the market either breaks the 1750 or the 1635 support. Notice that the Dow Jones Industrial Average already broke out to four year highs just last week. The NDX is very likely to follow it soon. That will bring back the trends and the swings.

For now, we must play it safe. If the NDX does not have a trend in mind, we have to stay neutral as well. If the market is choppy, we must stay out of the water. We have been very conservative all week last week and we recommend the same for this week. Always assume the market is choppy, unless it proves you otherwise. It is a much safer approach.

Hope this helps,

Shay Horowitz - ShogunTrading