SHOGUN TRADING STRATEGY
DAILY ANALYSIS FOR 05/22/06

(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

The market started the day on the down side, but closed positive right at the 1600 level.

LONG TERM ANALYSIS

This is a very strong down trend, but it taking a break now. We have to allow it to bounce back up for profit taking.

TRADING CONDITIONS

Last week was one of the strongest and quickest down trends we have had in many years. The significant fact was the number of down days in a row.

Every market move is a tug war between buyers and sellers. When the sellers win, the market goes down, when the buyers win, the market goes up. It is rare for the sellers to win so many times in a row, as if they never need a break to catch their breath. It looks like they took some time off to recover on Friday finally.

Determined sellers or determined buyers create momentum, they create trends. Determination or conviction is the main ingredient that we have been lacking for so many months now. We are super excited to see this type of market force returning, it could be a sign of things to come. We hope that this is the end of the sideways market and the start of a nice trendy market.

Our trades did very well last week, as is expected for a strong down trend.

Our Swing Strategy newsletter has added Options trades, which are really boosting returns. Some of our options trades have doubled and even tripled in value in one week.

Our Swing System continues to take advantage of short term swings in the market. As always, this service makes consistent returns through, virtually, all market conditions.

As for this next week, we expect the market to relax a bit. The sellers should be nice and full by now. Their strategy now will switch to protecting their profits and not initiating new positions. A small bounce would cause a profit taking rally.

We highly recommend that you do the same and take profits on your short trades. Remember that if the market resumes the down trend, we can always re-enter with more trades. We do not recommend giving your profits back though.

We are going to wait and see how the market opens this week. Monday can show us the direction for the rest of the week. If we continue to break support levels, we will hang on to our shorts. If the market bounces above Monday's highs, we will close the shorts and sit out, waiting for the next trend to develop.

Hope this helps,

Shay Horowitz - ShogunTrading