A daily market brief that presents the market structure sequences: cause -> effect -> trajectory, with the most relevant trades and education.

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Pinchas Cohen is a consultant to companies, offering research analysis, trading
signals, live event coverage and market education. Cohen is Financial Markets
Analysts/Contributing Author to Investing.com - where he writes The Week
Ahead, Opening Bell and Chart of the Day – as well as for The Marker. He is the
Founding Chairman of the Israeli Chamber of Technical Analysts.
Ai1 Objectives
1. Capture the Market Understand the various, often conflicting, market forces.
2. Market Sequence See how these forces form a Cause-Reaction-Trajectory sequence.
3. Market Accessibility Grasp complex topics in simple terms, broadening trade-choices
4. Straightforward Analysis What, why, how to trade
5. Natural Education Increase knowledge while trading, seamlessly.
cohen@ForcastIron.com I linkedin.com/in/pinchas-cohen I +972-54-2559095

2. 30/10/2017
2
Technology Shares, GDP Surprise Lead Stocks to Record Highs
Market Sequences: Explaining the Moves - Cause -> Effect -> Trajectory
1.
Trajectory:
Ripe for a correction
toward 6,000
Reaction:
Nasdaq 100 advanced to
a record on its biggest
gain since March 2016
Event 1:
Amazon and Google’s
Alphabet reported
stellar profits
2.
Trajectory:
Expected supply may
push the price to retest
2,550 level
Reaction:
The S&P 500 Index hit a
new high
Event 2:
Strongest GDP
consecutive quarters
of growth in 3 years
3.
Trajectory:
Continue to rise within
uptrend
Reaction:
Treasuries rose
Event 3:
Speculation mounted
Trump would appoint
a dovish Fed Chair
4.
Trajectory:
Continued decline, as
a top may have been
completed
Reaction:
Euro completed its worst
week since November
Event 4:
ECB vows continued
near-zero interest
rates
5.
Trajectory:
Expected to be pressured
by mounting supply – No
Trade
Reaction:
the Stoxx Europe 600
Index experienced best
annual performance
since 2013
Event 5:
European companies’
profits double that of
US companies
6.
Trajectory:
Resume downtrend,
crossing over 10,500
would form a bottom
reversal – No Trade
Reaction:
Spanish IBEX 35 index
trends down, while the
Stoxx Europe 600 Index
trends up
Event 6:
Catalan lawmakers
voted to separate
from Spain

3. 30/10/2017
3
Fundamental Analysis
Amazon also just released its third-quarter earnings report. It reported: Revenue: Q3 2017
revenue of $43.7 billion, versus $42.19 billion expected.
Google's parent company Alphabet beats on earnings, brings in $27.77 billion in Q3. Google
beat expectations on Q3 results, sending the stock popping after hours. The company
generated $27.77 billion in revenue, up 24% from a year ago
Technical Analysis
Nasdaq 100 Daily Chart
Market Sequences breakdown: Cause -> Effect -> Trajectory
1.
Trajectory 1:
Ripe for a correction
toward 6,000
Reaction 1:
Nasdaq 100 advanced to
a record on its biggest
gain since March 2016
Event 1:
Amazon and Google’s
Alphabet reported
stellar profits

4. 30/10/2017
4
The tech-heavy index reached the top of a rising channel, suggesting a potential correction
toward the channel bottom.
Rising-Channel
What is it? A rising-channel is confines in which an asset was trading in an
uptrend.
How is it formed? The lower line marking the channel-bottom is plotted along
the lows and the upper line marking the channel-top is plotted along the highs.
What the lines mean? The lower line tracks where buyers’ demand overcame
supply, and the upper line tracks where sellers’ supply overcame demand.
Bottom Line: In a rising channel both buyers and sellers agree that prices
should rise, as both are willing to buy and sell at rising prices, when buyers’
eagerness overcomes that of sellers at those pressure points.
Additionally, the rising channel may be forming a bearish Rising-Wedge, in which smart-
money supplies all its available selling shares to dumb-money, which precedes a downside
breakout, followed by another decline.
Trading Strategies
Filters
Filters are methods to avoid being trapped in a fake breakout, before the
price heads in the opposite direction. There are two types of filters: 1. Price
Depth - wait for the price to penetrate 1 – 3%, depending on risk aversion,
before counting on the breakout, and 2. Time – wait 1-3 days, depending on
risk aversion, to wait out a potential price whipsaw. Some investors insist on a
Friday filter. If traders are willing to be exposed throughout the weekend, when
a lot can happen, when they can’t exit their position, it means they’re confident
in that market move. Therefore, the price is reliable
Conservative traders should only trade
in the direction of the trend. Therefore,
they may enter a long position, if a
correction returns the price to the
bottom of the channel, at 6,000 at the
current angle. Alternatively, should
an upside breakout occur, they’d wait
for a correction toward the top, before
entering a long position.
Moderate
traders may wait
on a long, along
with the trend,
if a correction
returns to the
6,100-support area,
of the former peak.
Aggressive traders
may go long with the
direction of the trend
but on a minimal
0.55-percent breakout,
which might prove to
be a bullish-trap. Filters
(explained below) are
employed to limit fake-
out breakouts.

5. 30/10/2017
5
Alternatively, traders can short, with a close stop-loss above Friday’s high, on the hope of
the explained above correction. Of course, traders can enter two opposing positions, if they
believe a strong move is about to follow, and close the losing position and keep the winning
position. This is complicated and should be used only by experienced, advanced traders, as
long as they keep their eye on their account’s risk.
Risk-Reward - How to Get on the Good Side of Statistics
A common trader mistake is to cut wins (on fear of exiting on a loss) and run
with their losses – deluding themselves into believing that the price will turn
around, thereby digging an ever-deeper hole. Traders must do the opposite: cut
losses (to avoid losses...duh) and run with their wins to milk the trend, cover
losses and cost of trading and allow themselves the chance to incur a profit.
A classic risk-reward ratio is 1:3. In this way, a loss won’t take your account to
the point of no return, and a win will make up for several small losses. That
means when traders select a stop-loss, they should factor in the target profit,
consider its viability, then stick to it. Otherwise, they fall back into a negative
risk-reward ratio, by increasing risk and limiting reward probabilities. These
catch up with you.
Target:
A long position from the bottom of the channel or the 6,100-area’s target would be
the channel-top, at 6,200 at the current angle, and rising.
A long position on an upside breakout’s target would be 600 points, the height of the
channel.
A short position’s targets: 6,120 – former peak support area & 6,020 of the last low.

6. 30/10/2017
6
Fundamental Analysis
After the financial crisis, followed by the Great Recession, the major central banks followed
the Fed, in avoiding another 1930’s style Depression. While QE avoided that, its side effect
was a lack of economic growth. For the first time since QE, the US experienced last year
inflation – rising prices – which demonstrates that demand within the economy is outpacing
supply, the mechanism for growth. Since then, growth picked up in the rest of the world,
especially in Europe, which took the mantle from China to lead the world into economic
growth. However, this year inflation, necessary for economic growth, disappeared, leaving the
US behind in the global growth story. The latest GDP read, however, put the color back into
the cheeks of economists.
Technical Analysis
S&P 500 Daily Chart
2.
Trajectory 1:
Expected supply may
push the price to retest
2,550 level
Reaction 1:
The S&P 500 Index hit a
new high
Event 2:
Strongest GDP
consecutive quarters
of growth in 3 years

7. 30/10/2017
7
The price is right on a resistance-level, which means there is an expectation of supply there
– from all the traders who remember from October 23 the last time the price came to these
levels it declined 1.3 percent to 2,544, on October 25. They may therefore sell or even short.
Additionally, there is a divergence in the supply & demand structure. For a clear trend
leadership is required, a consensus that prices are either in an uptrend or a downtrend. That’s
why in an uptrend both buyers and sellers are buying-and-selling at ever rising prices, and in a
downtrend both buyers and sellers are buying-and-selling at ever lower prices – because they
agree. That has not been displayed since October 19, when the next low of October 25 was
lower, in contradiction to the October 27 high which was in fact higher than the October 23
high. The higher highs suggest an uptrend, but the lower lows are suggesting a downtrend.
While it takes months for a bonafide pattern that is bearish in nature, because of this
breakdown to develop, but for now the uptrend is in question, at least for the short-term.
Trading Strategies
Conservative
traders would
for the trend to
reassert itself
with two peaks
and troughs
in the same
direction.
Moderate traders
would go long either
after a continued
rally and correction
that finds support
above the 2,580
October peak.
Aggressive traders may go long on the
fact that a higher price has been registered
on Friday, suggesting a continued uptrend.
They can go short, with a very close stop-
loss, above Friday’s high, on the hope that
there would be a dip. If they’re experienced
enough, they can enter both a long and a
short: The short stop-loss would be above
Friday’s high and the long stop-loss would be
below the 2,544 low of October 25.

8. 30/10/2017
8
Fundamental Analysis
Three people involved with the matter said that President Donald Trump’s front runner is
Governor Jerome Powell for Fed Chair, considered dovish next to the previously report front-
runner, Sandford University’s John Taylor. Trump said he’d announce his choice before the
November 3rd trip to Asia.
A Fed Chair who would raise rates slower renders the current rate suddenly more attractive,
leading bond traders to buy Treasuries.
Technical Analysis
10-Year Treasury Yields Daily Chart
3.
Trajectory 1:
Continue to rise within
uptrend
Reaction 1:
Treasuries rose
Event 3:
Speculation mounted
Trump would appoint
a dovish Fed Chair

9. 30/10/2017
9
The chart above shows yields, which have an inverse relationship with their bonds. See
below for explanation.
Treasury Inverse Relationship with Stocks and Price to Yield
Investors park their capital in conceived safety of Treasuries during times of
uncertainty. When the markets begin roaring again, investors rush to reinvest
into risk assets such as equities. When investors sell Treasuries, their price
fall, making the difference between the price and the yield greater. That
makes the yield rise. The higher the yield rises, the more it attracts investors,
whose demand raises the price, making the yield fall. This is how yield rises
and fall, between its attraction as a haven asset and how much yield it pays
its investors.
The price is between a rock and a hard place. On one hand, it registered a new, higher peak,
evidencing a continued uptrend that begin in September. On the other hand, after breaking
through the May resistance, there was an expectation the 2.423 percent level would become
a support. That failed, as the price fell back below it, suggesting the original resistance held.
Therefore, until the price will break either the uptrend line since September or the 2.423
resistance it is expected to range.
iShares 10-20 Year Treasury Bond
Traders may trade Treasuries via the above ETF that tracks Treasuries. You can see the
inverse relationship between the former yields chart to the one above on the actual bond
that pays the yield. The downtrend is holding above the July trough’s support.

10. 30/10/2017
10
Trading Strategies
Conservative traders
would wait on a short entry
for a downside breakout of
the support (red line) and
a confirming return-move
that holds, demonstrating
the downtrend is intact
in that the former 134.80
support turned resistance.
Moderate traders may
may also short upon a
return to the downtrend
line since September,
with a stop-loss above
the downtrend line and an
initial target of the 134.89
support, with a secondary
target of the 134.65 May
12 trough.
Aggressive traders may
enter now a contrarian
long position, with a close
stop-loss below the 134.89
support and the downtrend
line since September as the
target, before joining the rest
of the market down.

11. 30/10/2017
11
Fundamental Analysis
A promised low rate means the euro will pay out less interest than the dollar on track for
higher rates, leading investors to sell the euro in favor of the dollar.
Technical Analysis
EURUSD Daily Chart
4.
Trajectory 1:
Continued decline, as
a top may have been
completed
Reaction 1:
Euro completed its worst
week since November
Event 4:
ECB vows continued
near-zero interest
rates

12. 30/10/2017
12
The pair has apparently completed a head & shoulders top, a major reversal with high success
odds. However, sometimes whipsaws occur, in which the price pulls back before it continues
in the new trend. Sometimes it plainly turns the other way. This is called a Bear-Trap. Traders
become bearish on the downside breakout, but it turns out to be a fake out. To avoid those,
traders employ “filters,” explained above in the first Trading Strategies on the Nasdaq 100.
Trading Strategies
Conservative
traders trade only
with the prevailing
trend, and since the
downside breakout
of the neckline –
which connects the
troughs (lows) – was
less than 1 percent,
the uptrend is still
considered officially
intact. Therefore,
conservative traders
would not trade this
pair until it records a
new peak above the
September 8, 1.2016
high.key-level.
Moderate traders
may either wait for a
2-percent filter or a
return to the presumed
downtrend that
connects the head
and right shoulder.
It’s “presumed,”
because of the above
explanation that a
downtrend has not
been firmly established
yet. Moderate traders
may risk a short trade
at the dotted line, with
a close stop-loss above
it.
Very Aggressive
traders may wait
for a return-move
and upon seeing
the neckline holds,
that is proving its
resisting nature,
decide that indeed
the trend has
reversed and short.
Aggressive
traders may
wait for a
return-move
and upon
seeing the
neckline holds,
that is proving
its resisting
nature, decide
that indeed
the trend has
reversed and
short.
Terms & Disclaimer
The sale of this document is to its buyer’s company alone. No part of this document is to be
reproduced, emailed or shared outside of the client’s company, without written permission.
This market brief was written by Pinchas Cohen, who does not hold an investment advice
license and is therefore not written for retail investors. All investments have many risks
and can lose principal in the short and long term. The information contained herein is not
guaranteed, does not purport to be comprehensive and is strictly for information purposes
only. Anyone reading this agrees, understands and accepts that they take upon themselves all
responsibility for all their investment decisions and to do their own due diligence, and not to
hold Pinchas Cohen responsible. Pinchas Cohen does not assume any liability for any direct,
indirect or consequential loss that may result from the reliance by any person upon any such
information or opinions. Any expressions of opinions are subject to change without notice.
This document does not constitute an offer or an invitation to trade or invest. No party should
treat any of the contents herein as advice.