Monday, October 6, 2003
Issue Contents:
| 08:39 | Teresa's Watch List |
| 08:53 | Good Morning... |
| 08:58 | Today's Swing Trade Candidates |
| 09:17 | Swing Trade of the Day |
| 20:39 | 2003-10-06 Transcript for Real Time Trading Group Real time forum discussion transcript: 2003-10-06 Transcript for Real Time Trading Group |
Paul is on holiday this week. Since we are starting our new Swing of The Day for newsletter subscribers, this is my watchlist.
Scrolling through the charts, all I found were Test of Top and potential spike top setups. Given the fact that almost all of them are 52-week highs, 20-day highs and gap up, it tells us that it's either got to be a huge breakout (still need to see proof) or this is an exhaustion gap, big time.
SHORT SCALPS:
- INTC
- YHOO
- ERTS
- AMZN
- RIMM
- SNDK
- MWD
On an intraday basis, traders who are interested in the short side will be looking for a closing of the gaps below, and if last Thursday's highs cannot hold as support, then look for retracement setups on the 10- or 15-minute charts to sell short.
For example, Morgan Stanley came all the way back to last Thursday's high of $53.02 and closed the gap. At this point, intraday traders will be watching for sellers/sell setups such as Stealth Bear Flags (outlined in the Technical Trader's Handbook) under Friday's gap at $53.26 and the 20EMA15 at $53.38, because these are two potential points of resistance overhead.
The big news this week on the U.S. Economic Calendar is earnings. That's right. We'll see if some of the biggies can actually deliver the goods.
The psychologic backdrop going in can be classified under the heading: "No Room for Error". Newspaper headlines are telling us that all hopes on the upside are pinned on the expectation of better earnings, which must be confirmed. Add this to the fact that a number of the high fliers are in test of top formations on the daily charts, with high ADX reading on the weeklies, one must be mindful of the fact that 1. earnings disappointments will bring selling, and 2. maybe even if the numbers are good, they won't be enough to avoid the "sell on news" phenonmon.
What they need for the upside to continue are better than expected numbers, and in a big way.
Today's Swing Trade Candidates
Here is today's list -- all sell setups -- chosen from List 2 of the TrendVue Stock Scan Lists.
You're going to look at this list and say, but hold on (!), aren't these breakouts? Well, maybe, but at the moment, we still do not know if the upper horizontal lines that I've drawn on each chart can be confirmed as resistance yet. All we know is that this is where sellers showed up before.
INTC DAILY: Gap up. 20-day high. Test of Top.
YHOO DAILY: Gap up. 20-day high. Test of Top.
ERTS DAILY: Gap up. 20-day high. Test of Top.
AMZN DAILY: Gap up. 20-day high. Test of top. Surely, this one must be a real breakout, right? Well, maybe, but after a big expanded range upside day, we will be looking for a short pause, and we shall see. Intraday, there might be buy setups on the 10- or 15-minute charts.
RIMM DAILY: Test of top. 20-day high. Gap up.
Com'on T, this has surely got to be a breakout? Yes, this one is what we call a parabolic move, in that the trajectory of the price is now near vertical, while the ADX is at 46, which is a near a high value for this symbol and timeframe. This is where we might find spike tops, a.k.a. "sudden death" reversals that are very profitable as one or two-day swing trades. Similar to AMZN, after a big expanded range up day, we would expect a day of rest, and then tomorrow we will likely find a setup.
SNDK DAILY: Gap up. 20-day high. Test of top. Also, this is the potential apex of a rising wedge.
MWD DAILY: 20-day high. Test of top. Last Friday's candlestick is a bearish belt hold (I think). We call this the "one-finger salute". Given that it's happenning on a test of top, and it actually closed under the September 18 swing high, any move underneath this should bring sellers.
There were a lot of candiates on today's list. We can strike off RIMM and AMZN since we would like to see them stall today and set up for tomorrow on a swing trade basis. INTC is priced too low, so forget it. YHOO is waiting on numbers this week, so they'll all be holding on until the news, maybe. MWD has already triggered, and we probably won't get as much poop on an NYSE stock. That leaves us with SNDK and ERTS.
ERTS DAILY: Earnings due out October 23, so we are OK thee. Note that all the retracements have overlapped since August, slowly grinding up. It's only this last retracement that's been eagerly bought. The most aggressive entry on the short side on a swing trade would be to sell short as price comes back under the last swing high. In this case it would be the September 24 high of $97.00. The 5-day ABL is $2.56. Add this to $97.00 and we get the ideal strike price for a put would be the one closest to $99.56, with at least two weeks to expiry.
First downside target is the 20-day EMA below at $93.16. The second downside target is the last swing low on the way up, the September 30 low at $91.02. The initial stop loss would be $100, the strike price of the put option. Measured risk is $3.00. Measured reward at Target 1 = $4 and Target 2 = $6.
SNDK DAILY: Come to think of it, SNDK did an expanded range bar last Friday too, so we'll put that back in the with RIMM and AMZN, and see if it sets up tomorrow.
2003-10-06 Transcript for Real Time Trading Group
Real time forum discussion transcript: 2003-10-06 Transcript for Real Time Trading Group
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