Monday, November 17, 2003
Issue Contents:
| 07:55 | Good Morning CME Raises Margin Requirements. |
| 08:24 | U.S. Economic Calendar Releases for this week. |
| 08:44 | [$VIX, $VXN, Weekly] Market Volatility Indices A reminder. |
| 08:54 | Economic Data Roundup A summary of today's releases. |
| 09:02 | Investor Watch List Comments. |
| 09:09 | Daily Swing Trade Today's strategy. |
| 09:36 | More Unwanted PopUps Is Realplayer into it now? |
| 16:16 | Active Trader Transcript Real time forum log. |
I guess it had to happen sooner or later. With the big rally in the market over the past six months, stock indices have climbed considerably and margin rates have been increased effective today.
If you're trading S&P or NASDAQ index futures, this effects you.
Elsewhere, the mutual fund scandal continues to broaden. Over the weekend, Wall Street Journal reported:
Bear Stearns fired six employees in an action related to mutual-fund trading. Schwab said it had found instances of questionable trading at its U.S. Trust unit.
Charles Schwab said it has found evidence of market-timing and late-trading activities in mutual funds run by the company and its subsidiaries. A unit of American Express is in talks with authorities about its mutual-fund trading practices, and Legg Mason is also under investigation.
And in what's got to be the most strange "explanation" given by the media, WSJ.com reports:
Tokyo stocks tumbled 3.7% Monday amid fears of a possible terrorist attack against Japan, dragging other Asian markets lower.
NIKKEI, Weekly: How about "correction after extreme move"?
NIKKEI, Weekly: Upon closer inspected, it's actually funny, since it's been TWO THOUSAND points since the failed test of top. This one is a classic, right from the pages of our Technical Trader's Handbook: M Test of Top, the Trader Vic 2B type.
When price action is reduced to simple stuff such as tests, we can be out the exit door before the "news" hits. As Justin Mamis says in his book The Nature of Risk, by the time you know the "reason", it's just too late.
P.S. WSJ just posted:
U.S. stocks were expected to fall at the open Monday, pressured by tax-related selling and worries about terrorism.
Gee, wasn't this the same excuse they gave on the long way down too? Ugh.
Monday, November 17
Paul is out of the office today.
Earnings Highlights: LOW, A, TOY, JAS, ANPI, AOM.TO
- 8:30AM Business Inventories
- 8:30AM NY Empire State Index
- 1:00PM 3-Month Treasury Bill Auction
- 1:00PM 6-Month Treasury Bill Auction
- 2:00PM Treasury Budget
Tuesday, November 18
U.S. President George W. Bush visits to the United Kingdom. Paul is out of the office today.
Earnings Highlights: ADI, SPLS, HD, NTAP, CTMI, DKS
- 7:45AM BTM-UBSW Store Sales
- 8:30AM Consumer Price Index
- 8:55AM Redbook
- 10:15AM San Francisco Federal Reserve Bank President Robert Parry delivers a speech on the role of the Fed to the Tucson Metropolitan Chamber of Commerce in Tucson, Arizona.
- 12:45PM Philadelphia Federal Reserve Bank President Anthony Santomero speaks on monetary policy at a luncheon of the Philadelphia Estate Planning Council.
- 1:00PM 4-Week Treasury Bill Auction
Wednesday, November 19
U.S. President Bush continues his state visit to the U.K. Paul is out of the office.
Earnings Highlights: Q, INTU, BLI, NIKU, PETC, ANST
- 7:00AM MBA Purchase Applications
- 8:30AM Housing Starts
- 9:00AM Dallas Federal Reserve Bank President Robert McTeer speaks about the U.S. economy at a conference in Dallas, Texas.
- 12:00NOON St. Louis Federal Reserve Bank President William Poole addresses the Louisville chapter of the Association for Investment Management Research in Louisville, Kentucky.
Thursday, November 20
U.S. President Bush continues his state visit to the U.K.
Earnings Highlights: DIS, GPS, LTD, JWN, ADSK, NOVL
- 8:30AM Jobless Claims
- 8:55AM Chicago Federal Reserve Bank President Michael Moskow speaks about the U.S. economic outlook at the Chicagoland Chamber of Commerce business leaders forecast breakfast, in Chicago.
- 9:00AM Federal Reserve Chairman Alan Greenspan speaks at a Cato Institute conference on the future of the euro, in Washington.
- 10:00 Leading Indicators
- 12:00NOON Philadelphia Fed Survey
- 4:30PM Money Supply
Friday, November 21
U.S. President Bush continues his state visit to the U.K.
Earnings Highlights: KKD, TRMD, OBR.VI, BPB.L, BRA.VI, CNG.TO
- 8:00AM Atlanta Federal Reserve Bank President Jack Guynn gives U.S. economic outlook at a conference in Atlanta, Georgia.
- 12:00NOON St. Louis Federal Reserve Bank President William Poole appears on a CATO Institute panel in Washington.
- 1:30PM Federal Reserve Governor Roger Ferguson addresses the Executives' Club of Chicago.
[$VIX, $VXN, Weekly] Market Volatility Indices
On November 6, we updated the weekly charts of the $VIX and $VXN, along with NYSE and NASDAQ Internals and alerted you to the WEEKLY CHART SELL SIGNAL.
$VIX, Weekly: Divergence between price and indicator at the lower Bollinger Band produced a sell signal on the WEEKLY timeframe.
$VXN, Weekly: Same as $VIX.
U.S. Business Inventories +0.3%
WASHINGTON (Reuters) - U.S. business inventories unexpectedly rose 0.3 percent in September as unsold stocks of autos accumulated at the fastest clip since February, a government report showed on Monday.
Empire State Manufacturing 41.0
Econoday reports: The New York Empire State manufacturing survey posted another sharp gain, from 34.1 in October to 41.0 in November (a record for the young series). New orders were especially strong, at 41.4 vs. 34.3 and pointing to further strength in the months ahead. The rise in shipments was even greater, at 37.6 in November vs. 26.8 in October.
Information will be updated as releases are made during the day...
On November 6, we published a survey of market conditions as themes:
"The second theme that shouted out from the rooftops were weekly charts that registered extreme ADX for the symbol and timeframe."
At this point, it's time to keep an eye on stocks that fit this description, for this is exactly what the Nikkei looked like prior yesterday's big fall. In fact, it hit the first downside target on the weekly chart already.
You'll notice that we have not made too many picks over the last few sessions. I didn't think that the buy setups were that great, even though everyone was extremely optimistic. But at the same time, it was not a good thing to short, since the textook setups weren't there.
This is a pergatory sort of place call "potential change of trend". It's not up and not down. In the end, when we are in chop zones like that, the choices boil down to repeated stabbing at marginal setups until it finally breaks or sitting out until there is a sign from the market that the game is finally on. I'd be poor if I keep taking stabs, and I think if we have to choose between being a bit annoyed and/or frustrated by the lack of trend in the market, or losing money, I think I'll take the former, since P-A-T-I-E-N-C-E is free.
Last Thursday, I showed you the bounces that were trying, but they were the "last stand" ones.
BEAS, Daily: Didn't "do", so it "died".
AMZN, Daily: Potential three swing descending wedge to the 50-day EMA, a truly "last stand" sort of buy signal, failed at the upper edge of the pattern.
AMAT, Daily: In the end, AMAT did not make it to the upside target.
CSCO, Daily: And neither did CSCO. And when a "bull flag" fails here and makes a lower high before turning around, we know that it now opens the door to larger buy setups such as the pennant or the classic bull flag, so long as price remains above the 20-day EMA. But just knowing that tells us that the impetus to buy is waning, so we'll stand aside as we did.
SMH, Daily: SMH did not hit the upside target either, before reversing, and now, we'll see if any buyers will be found on this potential classic bull flag above the 20-day EMA on an ADX of 35. This is a textbook buy signal, and if it fails, you know what's on the minds of the market participants.
TODAY'S PLAN: With the big reversal day on Friday, and what appears to be follow through at the open, we do not have any good setups that allow us to position a swing trade in anticipation of a reversal of swing from up to down, since most stocks are now on a downswing on the daily charts. To position a short sale, I need a bounce, and in the absence of such on the daily chart, we can trade anything that is moving on an intraday basis. For stocks, we trade the 10- or 15M timeframes.
A few weeks ago, we reported that the FTC was suing D Squared for some nasty business practices.
Well, last night I had my Realplayer up, and guess what? Yep, and even though the browser window was labelled "MediaBrowser" and there was some attempt to disclose that this was not a windows program, it did call itself a "System Update".
I clicked OK to "begin your Privacy Protection Update" and it installed a program called System Soap (sort of disclosed because while it did not say that it was going to install software, it did say "Windows is a copyright of Microsoft Corporation. System Soap and Microsoft are not affliated), plus two other programs that were not disclosed, producing sixteen spy/adware additions to my computer that was detected by PestPatrol.
Real time forum log.
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