Thursday, December 4, 2003
Issue Contents:
| 09:15 | Paul's Watch List Stock picks for intraday and swing trades. |
| 09:26 | Daily Swing Trade Today's stock setups. |
| 10:02 | Good Morning Housekeeping items. |
| 10:21 | Interest Rates Headlines and reaction. |
| 15:30 | Economic Data Roundup Summary of today's key releases. |
This is Paul's intraday and swing trade watch list for Thursday. He will review the setups for Level 4 Active Traders at around 11AM Eastern.
BUY SCALPS:
- COST @ 36.51
- NXTL @ 26.10
SHORT SCALPS:
- MCHP @ 35.56
Prices above are used as ALERTS to look for intraday entries. If you need additional ideas, don't forget that we have automated Stock Scan Lists as well.
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Firsrt, let's update yesterday's picks.
MAXIM: This is a classic chart. We discussed why it would be best to play any potential first hour breakout off a small intraday pattern, mainly because we've seen this a million times: everyone is looking for the "breakout" and it goes in one direction, fakes and then reverse. If we insist on taking the first retracement pattern intraday after the "breakout", we do not get sucked in since the setup never forms. Now we can make a new statement. IF MXIM has failed on the upper edge of this pattern, THEN the usual place to head for is the other edge. The downside target is admittedly skinny, so if we play it at all, we will once again play it on the 10- or 15-minute intraday chart,
NEWMONT MINING: The sell stop was not triggered yesterday, so we will move our alert price up to yesterday's low of 49.50 to set up a one or two day hit and run swing trade on the short side.
XILINX: Short sale was triggered. The first downside target is the 20-day EMA below in the 35.47 area, but this is a retracement in an uptrend, regardless of the fact that ADX is extreme for this symbol and timeframe. Stop loss should be moved to $37.60.
CISCO: Intraday setup produced a good scalp on the long side off the 15-minute chart before it made the round trip. No more on this one for now. The area circled is a small bull flag, above the high of the day before.
Please accept our apologies. We have been working on the database and transcripts from Active Trader will be uploaded shortly once we finish work.
In the meantime, we are uploading to the Knowledge Base, and will continue throughout the month until we are finished.
This morning, there was a curious little headline on WSJ.com:
U.S. companies are racing to issue new bonds out of concern that a surging economy will push interest rates higher next year.
At the same time, it reported:
The ECB kept interest rates steady at 2%, as inflation risks in the euro-zone economy remain low. The Bank of England left its rates unchanged at 3.75%.
I don't know about you, but I see inflation all around me; however, the government has engineered the statistic to exclude anything that a real person uses in real life, so officially, there is no inflation. My cynical view is that it's probably another way to hold down all pension benefits that are indexed to "inflation".
Next year is an election year, and the Fed will avoid raising rates close to the election itself since they don't want to appear to be influencing voters. This leaves it two alternatives: do nothing, or raise rates early in the year.
We've been assured by a parade of FOMC officials that rates are going to stay low, so here is what we think will come to pass. Without an official rate hike, the Dollar will be weak, but don't forget market forces. For all we know, the FOMC will follow it's tried and true formula of letting the market make major interest rate decisions as Treasury bond and note prices yo-yo in the open market.
We've done our work on the big picture and for Treasuries. If rates start to move, we don't expect the FOMC to do anything other than to maybe follow suit as a last resort. The bottom line is that they learned from Paul Volker that they can definitely kill inflation with higher rates, while the Bank of Japan demonstrated that interest rates are ineffective in stimulating recovery. If you have to place a bet like Alan Greenspan, it's certainly understandable why one would prefer to err on the side of inflation, particularly when you know that market forces will raise rates for you beforehand.
Bank of England Rates Unchanged 3.75%
Econoday reports: As expected, the Bank of England's Monetary Policy Committee left its key interest rate at 3.75 percent. The MPC had increased its rate by 25 basis points at its November 6, 2003 meeting after lowering it in July by 25 basis points as a precaution.
European Central Bank Rates Unchanged 2%
Econoday reports: As expected, the European Central Bank left their key interest rate at 2 percent as the economy of the 12 member EMU slowly begins to show signs of recovery. The Bank had lowered its policymaking interest rate by 50 basis points to 2.0 percent at its June 5 meeting. This is the lowest rate among the 12 nations sharing the euro since at least 1948.
Jobless Claims 365,000
Econoday reports: Jobless claims ended a month of positive surprises, rising an adjusted 11,000 in the week ended November 29 to 365,000. The four-week average for adjusted claims, offering a smoother look at the data, rose a milder 3,000 to 362,500.
Chain Store Sales: Weak
Econoday reports: U.S. chain stores posted mostly weak results in November, not confirming expectations for a robust holiday shopping season. Wal-Mart, which dominates general merchandise, said post-Thanksgiving sales were disappointing. Department stores Kohl's, Penney's and Sears all reported weak sales. In contrast, sales at upscale department stores Nordstrom and Saks were strong, reflecting at least some demand at the top end of the market. But Federated Department Stores, which operates Macy's and Bloomingdale's, posted weak sales.