Wednesday, July 23, 2003
Issue Contents:
Let's hope that law, order and sanity is a little closer to being restored in this desperate place tonight. Washington Post story: Hussein's Two Sons Killed In Firefight With U.S. Troops.
Thank Goodness for Small Mercies...
Pfc. Jessica Lynch returned home today to West Virginia. USA Today story: Lynch comes home full of thanks.
[$NDX, Daily] NASDAQ 100 Index
Good morning. Here is the setup of the day. Let's take a look at the daily $NDX chart.
What we have here is a simple bar chart, and I've fanned the trendlines here along with a few other things to see what others are seeing. We note that this is a retracement (pullback) in an uptrend to a couple of important potential support points such as the 20-day EMA and the July 3 point of breakout of the classic bull flag. No doubt there should be willing sellers lurking under the uptrend line, which is just a shade above the 50-day moving average in the 1200ish area. The question to be asked here is if buyers are going to come out and do the dip? And what if they don't?
[QQQ, Daily] NASDAQ 100 Index Shares
While it would be no surprise to see buyers come out and play the dip, it would be a big surprise to have it fail. We note that last week the QQQ already failed a test of top on the daily chart, and yesterday, after a bounce off the 20-day EMA, it was meeting resistance from the July 10 swing low. Tuesday's move was done on relatively low volume, and the trading range for the day was small.
Aggressive swing traders can set up a short sale for a one or two day hit and run (remember, still technically in an UPtrend!) on the short side. The trigger is a break of Tuesday's low of $30.86. Given that this is a hit and run trade, once yesterday's low is broken, we suggest looking for an entry using an intraday pattern such as a bear flag that forms on the 10- or 15-minute charts. Target 1 is Monday's low of $30.61; Target 2 is the 50-day MA at $31.18. Initial risk from a money management point of view should be no more than 50% of the distance between the trigger price and the first downside target; this works out to be about 13 cents. If you are going to assume this trade using options, we suggest you investigate the August 31 puts, and if it does not go down right away, admit defeat at $31.00.
The press always says that FOMC Chairman Greenspan never moves until he sees the whites of their eyes. We're sort of doing that right now here at TrendVue. Mike and Craig are away next week, and I'm furiously organizing battle plans. The TradeStation 2000i has been dusted off and secured; all indicators reprogrammed. Now onto TradeStation 7 and see what sort of goodies they have in store for us there. Particularly interested in the importing of stock lists, since our friend Bob has automated the production of the lists at ChartScreener.com. Right now, the old Lists 1 to 9 are produced at around 7:30PM Eastern time, and next week, I'm going to tighten up the definitions of the setups. The lists are available in a number of formats including CSV and ASCII, compatible with lots of charting software including TradeStation 7, TrendVue Swing Charts, TC2000, MS Excel, and a number of others. Speaking of Greenie, the next FOMC meeting is on August 12; not far away...and rates are rising with the little bond crash.
Trading is Simple, But it's Not Easy
U-turn, back to the morning highs for the major stock indices.
Real-Time Trading Group Transcript
Again, very light on the U.S. economic calendar this week, as earnings continue to dominate the news. For tomorrow, we have:
- 8:30 a.m. Initial Jobless Claims for July 19 week. Consensus: +4K. Previous: -29K.
- 10 a.m. DJ-BTM Business Barometer for July 12 week. Previous: +0.2%.
- 4:30 p.m. Money Supply.
Bob is making some small adjustments to our Lists 1 to 9 so that its less work to import them to TradeStation 7. That will be completed tonight, and we will be able to go through our usual stock lists in a jiffy again. Off to do some chores now, and will be back later to post analysis and strategy for the usual symbols, Paul's intraday picks and swing trade stock picks. Until then...