Tuesday, July 29, 2003
Issue Contents:
| 09:23 | Good Morning... |
| 10:28 | On the Earnings Front... |
| 10:51 | A Trade a Day... |
| 12:39 | [$SPX, Daily] S&P 500 Index |
| 17:39 | Bye for Now... |
| 19:47 | Paul's Intraday Stock Picks |
We only have one more release on the U.S. economic calendar ahead of us today at 10AM Eastern.
Treasury Bond and Note futures open gap down under yesterday's low, as the selloff is finally noticed by all.
Yesterday produced an extremely narrow trading range on most of the stock indices. In fact, for the past month, the Dow Industrials, the S&P 500 and the NASDAQ 100 have been chopping sideways.
We will upload analysis of market internals today, as well as create a table listing support and resistance points for the symbols we follow.
Earnings continue to come out, and it seems to be a mixed bag. The initial impression seems like there are lots of companies that are starting to turn around, or at least not getting any worse...
From the frontpage of WSJ Online, we pick out some interesting ones:
- Tyco swung to a profit in the latest quarter, reversing a large net loss in the year-earlier period tied in part to its split-off of CIT Group. Tyco also restated results going back to 1998.
- DuPont's profit rose 24% from a year-earlier period that was hurt by restructuring charges and other costs. Revenue climbed 10%.
- McDonald's net fell but revenue rose as record sales offset costs for new food offerings and store overhauls. The fast-food chain also said it will return $500 million to $1 billion cash to shareholders this year.
Meanwhile, the 10AM number produced a surprise. Consumer confidence in the economy unexpectedly fell to 76.6 in July from an unrevised 83.5 in June amid concerns about the labor market. Stock index futures plunged and bonds spiked up on the news.
...keeps the creditors at bay. Today, we found a good setup in the 20-minute September Treasury Note Futures.
I know that many traders shy away from certain instruments, but personally, I simply regard my job title as "trader", rather than "stock trader" or "futures trader" or "day trader" or "investor" or "swing trader". If a trade sets up in a market that is very liquid in a time frame where the risk reward is appropriate for my account size, I trade it.
(09:03 AM) Teresa_Lo: We've got some panic selling mode here on the Treasury Bonds and Notes here.
(09:05 AM) Teresa_Lo: **ENTERING A TINY BUY STOP AT ZN 112^020 OFF THE 20M CHART, IN CASE OF SPIKE BOTTOM.
(09:31 AM) Teresa_Lo: YES, BUY STOP IS STILL IN.
(09:37 AM) Teresa_Lo: **ZN BUY STOP WAS ELECTED AND I WOULD LIKE TO SEE IT BLAST UP INTO YESTERDAY'S LOW TO SHOW ME THAT THIS IS A SPIKE BOTTOM.
(09:37 AM) Teresa_Lo: MOVING STOP LOSS TO BREAKEVEN OR BETTER ON THE ZN.
(09:40 AM) Teresa_Lo: On the ZN, yesterday's low must be assumed to be overhead resistance, but there are setups where on the gap down under yesterday's low, there will be buyers just above that, in case it was an extreme panic selloff.
(09:40 AM) Teresa_Lo: We have the first bar completed on the ZN potential spike bottom setup.
(09:43 AM) Teresa_Lo: Here is a picture of the first bar after the buy stop at 112^020 was elected. We could have been even more aggressive and lowered the buy stop to the high of the second inside bar of 112^011
(09:43 AM) Teresa_Lo: I probably should have done that...
(09:53 AM) Teresa_Lo: ZN HITS THE UPSIDE TARGET.
(09:53 AM) Teresa_Lo: GETTING READY TO EXIT.
(09:54 AM) Teresa_Lo: WE WANT TO SEE IF IT CAN JAM UP INTO YESTERDAY'S HIGH BUT IT'S NOT NECESSARY FOR US TO WAIT IF WE DON'T WANT TO.
(09:54 AM) Teresa_Lo: THE 20EMA20 IS JUST ABOVE THAT AT 112^140
(09:54 AM) Teresa_Lo: THAT WOULD BE THE SECOND UPSIDE TARGET.
(09:55 AM) Teresa_Lo: FIRST THE TOP OF THE GAP AT YESTERDAY'S LOW...AND THEN FOR THOSE WHO WANT TO HOLD THE TRADE, YOU CAN ZOOM IN ON A SMALLER TIMEFRAME AND TRAIL THE STOPS.
(09:55 AM) Teresa_Lo: I AM GOING TO EXIT HERE.
(09:55 AM) Teresa_Lo: 112^091 AND I AM GONE.
(09:58 AM) Teresa_Lo: And now the thrust up and the ZN is almost at Target 2.
We made our exit five minutes before the 10AM consumer confidence number, as we almost always stand aside just in case there is a spike in price on the news.
The number came out as an unexpected positive for the bond market, and it spiked up. As a trader, that is a bonus beyond the initial targets, and we have no regrets getting out early, since the spikes also work the other way, and I am not a gambler.
For full details of the trade, please see the unedited Real-Time Trading Group transcript.
Earlier, we showed the $NDX and highlighted the tight trading range on the daily chart.
For the $SPX, we can use the highs and lows of certain candlesticks to peg support and resistance levels in order to mark out the corresponding trading range on the daily chart.
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The Real-Time Trading Group transcript has been uploaded. See you in the morning.
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These are Paul's intraday stock picks for Tuesday. He will review each setup for the Real-Time Trading Group at around 11AM Eastern.
- AIG @ 64.76 retracement
- ERICY @ 14.32 retracement
- S @ 40.88 high adx play
- BRCM @ 21.50 retracement
- SNDK @ 55.50 high adx play
- SINA @ 36.34 high adx play
- HAL @ 20.51 continuation
- DNA @ 80.77 high adx play
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