Wednesday, October 13, 2004
Issue Contents:
| 08:25 | Swing Scanner Results From Tuesday October 12 closing data. |
| 08:29 | Market Statistics October 12th closing data. |
| 08:48 | The Day Ahead Economic releases and news. |
| 09:27 | Swing Trade Setups Featured charts for Wednesday October 13th. |
| 10:31 | Oil Report Delayed One more day to wait... |
| 14:09 | Oil, Again Crude makes its presence felt. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 19:29 | Swing Scanner Results Wednesday October 13th closing data. |
| 19:31 | Market Statistics October 13th closing data. |
| 20:25 | Quick Take: Semiconductors One day wonder scenario set up. NVLS warns. |
| 20:55 | Weather Watch There's money to be made in watching weather. |
From Tuesday October 12 closing data.
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Statistics for Tuesday October 12
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 139 |
|---|---|
| Symbols in Down Swings | 641 |
| Up/Down Swing Ratio | 0.21 : 1 |
| Advancers | 32% |
| Decliners | 65% |
| Unchanged | 2% |
| Close > 20EMA | 32% |
| Close > 50SMA | 67% |
| Close > 200SMA | 49% |
| 20EMA > 50SMA > 200SMA (trend up) | 33% |
| 20EMA < 50SMA < 200SMA (trend down) | 25% |
The TrendVue Swing Ratio has moved from one extreme to another over the past week, from more than 10:1 stocks in up swings vs downswings to 0.21:1 as of Tuesday. A short term (at least) bottom may be near…
Good morning, on this the 287th day of 2004.
Wednesday’s often have little economic news for traders to digest and this day is no exception. The major news of the day will be the EIA Weekly Petroleum report at 10:30 – oil traders are already factoring in a million barrel decline in stocks, so only a major deviation from that expectation is likely to influence markets. Meanwhile, crude futures are down from yesterday’s close, lending some additional hope to traders – and thus the potential for surprise, as we know an inverse relationship between stocks and crude has become quite pronounced of late.
US Market Calendar
- 7:00 am: MBA Purchase Applications
- 10:30 am: EIA Weekly Petroleum Status Report
- 11:00 am: Consumer Comfort Index for the week ended October 8
- 9:00 pm (ET): Final Presidential Candidates’ Debate in Tempe, Arizona
Canadian Market Calendar
- None scheduled
Earnings and the Federal Reserve
For earnings highlights, please see today's WSJ Earnings Calendar.
For a list of upcoming speeches, congressional testimony, Federal Open Market Committee material, and statistical releases, please visit the What's Next page of The Federal Reserve Board website. Recently released Federal Reserve Board material, including market moving FOMC decisions and speeches by members, will be found on their What's New page.
Featured setups from Tuesday October 12 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
Keep in mind the oil report at 10:30…
Long Setups
General common strategy: Unless noted otherwise, buy stop just above the “high” value, with an initial protective stop at the low value of the bar, not below the bar.
Retracement or Pause in Up Swing / Up Trend
HET – single down bar in still intact upswing, with a test of a major swing high just overhead. Since the trade premise involves the overhead test acting like a magnet – if filled demand that it push up fairly directly. We never want to stay long a stock which moves down near such a test. Buy stop 54.78, protective stop if filled 53.90.
DIS – minor pause in what has been a very strong up move over the past two weeks. Weekly chart (top panel) shows more clearly the challenges facing DIS – but with the recent highs acting as a magnet and price again trading above the 200 day moving average, trader interest seems enough to at least attempt to push DIS up higher. Buy stop 24.87 protective stop if filled 24.58.
Short Setups
General common strategy: Unless noted otherwise, place a sell alert at or just below the low of the setup bar, and look for the first failed intraday bounce after the low has been broken. What we are looking for is price to push down, bounce a little, and fail again – this is where we want to get short.
Retracement or Pause in Down Swing / Down Trend
PAYX minor bounce to top of gap – if this doesn’t trigger its short alert at 30.30 today, it will be a potential candidate for tomorrow.
Special Situations
PFE – intraday traders only, often a pattern like this provides a “surprise” long entry when traders discover the bear-flag-like pattern which got them short this name, suddenly reverses. Only consider holding if price moves very strongly in your favour.
SMH – Semiconductor HOLDRs – there is some potential the trendline poke yesterday could give rise to at least an intraday or one-three day move up, broad market willing. Buy stop 30.59, protective stop if filled 29.81.
From the EIA website :
The Weekly Petroleum Status Report will be published on Thursday, October 14, at 10:30 A.M. (Eastern time) due to the closure of the Federal government on Monday, October 11.
While its not completely fair to blame Crude for the big sell off today after the gap up open, we do know that the volatility and inverse correlation between oil and stocks is there, so who are we to be surprised.
High today at this point: 53.95, a stunning reversal speaking to the emotion in this market.
Today's transcript.
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Wednesday October 13th closing data.
Click on the title above to expand this document.
Statistics for Wednesday October 13
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 328 |
|---|---|
| Symbols in Down Swings | 452 |
| Up/Down Swing Ratio | 0.72 : 1 |
| Advancers | 32% |
| Decliners | 66% |
| Unchanged | 2% |
| Close > 20EMA | 32% |
| Close > 50SMA | 64% |
| Close > 200SMA | 46% |
| 20EMA > 50SMA > 200SMA (trend up) | 32% |
| 20EMA < 50SMA < 200SMA (trend down) | 26% |
Discussed intraday in TrendVue Trader Talk, we’ve witnessed price drop suddenly back to the lowest trading range on an intraday basis. With so many stocks poised to fail and start a new leg down, this is a do-or-die point. Many tech stocks, in particular, will have set up one day wonders – a single up day in a down swing, very near to recent swing lows or important bottoms.
We’ve also seen the very tight inverse coupling between oil and stocks continue today – so there is every reason to believe that the EIA Weekly Petroleum Status Report will have a significant impact one way or another.
The stage is set and it reminds me of the movie Trading Places featuring Dan Aykroyd and Eddie Murphy. All we need now is a sneak peak at the EIA report. Mr. Beeks, where are you?
As discussed earlier today:
SMH – semiconductor HOLDR exchange tradable fund
NVLS warned – this may provide the catalyst to move SMH back down below the lower edge of the triangle. If price moves there, the next target is on the downside, located at the base of the wedge. The key issue for SMH / SOX is whether the recent swing low will hold or not – if not, a lower swing high and low will have been set, opening the door for a resumption of the longer term downtrend.
SAN FRANCISCO (Reuters) – Novellus Systems Inc. (NVLS.O: Quote, Profile, Research) , a maker of semiconductor production equipment, on Wednesday warned of a sharp business decline in the current quarter that some analysts fear could turn into a long-term slump. Shares of Novellus, which also said it was preparing to cut costs to manage a revenue decline, dipped 6 percent in after-hours trading. More >
Recently a subscriber wrote asking a rhetorical question “why so much focus on the weather (hurricanes)?”
Weather is often an important catalyst in moving markets – its one of the first things commodity traders learn. Weather sometimes shows up as a factor in unexpected areas – drilling in some northern areas, for example, depends on nice solid (frozen) ground.
Its a bit of a gift to have huge weather patterns add unexpected predictability to certain markets. Hurricanes Charley, Ivan, Jeanne impacted a number of sectors ranging from tourism to energy and insurance, giving weather-watching traders an edge. An astute investor can look for opportunity arising from other businesses faced with significant weather related impacts. For example, consider healthcare services operator HCA Inc., a short pick from October 7 :
HCE provided a stealth bear flag above an important test of bottom.
Before the open this morning, HCA issued earnings guidance below analyst estimates, citing the financial impact of three hurricanes. This may be a trend with some legs. Today after the close, Allstate revised guidance down, citing losses due to weather.
Total catastrophe losses for the third quarter are estimated to be approximately $1.11 billion after-tax ($1.71 billion pre-tax) and $1.59 per diluted share after-tax. Estimated third quarter 2004 net income and operating income per diluted share are now $0.09 and $0.08, respectively. According to Reuters Estimates, analysts on average were expecting the Company to report third quarter earnings per diluted share of $0.24. More
ALL – no clean setup, although one could make an argument that locating a place to get short after the last gap up earlier this month would be a good fundamental decision, supported by technical trading.
Will AIG move down in advance of its October 21 earnings report?
Seems plausible, so our task is to find a suitable entry… and look for other vulnerable stocks.