Tuesday, October 5, 2004
Issue Contents:
| 08:59 | The Day Ahead Economic releases and news. |
| 09:24 | Swing Trade Setups Featured charts for Tuesday October 5 |
| 14:45 | Intermarket Analysis: CL and ES Crude and Stock Index Futures |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 20:30 | Swing Scanner Results Tuesday October 5th closing data. |
| 20:34 | Market Statistics TrendVue Swing Ratio for Tuesday October 5th. |
Good morning, on this the 279th day of 2004, a day where the crude oil contract again hit a record high.
Despite the easing of tensions in Nigeria, markets remained concerned about tight supplies ahead of winter in the northern hemisphere. “There is still a lot of the Gulf of Mexico production out of action since the hurricane (Ivan),” Evers said. “They are talking about 480,000 barrels a day which is about 30 percent of the total Gulf of Mexico production.” Article >
We’ve been saying for some time that the crude oil rally was not-dead-yet… with a retest of the highs in the making we shall be closely monitoring the crude chart.
Unbelievably in this high oil price environment, Conoco announced it would miss profit targets.
Quote of the Day “Happiness is not achieved by the conscious pursuit of happiness; it is generally the by-product of other activities.” – Aldous Huxley
US Market Calendar
Greenspan is due to speak at the American Bankers Association Convention- 7:45 am: ICSC-UBS Weekly Chain Store Sales Snapshot for the week ended October 1
- 8:55 am: Johnson Redbook Retail Sales Index
- 10:00 am: Challenger Job-Cut Report
- 10:00 am: ISM Non-Mfg Survery
- 10:30 am: Federal Reserve Chairman Alan Greenspan speaks at the American Bankers Association’s Annual Convention, New York
- 1:00 pm: 4-Week Bill Auction
- 5:30 pm: Federal Reserve Governor Laurence Meyer speaks to The Money Marketeers of New York University
- 9:00 pm: Vice Presidential Candidates Debate
Canadian Market Calendar
- 8:15 am: Foreign Reserves
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 Monday October 4 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
Today among the featured charts are a great number of – so far – simple retracements in Gold stocks present long opportunities. If they do not trigger today, many or all will be candidates tomorrow as well.
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
AIRT simple retracement pulling back to what was resistance may now be support. Buy stop 23.71 protective stop if filled 21.34.
Gold names – demand, if filled, that price closes well in your favour before holding.
BGO
CDE
PAAS (Silver but shiny enough?)
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.
Test of Bottom – Continuation
CY Cypress Semi has a stealth bear flag just above a test of bottom. Sell short alert 9.10.
ANN – retail, stealth bear flag. Sell short alert 22.98
FDO – pause in downswing, perhaps too weak to form an actual bear flag? Short alert 26.64
Special Situations
TIVO – put forward as an example of a chart which suggests its time to take profits. High ADX, and an apparent failed test of top.
Intermarket Analysis: CL and ES
The media are making much of a supposed relationship between the crude contract and stocks. While there is no doubt that there is, at times, a direct inverse relationship, the most important aspect of the relationship is to detect when it applies and when it does not. Consider if you will:
The strong and broad rally in stocks which started last week occured and continued even as Crude Oil futures were sitting near all time highs. Stock index futures have not again started to react to intraday crude price movements until today when CL broke up and out of its recent range.
Late last month word came from the US Administration that limited use of the Strategic Petroleum Reserve (SPR) would make up for some delivery short falls resulting from various hurricanes. As well, last week’s petroleum inventory report (released every Wednesday 10:30 am ET) showed a surprising increase in some stocks. Stock market participants seem to have been comforted by this backdrop even though commodity traders kept oil prices high.
Since then, traders have learned that Hurricane Ivan was more damaging to oil and natural gas infrastructure than first thought, cutting off 30% of production capacity from the Gulf coast region, which supplies 25% of total US requirements. Given tightness of supply, traders are obviously betting that no quick remedies – other than the SPR – are available to bring prices down immediately.
Clearly any significant news on supply or inventory has the potential to move Crude prices substantially here.The dawning concensus appears to be that supply is more limited than has been suggested, and until data proves conclusively otherwise, it seems likely that crude will continue to draw out new and ever higher levels of support.
In the short term, whenever price breaks out of a range we have to be on the lookout over the subsequent day or two for failure. If sellers do not more or less immediately assert control and push price down, another leg up in price becomes more likely than not. First catalyst up on deck: 10:30 am ET tomorrow…
Today's transcript.
Click on the title above to expand this document.
Tuesday October 5th closing data.
Click on the title above to expand this document.
Statistics for Tuesday October 5
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 627 |
|---|---|
| Symbols in Down Swings | 153 |
| Up/Down Swing Ratio | 4.09 : 1 |
| Advancers | 41% |
| Decliners | 57% |
| Unchanged | 2% |
| Close > 20EMA | 40% |
| Close > 50SMA | 79% |
| Close > 200SMA | 52% |
| 20EMA > 50SMA > 200SMA (trend up) | 34% |
| 20EMA < 50SMA < 200SMA (trend down) | 16% |
Following yesterday’s “extreme enough” reading of > 10:1 stocks in up swings compared to stocks in down swings, we went into today not surprised to see stocks on balance retreat a little, pause, or consolidate.
We should prepare for the possibility that the market may resume its push upward directly on Wednesday. Later today we’ll publish a lengthly list of mostly long-side swing trade candidates for our quiver – some 20 in all – for just that eventuality tomorrow. Many of these will remain long-side setups if the retracement extends for another day or so.
Potential catalysts? Vice Presidential debate outcome, surprise news (good or bad) for the oil complex (lets not forget the 10:30 am petroleum inventory report due out Wednesday) and earnings surprises as the S&P 500 earnings start to roll on in.