Tuesday, December 14, 2004
Issue Contents:
| 09:00 | The Day Ahead Economic releases and news. |
| 09:14 | Trading Rules We can go long, short, or do nothing at all... |
| 09:23 | TrendVue Trader Talk Temporary Schedule Change |
| 10:48 | Swing Trade Setups Featured charts for Tuesday December 14th. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning on this the 349th day of 2004, one packed with important economic releases. Already this morning we’ve seen surprises from both Canada and the US – a record US trading deficit for the month of October, including a record trade gap with China; and, “textbook-bad” trade numbers from Canada, showing a trade deficit much lower than expected, input costs up and a report all-around weaker than had been expected.
Big moves in currencies are happening as we speak, although the USDCAD may now continue firming up even as the USD weakens againt other world currencies.
Also released every Tuesday are ICSC-UBS and Redbook retail sales reports. From this morning’s ICSC-UBS Weekly Store Sales report:
U.S. Retailers’ Sales Gains Slow to 2.4% on Concerns About Jobs
Dec. 14 (Bloomberg)—Sales gains at U.S. retailers including Wal-Mart Stores Inc. slowed to 2.4 percent in the second week of holiday shopping amid sluggish job growth and higher energy prices.Sales growth at stores open at least a year was less than half the 5.1 percent increase a year earlier, according to the International Council of Shopping Centers-UBS weekly Index released today.
Thirty-nine percent of consumers said their willingness to buy gifts deteriorated in the last month because of concerns over their personal finances, according to an ICSC survey. To boost sales retailers are expected to discount more items by about 50 percent this week after only 13 percent of gift-givers had finish their holiday shopping, analysts said.
Coming up this afternoon is the latest US interest rate policy announcement from the FOMC – typically trade is somewhat muted in the hours leading up to the release and somewhat hysterical in the hours after. Often the market doesn’t ultimately decide on direction until late in the day or even the day following.
US Market Calendar
- 7:45 am: ICSC-UBS Store Sales
- 8:30 am: Goods & Services Trade Balance – Oct.
- 8:55 am: Redbook – Dec. 11th week
- 9:00 FOMC Meeting Begins
- 9:15 am: Industrial Production
- 1:00 pm: 4-Week Bill Auction
- 2:15 pm: FOMC Announcement
Canadian Market Calendar
- 8:30 am: Merchandise Trade Balance – Oct.
- 8:30 am: Manufacturing Shipments & Orders – Oct.
- Manpower Survey – Q1
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.
As traders we have three basic rules. We can:
- Go long, or
- Go Short, or,
- Do nothing at all…
Rule 3 is perhaps the most overlooked yet clearly the most important. There are many times when being in a market or a stock makes no sense at all. FOMC announcement dates are one of those times for futures scalpers.
Ahead of an FOMC announcement I limit my futures trading to the first 90 minutes or less if the volume drops off. Leading right into the 2:15 pm release volume is generally very low and often wild swings both up and down start to happen in the minutes before the release at, and certainly after the release. Generally I do not weigh into the fray until well after 2:15 pm and I never have open futures positions nor stop-to-enter orders in place before the news release.
If there is any change in language in the announcement, it often takes the market a surprising amount of time before coming to a conclusion as to direction for the balance of the day. Be careful!
Good morning.
On days like this I am reminded that Trading for a Living is not a sprint, its a marathon. This runner needs a little more rest.
It turns out I have a borderline case of pneumonia; after last night I have a feeling its not borderline any more and under doctor’s orders, I face another line up his office to confirm that. Like a computer program that never fails when the expert is over your shoulder, I sounded much better at the doctor’s office yesterday than I did before or after. Sadly that’s not likely to be an issue today.
In order to beat this thing back quickly I’m going to do what I should have done 5 days ago and dramatically cut back my trading hours for a day or two and dramatically increase my sleeping hours at the same time.
I will try to be present during the period immediately before and after the FOMC release – in this morning’s newsletter, please take note of my personal rules on trading before the FOMC announcement.
Following the trade deficit numbers this morning, index futures are off somewhat; hopefully this and the looming announcement will pause markets enough to allow us a good look through the swing candidates list and be ready to act when the dust settles.
I will drop by the live chat briefly; also this morning I’ll publish a selection of long and short candidates, for even though the markets seem to want continue higher, we need to be prepared for either direction.
Featured setups from Monday December 13 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
It might simply be that I’m not feeling well, but very little stood out in the charts for me. I can see quite a few setups which might be ready to play tomorrow. Hopefully the market and I will be back in synch by then.
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.
Test of Bottom – Reversal
KGC (also K on TSX) Gold charts generally look weak, caution advised.
Retracement or Pause in Up Swing / Up Trend
IACI – worth following up on here for a day or two more provided it doesn’t break Friday’s low or pull back into that range.
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 Top – Reversal
IPIX – bear flag forming and at this point a down trend in place.
Retracement or Pause in Down Swing / Down Trend
ISIL, carry forward from yesterday, forming a “stealth bear flag” here just above the test of bottom.
Today's transcript.
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