Thursday, December 2, 2004
Issue Contents:
| 09:13 | The Day Ahead Economic releases and news. |
| 09:15 | Swing Trade Setups Featured charts for December 2nd |
| 14:32 | Quick Take: Crude, Dollar, Gold Heads, tails, shoulders. |
| 14:36 | Market Direction Notes for the day. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning, on this the 337th day of 2004.
I’m up 2 hours later than normal, here on the west coast, as I’m still battling a bad cold. Swing trade setups will be posted shortly here. Pass the tissue!
US Market Calendar
- 6:00 am: Monster Employment Index
- 7:45 am: ECB Announcement
- 8:30 am: Jobless Claims
- 10:00 am: Factory Orders
- 11:00 am: Chain Store Sales
- 12:30 pm: Federal Reserve Governor Ben Bernanke to speak to the National Economists Club, in Washington .
- 4:30 pm: Money Supply
Canadian Market Calendar
- 2-year bond auction announcement
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 Wednesday December 1 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
Its hard to find decent picks after a strong up day, but fortunately for us we had good entries in a number, including ETF’s, made some money on futures going up – so hopefully today’s price action is a narrow range consolidation in the upper part of yesterday’s range (at worst), or continuation directly upwards (at best).
It goes without saying that a big reversal here would not be good.
I’ve included a few short possibilities, just in case. Canadian picks to come. Today I will probably not be in the room the entire day, I need to knock this cold back.
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
AVP – 3 inside up pattern near a test of bottom. Could also be stalked short.
DG piercing line – reversal pattern. Use intraday buy technique.
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
ANN was a highly profitable short pick three days ago – the next step here is to see if further downside lies ahead. Many retail stocks yesterday put in small harami candles within Tuesday’s big down bar—you can pick any number of these as potential short targets, although the pattern also works as a “3 inside up”. If a weak bounce in the retail sector develops from here we’ll have more short candidates in the next 1–3 days.
PSUN – Single up bar in a down swing.
GM – if it does trigger hold only if very profitable at the close.
Special Situations
CSCO – long – break of the two day high. It sure is lagging its peers…
Quick Take: Crude, Dollar, Gold
Crude: What an emotional market this is. A reduction in inventories last week pushed prices higher; an increase in inventories this week pushed prices sharply lower, breaking the neckline of this head and shoulders-looking pattern. What we do know is that price rose in a parabolic fashion and parabolic rises tend to die (correct) in a spectacular fashion.
The H&S pattern is not terribly reliable; instead I prefer to look at the individual components and act accordingly.
If the recent swing low near the 45 price level can not be regained in fairly short order, then its likely that price will retest the August lows. We’ll simply keep an eye on important swing low and range low tests and go from there. After exiting recent oil positions with just over a 9% gain, I’m again looking for places to speculate, but with smaller trade size in case there is another big leg down in these stocks.
In the big picture, Crude remains in an uptrend.
US Dollar: Speaking of parabolas, the US$ certainly has been getting very stretched to the down side.
Generally when we see ADX above 40 we start looking for reasons to exit a trend. Simply being stretched, and intervention talk from the Japanese, seems to be enough to fuel a bounce here.
Gold: A bouncing USD of course makes Gold look a little tentative here. Certainly the gold stocks have all acted weak.
Perhaps there is another leg down in the dollar and leg up in Gold and Gold stock – but for now standing aside – or carefully looking for intraday buying opportunities – is the right way to go.
S&P 500 futures: As you can see, there is – so far – a failed test of the range high here in ES. We’ve no choice but to think more cautiously after such an event on the big-time frame intraday charts, particularly after the strong advances of late. If price can push up above the range, another big leg is likely to follow. If it fails and fails at the bottom end of the range, that is by definition a change in trend from up to down.
But lets not get ahead of ourselves!
Nasdaq Futures: NQ has pushed up out of a rising wedge – we call this a running triangle. The pattern suggests further gains, provided that the pause underway does not turn into a reversal and pull back below the upper trendline. Certainly Nasdaq is demonstrating more strength, therefore its the one to watch even more closely for potential failure.
What does caution mean?
What I’ve done is raise trailing stops now quite tight to positions held – in most cases I have my exit stops at the low of today’s daily bar, or, off of intraday patterns using 20 or 78 minute charts.
I will still enter new positions if the setups are there – but until the S&P confirms that it is able to push higher out of this range I’ll use might tighter initial stops than I would normally; ideally moving to break-even on an intraday basis wherever possible.
Today's transcript.
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