Thursday, March 4, 2004
Issue Contents:
| 08:34 | Good Morning Reminder |
| 08:50 | Stock Index Strategy $INDU, DIA, $SPX, SPY. |
| 08:53 | Stock Index Strategy $NDX, QQQ, $SOX, SMH. |
| 09:01 | The Swing Trader Update open positions. |
| 09:23 | The Swing Trader Today's stock picks. |
| 16:16 | Active Trader Transcript Real time forum log. |
Teresa will be out of the office at around 11AM Eastern, and the afternoon segment of today's newsletter will be published overnight.
Still no breakout to report, but we are getting close to some sort of inflection point, as patience wears thin. The newspapers have been telling the same thing all week:
(WSJ.com) - Stocks may open on a flat note Thursday, with market watchers awaiting Friday's unemployment data.
At this point, the expected trading range on the day is around 11 S&P points based on the futures, while the apex of the pattern measures around 15 points.
There is something to be said about not worrying about trying to position for any potential breakout, mainly because it seems to hinge on tomorrow's employment number, and for all we know (as usual), it will all be done on a gap open. Hard to control risk, if you know what I mean. That's why our repertiore includes intraday trading of futures. We can always get a piece of it, with less risk.
P.S. I think a lot of people think the market is about to crap out, so the surprise is going to be...up. This is important to know because if a large number of people are caught on the wrong side into a breakout, they help to accelerate the move when they have to get out of their losing positions.
After sellers showed up at resistance on Tuesday, there was a little more push on the downside on Wednesday as both the $NDX and $SOX head down to test the 2/24 swing low. No trend in place but I am sure this erosion is quite worrisome.
If there is continued acceleration to the downside, we know they are all going to be selling just under the 2/24 swing low, and that is one place we'll avoid because for all we know, it might hold and bounce again like it did the last time when it tested the 2/05 swing low. Nothing to do right now on a swing basis.
We did not have any new picks yesterday, and all positions were closed. I continue to monitor BEAS, ERTS, BRCD and CL.
As we work to add/refine the criteria for the SwingScanner, we will have even better qualified candidates.
Out of the whole whack of potential buy candidates, I passed on most of them due to the fact that their weekly charts are at the point where IF it cannot go up, THEN the potential for downside action is big. Knowing that they are all waiting for a number tomorrow morning, and the potential for a big gap -- up or down -- I'm not that interesting in going in with the boat loaded. I'm not the "go big or go home" kinda girl.
Here's what I saw. MOT, QCOM, VLO, CFC and MRO are all potential spike tops on the weekly chart, while FCX, BP, XLB, PCG and CNX are tests of tops. Again, while I might be leaning a little on the cautious side, the fact is that should a top be in, it is taking place on the weekly chart, and therefore, it might be quite a move if we are caught on the wrong side.
Out of the whole batch, I like TIF the best. It's a decent looking bull flag after a spike bottom, and volume has been contracting for a few days. This is a small bull flag, and on a swing trade basis, the buy alert should be placed at Wednesday's high, and if the trade is triggered today, the initial stop loss should be placed at Wednesday's low. The initial upside target is the 2/26 swing high at 42.92. Since the flag is four days old, the 50% rule of thumb suggests that if momentum is still there, the upside target should be hit within two days.
On the short side, HMA looks the best, but I don't really want to short a $20 stock after it might have put in a small spike bottom.
That's it for now. Back to work we go on the scanning criteria.
Real time forum log.
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