Tuesday, March 9, 2004
Issue Contents:
| 08:42 | The Day Ahead U.S. market calendar. |
| 08:49 | This Morning Headlines and reaction. |
| 09:17 | Stock Index Strategy $INDU, DIA, $SPX, SPY. |
| 09:24 | Stock Index Strategy $NDX, QQQ, $SOX, SMH. |
| 16:16 | Active Trader Transcript Real time forum log. |
| 19:00 | Economic Data Summary of today's releases. |
| 19:01 | Volume Leaders NASDAQ, NYSE and AMEX |
| 19:42 | The Day Ahead U.S. market calendar for tomorrow. |
| 20:01 | Market Sentiment CBOE equity put/call ratio analysis. |
| 22:47 | Market Internals $VIX, $VXN, high/low statistics analysis. |
| 22:57 | SwingScanner Results Swing trade short list for Wednesday. |
Tuesday, March 9, 2004
- 7:45AM ICSC-UBS Store Sales
- 8:55AM Redbook
- 1:00PM 4-Week Treasury Bill Auction
For earnings highlights, please see tomorrow's WSJ Earnings Calendar.
This was a headline at WSJ.com this morning:
Stock Pros Hunt for Market Peak Signs
The bullish run in stocks is spurring seasoned investors to study their favorite tea leaves -- like how much financial television local mechanics are watching -- for hints of a possible retreat.
The problem with watching the market closely day after day after day is that is causes most participants to lose perspective. Knowing that, we are always mindful of the big picture.
As you've read for months now in our newsletter, the take on the broad stock indices is that they've been stuck in a congestion zone. While there are individual hot spots in stocks, the Dow Industrials and the S&P 500 Index have been going sideways.
For intraday traders, the lack of an overall trend on the daily chart has been bad for those who have to make a certain amount of money every day. The fact is that the market cannot be made to do what we want. We have to do as it wants.
We have to go to where the action is, meaning its actually the trader's job to find setups. This means that we don't confine ourselves to trading only one part of the market. We can trade stocks, bonds, forex, anything that moves. Of course, when we get our break, we'll be back on it.
Yesterday's price action was a poke under the lower edge of the congestion pattern seen on the Dow Industrials. It's been a three-month sideways move, so we'll soon see if this is the potential neckline break. How will we know? We are looking for acceleration to the downside to confirm, and the plan will be to step in on the first pause or bounce on the daily chart. We'll measure the pattern later, and for now, we'll see if that was just a little trap for the sellers first.
The S&P 500 Index is the strongest of the broad indexes, still trading inside the apex of the congestion area. We'll see if it is heading down toward the lower edge of the pattern too.
As discussed, the NASDAQ 100 index and the Semiconductor Sector index were the weaker of the two since they are both trading under the 50-day MA. With yesterday's expanded range down day, it made another 20-day low. While this is probably a sign of weakness, we still have to draw the wedge on the QQQ because since the daily chart is not in a downtrend quite yet.
We have to be mindful of any potential big buy patterns here that point to the 20-week MA on the weekly chart.
Real time forum log.
Click on the title above to expand this document.
ICSC-UBS Store Sales -0.3%
(Econoday.com) - Retailer sales slipped in the latest week but still held a firm pace, according to the International Council of Shopping Centers/UBS report. Week-to-week sales slipped 0.3 percent in the March 6 week, but year-on-year sales were up a solid 7.0 percent compared with an unusually sharp 7.9 percent year-on-year pace in the prior week.
Redbook -0.7%
(Econoday.com) - Retailer sales dipped 0.7 percent in the March 6 week compared with February, while year-on-year sales for the week rose a firm 5.1 percent compared with a 5.8 percent pace in the prior week.
4-Week Bill Treasury Rate 0.96%
(Econoday.com) - Tuesday's auction of 4-week bills were sold at a high rate of 0.960 percent, unchanged from last week. The bid-to-cover ratio was a strong 2.34 vs. 1.61 last week.
We will review the list of the most active stocks on the NYSE, NASDAQ and AMEX overnight along with today's SwingScanner results to see if there are any swing trade setups for tomorrow.
Wednesday, March 10, 2004
- 7:00AM MBA Purchase Applications
- 8:30AM International Trade
- 10:00AM Wholesale Trade
- 1:00PM 5-Year Treasury Note Auction
For earnings highlights, please see tomorrow's WSJ Earnings Calendar.
The last time we looked, I mentioned that the public was getting a little too bullish, and with market internals starting to flash sell, it was time to be cautious. Of course, as the 50-day moving average was being tested today on the Dow Industrials and the S&P 500, the public started buying puts. The equity P/C ratio was .857 today so we know that concern is now turning into a little panic.
For background information on market sentiment, please visit the Knowledge Base.
When we last visited $VIX, it was flashing a sell signal on the daily chart. We used it to look for a breakout, knowing that the downside formation was the potential head and shoulders top on the $SPX and the $INDU.
After a few days of selloff, the 5-day RSI on both the $VIX and $VXN is now above the 70 line, and normally we would be on the lookout for a downhook back under it to signal a small bounce, particularly if we get a spike high on the equity put/call ratio. We note that if this is a real downside break, we can expect the RSI to stay above 70 for some time, since it is an oscillator.
For background information on market internals, please visit the Knowledge Base.
Potential bull flags in uptrend.
MER
CFC
CNP
LGND
CCI
AMX
AT
CNET
WEBX
MGAM
AVP
OSIP
DNDN
KBH
ESRX
IGL
YELL
BLTI
AZO