Wednesday, May 5, 2004
Issue Contents:
| 09:18 | US Market Review Premarket overview. |
| 09:29 | Canadian Market Review Premarket overview. |
| 10:05 | Swing Trade Setups A few long ideas. |
| 16:16 | TrendVue Active Trader Today's transcript. |
| 16:16 | TrendVue Trader Talk Today's transcript. |
When we last looked at Nasdaq Composite (COMPX), S&P500 (INX), DOW 30 (INDU) and the NYSE Composite (NYA) we observed that the INX, INDU and NYA were all within striking range of testing / holding the April 21 swing lows.
The FOMC meeting came and went, and delivered pretty much what most market observers expected. Tuesday's close ended up with price generally below intraday resistance, however price did push up higher for all four indexes.
End of day only traders and investors are at a disadvantage today, as a test of Tuesday's high and the pass/fail grade is what we are looking for as a signal that the game is on.
Even if price does move higher, we should keep in mind that until overhead resistance and prior swing highs are clear, price will remain within a range and a fairly tight one at that. We'll need to keep our expectations reasonable and ensure that profitable new positions have break even stops or better put in place as quickly as is possible.
Comparing the performance of major indexes on the TSX to the US markets Tuesday one might be forgiven for doing a double take. The TSX had its strongest performance in 2004, thanks largely to the very heavy weighting of resource stocks - namely in the petrochemical complex and precious metals - as both oil and gold commodities had signigicant surges Tuesday.
Clearly there seems to be a preference for larger capitalized names in this resource-driven rally. The principle reasons behind the Gold rally include a) the US$ pulling back against major currencies, particularly the Euro:
And b) Gold stocks and the commodity itself have taken a rapid and severe beating over the past month:
Ultimately whether Gold rises to its former highs or not depends entirely on the currency picture and we'll be watching both with a magnifying glass. /Mike
There are a few charts with similar setups that we can look at for long swing trades. The setup is a Harami (a form of inside bar) 3 Inside Up pattern, and the basic drill is that a long is triggered on a break of the high of Tuesdays inside bar.
ADCT
NVLS
Since these are also tests of important swing lows, price really can go either way. If stopped in, your mission is to move to a break-even stop as quickly as possible.
The proximity of the test of bottom makes these types of trades worth attempting, for if they do move up, generally a decent % can be obtained within a bar or two (day or two) and sometimes even intraday.
Since neither stock has reported recently, caution is of course warranted. I personally never carry swing trades through earnings. /Mike
Today's transcript.
Click on the title above to expand this document.
Today's transcript.
Click on the title above to expand this document.