Monday, June 14, 2004
Issue Contents:
| 06:32 | Swing Trade Setups From Thursday June 10 closing data. |
| 09:28 | Economic Releases For Monday June 14 |
| 09:55 | Market Direction A look at the broad indexes. |
| 10:25 | Quick Takes Oil, Currencies, Gold |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:15 | TrendVue Morning Trader Today's transcript. |
| 17:49 | Symbol Scans Monday June 14 closing data. |
Featured setups from Thursday June 10 closing data symbol scan.
Jump to: Long Setups | Short Setups | Special Situations
Long Setups
Retracement or Pause in Up Swing / Up Trend
As frequently happens, there are a number of similar charts in thsi mornings round up. Today we find numerous examples of minor retracements forming at or just below a test of a recent range high. A positive overall market will tend to push all of these to target 1, the recent swing high. If the market is negative today, we may want to revisit these charts tomorrow since most will still be well within our preference maximum length of retracement - 2 to 4 bars.
The setup for all of these is the same. Buy stop orders placed just above Thursday's high; and if filled, an inital protective stop should be placed at Thursday's low.
A note on initial protective stops. As soon as our long orders are filled, we enter in a protective stop order, without fail, at the earliest possible opportunity. That way we are protected if we lose connectivity, phone service or simply have to go make a sandwich or take the kids to school.
Initial protective stops should be moved to narrow risk and ultimately capture proft as soon as possible, while still providing the trade room to work. A general rule of thumb worth living with is that once a trade is solidly positive, your protective stop should be moved to break even or better.
JNPR
AFL
BRCM
JPM
WMT
Test of Top
NSC
Premise: NSC is 3 bar retracement after making a new 52 week high and is testing its top. At tests of top we can go short on failure or lurk above with a buy stop to attempt to catch a resumption of the move up.
Long setup: Buy stop 25.05
Protective stop if filled: 24.82
MET
Premise: MET has a similar setup to NSC, and a multi-year high is immediately overhead. If filled the first target is 36.50, the second overhead is 36.70. We like to see this setup - bull flag just below what will become a test of top - follow through quickly to T2.
Long entry: Buy stop 36.13
Protective stop if filled: 35.79
Short Setups
See "Special Situations".
Special Situations
The "I don't like Mondays" triangles.
CVX
Premise: Generally speaking the right thing to do with triangles is avoid them. However once trendlines have been broken near the apex, we generally quickly find out if a new directional move is underway or if a larger congestion zone is builing. If the former, attempting to exploit failure for our benefit can sometimes reap outsized rewards.
The dark cloud cover two bars prior at a break of the trendline resulted in a quick trip to the lower range of the triangle, setting in a lower swing low and a single bar up. Going short on a break of this bar's low should result in a quick trip down and out of the triangle. If anything else is delivered, the trade should be closed quickly.
Short entry: Go short following an alert placed at Thursday's low 90.16.
Initial protective stop: 91.29, moved lower intraday at the earliest opportunity.
GRP - Rising Wedge
Premise: A potential short. We should never be cavalier about shorting stocks that are moving up. GRP has a harami spike at the apex of a rising wedge. What catches our attention is the potential for a right hand shoulder forming here on the daily chart.
Short sale setup: set alert to 16.19, enter short intraday if alert hit.
Initial protective stop: 16.57, moved agressively down intraday where possible.
US Market Economic Releases
- 8:30 am - International Trade for April
The merchandise trade deficit widened markedly to $48.33 billion in April from a revised $46.57 billion in March. That implied net exports would take a bigger chunk out of second quarter GDP growth than first assumed. - 8:30 am - Retail sales for May
Retail sales rose 1.2 percent in May when analysts had looked for a 1.0 percent gain. Excluding autos, sales increased 0.7 percent compared to forecasts of a 0.5 percent rise. However, stripping out both autos and gas, sales were up only a modest 0.3 percent.
Canadian Market Economic Releases
- 8:30 am - New Motor Vehicle Sales for April
Statistics Canada said Monday that sales advanced 2.6 per cent, compared with March, to 137,719 with sales up in every province.But the agency also said preliminary figures from the auto industry indicate the number of new motor vehicles sold dropped 3.9 per cent in May, with most of the decrease coming from lower passenger car sales.
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.
It had to happen. This morning a downswing was triggered on the S&P 500 index, cementing in fact what we've been noting as the Swing Index flipped from mostly up to mostly down again on Friday.
The SPX and other indexes had a 12 day run to its peak. Intraday the SPX has reached its first target, the ascending trendline off the daily chart. The next target for a retracement is the confluence of the 20 and 50 day exponential moving averages.
You can see that a line of support dating back from the first week of 2004 also happens to live at the 20/50D EMA level.
The Nasdaq Composite is virtually at the 20/50D EMA target. Traders will be looking to see if this lends support or next to the prior swing low at 1960.
The Dow Jones 30 (INDU) and NYSE Composite (NYA) indices have already reached the January line of support. Of the two, INDU (still) is positioned to move up more directly if the market finds some strength in the very short term. We'll keep that in mind for any swing trade setups on the long side.
On the NYA, after breaking the obvious descending trendline, the breakout
players are trapped. Price is now at a level where support will be
tested, so its wait and see.
Oil & Gas: While crude has had a significant pull back from its record highs, price has merely pulled back to what should be support. All eyes now on the crude contract to see if support holds or becomes new resistance.
Crude: We should note that (so far) price has not been moved much by the marked upturn in violence against westerners in Saudi Arabia over the weekend.
Gasoline: Futures have pulled back to the 50D EMA - we'll watch to see if the low of the last up bar is broken, which would invite sellers back for a retest of recent lows.
US Dollar Index: Intraday data shows a dark cloud cover forming just above former resistance. movement of a two-day candle. The next few sessions should decide whether this former resistance holds as new support.
Gold: This morning gold opened below the prior swing low, probably invalidating the 3-inside-up pattern that had set up on the daily. This market appears to remain hyper-sensitive to any economic news that suggests the Federal Reserve will have to raise rates on a schedule more agressive than current expectations.
Today's transcript.
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Today's transcript.
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Monday June 14 closing data.
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