Tuesday, June 8, 2004
Issue Contents:
| 09:13 | The Day Ahead Market Calendar |
| 09:23 | Today's Strategy Tighten stops, look at big picture. |
| 12:21 | Economic Data Round up of today's releases. |
| 13:58 | Reminder TrendVue Trader Talk |
| 14:19 | Focus on IPG Setup identified this morning. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:15 | TrendVue Active Trader Today's transcript. |
| 16:47 | Symbol Scans Tuesday June 8 Closing Data |
| 21:12 | Swing Trade Setups Featured setups from Tuesday's closing data. |
On Monday it was announced that the NYSE and NASDAQ markets will be closed this Friday in observance of the national day of mourning for President Ronald Reagan. Regular electronic and pit trading on the CBOT and CME will also be closed, although an abbreviated electronic session Friday morning will open. Check their websites for up to date information.
- 9:00 am - ICSC-UBS Weekly Chain Store Sales Snapshot for week ended June 5
- 9:00 am - Johnson Redbook Retail Sales Index for week ended June 5
- 9:15 am - Federal Reserve Chairman Greenspan speaks on the Central Bank Panel at the International Monetary Conference, London, England
Canadian Market Calendar
- Bank of Canada Policy Announcement released today
- 8:15 am - Housing Starts - May
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, post news embargo, on their What's New page.
Good morning.
Monday saw the broad indexes execute a significant push up out of congestion - today traders and investors will looking to see either a pause or a continuation. Few, we suspect, will be expecting an out and out reversal.
In the symbol scan for Monday, we noted that price action drove the up/down swing ratio in one big leap from sub 1 to over 3:1. Before even looking at the charts, the ratio suggests to us that a great number of stocks initiated new up swings so the pickings for new long ideas - based on pauses and retracements - would be slim. In fact, considering those symbols which did not fully participate in Monday's advance, it won't be a surprise to us if some of that group turn out to be better short candidates in the end.
If today delivers a continuation, rather than a pause, we can look to using the caboose method to join a move, if a stock or market we follow is already en-route.
A reversal is not what anyone expects after a push up like this, so consequently I'll be raising stops on my trades - both the very recent and also a few I've held here for 10 days or so - to Monday's low or just below, on a case by case basis.
During the course of the day we'll be publishing analysis of any stand out sectors, including an update on gold, rates and currencies.
US Economic Releases
ICSC-UBS Weekly Chain Store Sales Snapshot: +0.2%
CNN/Money: Sales at major retailers increased by 5.2 percent on a year-over-year basis for the week ended June 5, up from the preceding week's 4.6 percent pace, according to Redbook Research.
U.S. Treasury Secretary John Snow Speaks at Money summit
Reuters: US Challenged by high energy costs.
Washington Times: Deficit too high now.
Federal Reserve Chairman Greenspan Speach:
[Full text of speech] "Economic developments going forward will determine the level and term structure of interest rates. Federal funds futures prices already reflect expectations of a substantial firming of policy by the Federal Open Market Committee (FOMC). Unlike 1994, there has been an appreciable increase of market rates in anticipation of policy tightening, though history cautions that investors' anticipations of the cumulative magnitude of policy actions and their timing under such circumstances are far from perfect."
Reaction:
Greenspan's Positive Outlook Buoys Dollar NEW YORK (Reuters) - The dollar rose against the euro and the yen on Tuesday after Federal Reserve Chairman Alan Greenspan said the U.S. central bank will do what is required to keep inflation in check, analysts said.
Canadian Economic Releases
Bank of Canada Interest Rate Policy Announcement
Toronto Star: The Bank of Canada held short-term interest rates steady near four-decade lows today despite the inflationary impact of higher oil prices. The decision, confirming the expectations of financial markets, left the bank's trend-setting overnight rate at two per cent and the commercial banks' prime rate, the benchmark for a wide range of borrowing, at 3.75 per cent.
Housing Starts - May
Ottawa Business Journal: The pace of new home construction across the country slipped in May, Canada Mortgage and Housing Corp. reported Tuesday, but the level of activity remains at historic highs.
The Crown corporation reported that construction began on a seasonally adjusted 238,800 residential units last month, down 1.2 per cent from 241,600 in April.
Despite the decline, the number is still well above the 200,000 level considered indicative of a healthy market.
Looking at the year to date, housing starts remain stronger than in any five-month period in the past 17 years, CMHC said.
Don't forget that TrendVue Trader Talk is open during market hours for general discussion and questions. Occasionally we might even have tasty recipies or computer tips!
If you haven't checked out our interactive live forum yet, visit the member account page while logged on and follow the link to TrendVue Real Time Forums.
As
mentioned in TrendVue Trader Talk this morning, IPG was one of several harami / 3 inside up setups which were considered for inclusion in the daily featured setup report but eliminated.
The 3 Inside Up pattern: a tall down bar followed by either an inside bar or a harami candle the second day. Traders go long on a break of the inside bar's high.
We can expect to find some initial resistance at the high or the top of the real body (the open) of the tall down bar. Ideally price will push higher than this level on day one of the trade.
One of the benefits of being available for intraday trade entries is that we can look at price action after a good nights sleep and adjust our plan. From the unprocessed log:
09:51:50 Mike: I hummed and hawed about including PTEN in the list. It and IPG had the better looking charts for a bullish harami / 3 inside up setup.
09:52:58 Mike: IPG also is a potential ADX bottom too.
09:53:39 Mike: Actually IPG also has a basing look to it on the weekly.
10:06:08 subscriber: IPG trying to take off. Thanks for pointing that one out, Mike
So a setup seen more useful in the new light of day becomes a target for an intraday entry.
On trade entries: Its difficult to know which strategy nets better results in the end: a simple buy stop at the trigger point, or an alert at the trigger point followed up by careful monitoring for a retracement to buy.
My inclination is to suggest the simple buy, since traders and investors have wildly varying levels of ability, pain tolerance and patience. Those who have more experience and skill know where their experience, strength and limitations lie. The rest of us should opt for simplicity until we develop more experience.
Back to IPG: The simple buy stop followed up by placing of protective stops constitutes the minimum level of work a swing trader needs to perform on trade entry day. Because its easy to understand, and simple to implement and, for most folks this strategy will perform more consistantly..
We can see that a trade entry using the simple buy stop approach was filled soon after the open, and price pushed directly up from there. So far, so good.
Intraday traders also had an opportunity to get long early on. Using a buy stop above the opening down bar - which we can use since its a single down bar in an existing up swing - nearly positions the trade to get long on an apparent successful test of the prior day's high.
IPG offered a profit taking pause and/or another opportunity to go long on a second single down bar in the still-intact upswing.
So far intraday price action puts IPG in today's list of top 20 performers of the universe of 660 symbols we are currently tracking. At the bell, IPG closed up 3.67% for the day.
Today's transcript.
Click on the title above to expand this document.
Today's transcript.
Click on the title above to expand this document.
Today's transcript.
Click on the title above to expand this document.
Tuesday June 8 Closing Data
Click on the title above to expand this document.
Featured setups from Tuesday June 8 closing data symbol scan.
Jump to: Long Setups | Short Setups | Special Situations
Some days, little jumps out from the list - it may be that so many names are in much the same boat.
The TrendVue Swing Ratio (4.238) tells us that most symbols are in up swings - you can take a look through the symbol scan "Down in Up Swing" list and find many names where a long setup could be as simple placing a buy stop just above Tuesday's down bar.
From the list I've selected a few different ideas.
Long Setups
Retracement or Pause in Up Swing / Up Trend
PVN
Premise: A hit and run trade if price manages to break Tuesday's high, intraday-capable traders can attempt to catch a surprise push up to new highs. When ADX is high but not extreme we know a market is very directional. While it seems more likely that PVN will continue to retrace a little more - or fail at this test of top - it is possible this consumer lender may have one more push. Not recommended for end-of-day only traders.
Long entry: Buy stop / alert: 14.65
Protective stop if filled: 14.06 but recommend intraday handling only and tighter stops.
PDG (or other golds)
Premise: PDG and a number of gold stocks have similar charts at this time - a new upswing triggered followed by a down bar which has not yet created a downswing.
This long side trade is to catch a surprise move up - there is a low probability this will trigger.
Why PDG over others?
We put a few names together with the HUI Gold Bugs index and find that PDG has been outperforming others lately, by a significant percentage in some cases.
Please note that PDG and gold names are equally likely to head lower here - the small up swing in these names may have proven to be the perfect trap for recent longs. Since these names have the potential to grind sideways for a while here, we'll only want to try this surprise setup once.
Long setup: Buy stop 15.71
Protective stop if filled: 15.27
Test of Bottom
CCU
Premise: CCU formed a "hammer" Monday, followed by an inside bar on Tuesday - if price breaks Tuesday's high we'll be looking for a reversal back into the range.
Long setup: Buy stop 38.41
Protective stop if filled: 37.90
Short Setups
Retracement or Pause in Down Swing / Down Trend
CCU
Premise: What, not CCU again?! We must remember that tests of tops and bottoms are the only places where we can take either side of a trade, if one side does not work out. CCU properly belongs in both the long and short setup lists.
Aggressive intraday traders can go short on a break of Tuesday's inside bar - if filled the target is a new low which would "break" the Hammer formed Tuesday. Hammers are too-easily recognized and tend to bring out the crowd as they feel the "all's clear" bell has been rung.
A "broken hammer" situation can often lead to a quick surge down, and ringing in the ears of stung recent longs.
Short setup: go short on break of 37.90
Protective stop if filled: 38.41 but quickly move to narrow this intraday.