Friday, July 2, 2004
Issue Contents:
| 02:10 | The Day Ahead Economic Releases & Holiday Hours |
| 03:43 | Good Morning Market gets what it expected... |
| 04:59 | Swing Trade Setups From Thursday's closing data scans. |
| 16:15 | TrendVue Morning Trader Today's transcript. |
US Market Calendar
Note: Certain markets operate today under short schedules.1
This morning’s key employment numbers will likely give the market an excuse for a reaction, direction unknown. Perhaps in recognition of the upcoming Independance Day holiday, the market will be delivered a Goldilocks just right report. With the FOMC just recently behind us, the reaction to strong or weak economic news will be more informative than the news itself.
- 8:30 a.m. Nonfarm payrolls for June
Average hourly earnings
Unemployment rate
Augmented unemployment rate
Pool of available workers - 10:00 a.m. Factory orders for May
- 10:30 a.m. Weekly Leading Index for the week ended June 25
Canadian Market Calendar
- No significant releases today. Yesterday, markets were closed in observance of Canada Day
Earnings and the Federal Reserve
Reminder: Its earnings season once more and pre-release warnings are starting to come out.
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.
1 Holiday Hours for US Exchanges
Good morning.
This morning Mike will be travelling Alberta for a family wedding; he returns Monday. Teresa will hold the fort in Morning Traders until the lure of the three-day weekend and usual light trade in advance of early market closures becomes too much. Perhaps we should all take the hint, book off early today, and do something fun away from the market.
Thursday we saw what happens when market participants get what they want – the FOMC monetary policy announcement of a minor rate hike and a promise to do more at whatever rate conditions demand.
No surprises were delivered by the Fed, so why the market sell off on Thursday? Perhaps its as simple as there was nothing new, in the news.
We’ve been watching the Nasdaq 100 futures and Nasdaq Composite index diverge from other broader or less tech-heavy indexes now for the past three days. Things that make you go hmnn. At the close on Thursday, the performance divergence has become more marked.
Nasdaq 100, S&P 500, Dow 30 Futures
Friday we shall see if markets test the range lows— and hold or fail. If buyers do show up in volume, perhaps a Nasdaq inspired rally may emerge and drag the other markets along.
Nasdaq Composte (COMPX), NYSE Composite (NYA), S&P 500 (INX), Dow 30 (INDU)
All we know for certain is that all the major markets are running out of room here, with each pulling back to a former area of resistance which has for some time provided support. Pass or fail, we'll find out soon whether those levels continue to offer price support. If not, we can expect a quick trip down to the lows of late May, and then, of course, more tests.
Be careful of thin trade as the day progresses. Odds are that by the end of the day, you too will wish you were headed to the beach!
Featured setups from Tuesday June 29 closing data symbol scan
Jump to: Long Setups | Short Setups
Don’t forget to review the stock scanner output and also the raw text symbol list which contain additional groupings of stocks. By early next week we will have finished tweaking these (with a view to producing fewer symbols in the output lists but more likely candidates) and will fully document the meaning of the various combinations of factors and how the resulting lists can be used.
Today lets focus attention on Exchange Traded Funds that mirror the major indexes, QQQ, SPY and DIA.
In the day or two after a FOMC policy annoucement we frequently see volatility return to the market, and volatility is a good thing for swing traders, provided it doesn’t reverse course each and every day. Given the potential for a lasting move – irection as yet unknown – to come out of this week, we should mentally prepare ourselves to go long or short (or reduce) the broad market.
And lets also remember volume is likely to be light, particularly as the day wears on and with less liquidity comes less certainty.
Long Setups
Tests of Top
It seems unlikely that any of the major markets will rally enough on Friday to put in a higher high against Thursday’s high, but nevertheless, we should be prepared to enter a long on an intraday basis should this occur.
QQQ
SPY
DIA
In each case, if price were able to make a higher high on convincing volume, we’d want to seriously consider a long entry as a reversal of that nature would likely be heralding a break out from congestion. Setup for the unthinkable: wait for a break of the day’s high, wait a little more for the 1st pull back, and position a buy stop above that.
Short Setups
If continuation of selling is on deck, the range lows will be retested in SPY and DIA in short order. Nimble intraday-capable traders may wish to go short on failure of the test of the range low, realizing full well that this is not a test of bottom in the daily
QQQ
SPY
DIA
Referring to the daily charts earlier in this article, we know that the 50 day moving average or the low of the prior range will be likely targets in the event selling continues.
Entering a short here is tricky – price movement is likely to be directionless for at least part of Friday’s session, if not the entire day, and there’s little guarantee of follow through on Tuesday when traders return from holidays.
Still, the nimble may wish to look at this and trade short on lasting break of the prior day’s lows. Hold only if solidly profitable at the close.
Have a good day and a terrific, safe, July 4th weekend!
Today's transcript.
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