Friday, August 13, 2004
Issue Contents:
| 09:15 | The Day Ahead Economic releases and market news. |
| 09:25 | Swing Trade Setups From Thursday's stock scan data. |
| 09:57 | Strategy Be careful what you wish for. |
| 16:10 | Stock Scanner Results Friday August 13 data. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:58 | The Friday File Google Playboys |
Happy Friday the 13th!
Overnight, Japanese markets were off over two percent as new data showed disappointing growth in that country’s economy. The Yen slid, and we are seeing the US Dollar move up against the Euro.
“In Japan’s data, every single component was lower than the previous quarter. This confirms a broad theme that the world business cycle has peaked and we are seeing a slowdown in global growth,” said Bilal Hafeez, currency strategist at Deutsche.
“This means currencies such as the yen and Aussie dollar will underperform and defensive currencies such as the euro and Swissie will outperform.” [3]
European markets made fresh lows for the year this morning, while North American index futures are slightly higher than Thursday’s close. Welcome to Friday.
US Market Calendar
- 8:30 a.m. International Trade [1]
- 8:30 a.m. Producer Price Index2
- 9:45 a.m. Consumer Sentiment
Canadian Market Calendar
- 8:30 a.m. Merchandise Trade Balance – Jun.
- 8:30 a.m. Manufacturing Shipments & Orders – Jun.
Earnings and the Federal Reserve
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 WASHINGTON (Reuters) – The U.S. trade deficit widened much more than expected in June, hitting a record $55.8 billion dollars as the biggest drop in exports in nearly three years combined with record imports, the government said on Friday. Link
2 WASHINGTON (Reuters) – U.S. producer prices rose less than expected last month. The closely watched measure of core producer prices, which strips out volatile food and energy components, gained 0.1 percent while on a 12-month basis it rose 1.7 percent, moderating from June’s 0.2 percent monthly rise and 1.8 percent year over year. Overall producer prices have risen 4.0 percent in the last 12 months. Link
3 LONDON (Reuters) – The yen slid to a two-week low against the dollar and a three-month low against the euro on Friday as surprisingly weak Japanese growth data cast doubt over the health of the country’s economy. Link
Featured setups from Thursday August12 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
The big question is whether investors can shuck their bad moods of late and push prices up and out of the chop. Knowing that price congestion could continue for another few days, if we take a stab here at trying to capture a move up in QQQ, DIA or others, we have take a more aggressive attitude toward initial stop placement – demand that your trade become profitable quickly during the day.
Please check out TrendVue Trader Talk (live | live transcript) for more swing trade ideas and market analysis throughout the day,
Long Setups
General common strategy: Unless noted otherwise, buy stop just above the “high” value, with an initial protective stop at the low value of the bar, not below the bar.
Test of Bottom – Reversal
DIA we have to be concerned about continuing chop developing here, but a single stab at trying to catch index ETF’s in case they can power up here is worth our attention. Buy stop 99.49.
QQQ presents a tiny 2B test of bottom off the daily and large time frame intraday charts. Buy stop 32.87.
Retracement or Pause in Up Swing / Up Trend
PNC has been trading in a consolidation zone under resistance for some time – a recent gap up and pause following suggest that PNC might try to break out. Intraday traders only, buy stop 50.82. Demand that your trade be profitable quickly if filled or simply exit.
Test of Top – Continuation
Short Setups
General common strategy: Unless noted otherwise, place a sell alert at or just below the low of the setup bar, and look for the first failed intraday bounce after the low has been broken. What we are looking for is price to push down, bounce a little, and fail again – this is where we want to get short.
Test of Bottom – Continuation
MXIM, lurk below with a sell alert at 43.54 which should only be triggered here if MXIM plans on continuing its down swing. This is a valid test of bottom which can be traded on the long side – that trade triggered yesterday.
We’ve outlined some long-side trade ideas in the various index ETFs for Strategies for Success subscribers but find ourselves in the curious position of hoping that none of them trigger today.
Lets back up a moment and look at the daily index charts:
Ironically, the long-suffering Nasdaq may have the safest long swing trade setup here, simply due to the fact that the COMPX is not trading in a tight consolidation range.
However, NYA(NYSE Composite), INX(S&P 500) and INDU(Dow Jones 30) are all trading in a consolidation zone where we’ve seen large daily trading ranges push price from one side of the range to the other in single sessions.
This tells us we have to be extremely careful here, long or short, and use much more aggressive stop placement than we would ordinarily like. Or, as we like to point out at every possible opportunity, we can elect the trader’s other weapon – the “stand aside” approach – and let other traders and investors lose money until the consolidation range has been broken.
Working against the long side: Daily, weekly and monthly charts all are in down swings.
Possibly working for the long side: Non-tech indexes remain at the lower edge of the big range off the weekly charts. And earlier this week our VIX measures hit what is typically extreme territory:
This isn’t a tradeable signal all on its own, but does suggest we are in a position where a surprise move up could gather enough momentum to at least deliver a tradeable bounce.
Back to the opening comment – our concern is all about getting stopped into trendless chop. Non-tech indexes are already in chop, and its Friday, so we have two strikes against us already.If long-side trades are triggered today, then what we need to see is price fairly immediately push higher from our entry and, ideally, give us the opportunity to move to a break-even stop early into the trade. We do not want to get stopped into a trade only to have price continue along this congestion which has started to build this week, and most certainly we don’t want to carry over such a trade into the weekend.
Coming up today: a look at currencies and gold. Overnight news from Japan and US Trade Deficit news have been pushing currencies through big ranges so far today.
Friday August 13 data.
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Today's transcript.
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Admit it, you wanted to find out what all the fuss is about, but didn’t want to sneak into the 7–11 to buy a copy of Playboy. Thanks to regulatory reporting requirements, the good folks at the SEC offer the opportunity to read the now-infamous Playboy interview of Google founders Brin and Page, for free.
PLAYBOY: Is your company motto really “Don’t be evil”?
BRIN: Yes, it’s real.
PLAYBOY: Is it a written code?
BRIN: Yes. We have other rules, too.
PAGE: We allow dogs, for example.
Sorry, no pictures. [ Complete article ]