Monday, August 2, 2004
Issue Contents:
| 08:52 | A New Month New week, new month, new direction? |
| 09:34 | Swing Trade Setups Featured charts from Friday July 30 scan. |
| 10:24 | Economic Releases Manufacturing, Construction Spending, Housing |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:15 | TrendVue Morning Trader Today's transcript. |
| 23:25 | Stock Scanner Results Monday August 2 closing data. |
Good morning. First up, lets wrap up last month.
Across the board we have all major indexes bouncing to their first major target, the 20 D moving average.
Last week we looked at getting long the market, in particular the tech market, since tech had retested the spring lows.
After looking at the weekly chart, we also suggested that the other tech markets had a “close enough” test of bottom in place. Its important not to be too dogmatic about such things, for sometime the train will be long out of the station before one realizes its been missed.
Flies in the Ointment
The bounce to the 20 day moving average is one of the places where we expect sellers from bigger time frames (bigger than ours, typically) to come out. We also noted on Friday a rising wedge in both Nasdaq and S&P 500 futures charts.
Threat Level Orange news over the weekend has pushed futures over the weekend to levels which will put the broken rising wedge in play. The target of the rising wedge pattern is the base of the wedge – if price gets a head of steam going, we could see a retest of last week’s lows fairly quickly. The bounce was bound to bring out sellers; their perfect scenario – uncertainty – arrived on schedule. How the market deals with this will tell us much about the character of the recent attempt to rally.
The market has proven relatively able to shake off terrorism fears over the past few years, perhaps in part desensitized to the issue due to the constant threat facing finance and in particular the financial sector in New York City. Will traders shrug off this latest worry? We’ll be ready to move in either direction. In the meantime lets also cross our fingers and hope that this warning’s ounce of prevention delivers the protection needed.
Featured setups from %s closing data symbol scan
Due to the uncertainty – in either direction here, it may be prudent to reduce our trading size today. In the case of a gap down, be very careful here – we may just see a tiny exhaustion gap form on the news, and markets bounce from there.
Jump to: Long Setups | Short Setups | Special Situations
Test of Bottom
LU clearly is not enjoying much of a bounce here, however the single down bar on Friday gives us a lower-risk location to try a long buy stop at 3.16. Price ought not to trigger the stop unless LU can actually go up.
Short Setups
Retracement or Pause in Down Swing / Down Trend
UNP quickly hit target off the broken triangle; its short alert 56.02 – if triggered, look for a bounce up intraday under which to position a sell.
Test of Bottom
CSCO sell short alert at 20.74, look for a bounce up intraday under which to position a sell.
Special Situations
DELL is not suggested as a trade today, but its in such a big sideways range that we must put this on our perma-watch list and look for an opportunity to act. When a stock trades in congestion for a long period of time, the eventual move out often is significant.
Manufacturing, Construction Spending lead off this week’s relatively full economic calendar. There are no reports from Canada today, as markets are closed for a civic holiday across the country,
July Manufacturing ISM Report On Business – Purchasing Managers Index: 62.0%
The ISM Prices Index continues to moderate, but the prices manufacturers pay are still an issue. ISM’s Customers’ Inventories Index indicates that customer inventories are too low at this time. The Backlog of Orders Index indicates that order backlogs increased in July. The New Export Orders and Import Indexes continued to grow in July.
Comments from respondents indicate that many consider their business to be “strong” with a number indicating significant year-over-year improvement. Others continue to indicate only minor improvement. Energy prices remain a major concern for purchasers, as prices are at or near record highs. It appears that the steel supply situation has improved as there are fewer mentions of shortages.
US Home Affordability Fell in 2nd Qtr-NAR
The National Association of Realtors said its housing affordability index fell to 133.6 in the second quarter of 2004, down from 144.1 in the first quarter and also lower than 143.8 in the second quarter of 2003.
The NAR housing affordability index measures the ability of a family earning the median income to buy a home at the median price.
When the index measures 100, a family earning the median income—the level at which there are an equal number of families both above and below—has exactly the amount needed to buy a single-family home at the median price, using conventional financing and a 20 percent down payment.
A higher index means a median-income family has more money than would be needed for a median-priced home. In the second quarter, the median family income was 183,800, NAR said.
A typical family could afford a home costing 54,517 and the median home price was $170,800.
US June Construction Spending Falls
WASHINGTON (Reuters) – Outlays for U.S. construction fell unexpectedly in June as spending on housing dropped for the first time in 16 months, a government report showed on Monday.
The Commerce Department said June outlays for construction decreased 0.3 percent to a seasonally adjusted $985.16 billion annual rate. Wall Street analysts had expected June spending to be unchanged.
May construction spending was also revised lower to a 0.1 percent gain, from a previously reported 0.3 percent advance.
Today's transcript.
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Today's transcript.
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Monday August 2 closing data.
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