Monday, September 20, 2004
Issue Contents:
| 09:10 | The Day Ahead Economic releases and news. |
| 09:51 | Swing Trade Setups Featured charts from Friday's scan. |
| 11:55 | The To-Do List Checking a few items off... |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 17:49 | Stock Scanner Results Monday September 20th - TrendVue Swing Ratio 1.22 : 1 |
Good morning for Monday September 20th, the 264th day of 2004 as traders hunker down in anticipation of tomorrow’s Federal Open Market Committee meeting and decision on interest rates (2:15 pm ET Tuesday).
There are approximately another two weeks before company earnings results reports start to roll out earnest—to make matters interesting in the meantime, earnings warnings and preannouncements will keep traders off balance. Latest to warn range from Colgate and Unilever to Nortel and PMC Sierra.
“All truths are easy to understand once they are discovered; the point is to discover them.”—Galileo
Also of note this morning, crude oil made further gains in overnight trade, currently at 46.17 per barrel—having pushed out of a consolidation zone within the larger range, there is currently an increased chance of a retest of recent highs, a development many traders would have thought entirely unlikely even a week ago. We’ll first watch for pattern failure in the immediate future.
US Market Calendar
- 11:00 am: 4-Week Bill Announcement
- 1:00 pm: 3 and 6 Month Bill Auction
- 1:00 pm am: Treasury Secretary John Snow to address the National Press Club, in Washington .
Canadian Market Calendar
- 8:30 am: Wholesale Trade – July
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.
Featured setups from Friday September 17 closing data symbol scan
Jump to:Short Setups | Special Situations
Notes for the Day
Generally speaking, markets meander just before the FOMC makes its pronouncements on interest rate policy, so we should not expect new breakouts to the upside today in the broad market indexes. With earnings warnings starting to roll in for both low/no tech (Unilever, Colgate) and high tech (Nortel, PMC Sierra and others), it would seem that selling pressure—which has been largely absent for a number of weeks now, is going to be on the rise.
For the long-only investor/trader then, on balance the correct action may be to take little or no action. Longer term investors have also been long through the entire rally since we made the “this is as good as it gets” entry call mid-August; taking profits is one action that needs to be considered.
For the rest of us, lets use intraday entry techniques wherever possible on new longs to avoid being pulled into a stock destined to reverse. In general this means we should wait for the buy trigger to be hit and then identify a retracement above which to place a buy stop.
For now, a few short setups. In TrendVue Trader Talk we shall attempt to find some long ideas for the day or for this week. In reviewing scan data over the weekend I did note that there were a number of stocks poised for a move up which may simply need to tread water for a few days while the market waits out the FOMC results. At least we don’t need to wait long.
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 Top – Reversal
CFC – dark cloud cover at a test of recent swing high. Sell short alert at 37.49 – maintain caution since CFC is trading at multi-year highs therefore has been displaying strength. Yet, every top starts somewhere and this is a valid setup.
Retracement or Pause in Down Swing / Down Trend
HDI – a three inside up pattern provides a location to go long here with a buy stop above Friday’s inside bar/harami, however aggressive traders may wish to put this on watch for further breakdown. Sell alert at 59.99, hold only if price easily clears Thursday’s low and closes below that level.
Test of Bottom – Continuation
PEP, Coke warned, perhaps PEP also vulnerable? Potential failed test of bottom ahead if Friday’s up bar is broken to the downside. Sell short alert at 49.05.
Special Situations
JDSU – given the pressure tech may be under, timing for a long entry in JDSU may not work in favour of this developing flag at a test of a prior swing high. Yet the setup is present, so if we are interested in pursuing JDSU the buy stop is 3.56 just above Friday’s inside bar, protective stop if filled 3.45. Suggested for intraday-capable traders primarily, who should wait for the trigger to be hit and then identify a retracement above which to place a buy stop.
Over the next 10 days TrendVue will be ticking a few important things off the to-do list including:
- Start daily coverage of Canadian equity markets, including Exchange Traded Funds, to compliment our existing US equities and futures focus. We’ll cover all important dual-listed stocks and any which meet our average volume criteria.
- Make available, for free, a number of our must-have tools for the Tradestation 8 platform and make an attempt to back-port these all to Tradestation 2000i as well.
- Make available, for free, a number of our must-have tools for TickQuest’s NeoTicker charting platform.
We also have a couple of interesting longer term projects which we are nearing completion on – stay tuned!
Today's transcript.
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Monday September 20th - TrendVue Swing Ratio 1.22 : 1
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