Wednesday, January 12, 2005
Issue Contents:
| 09:04 | Swing Scanner Results Tuesday January 11th closing data. |
| 09:05 | Market Statistics For Tuesday January 11th. |
| 09:22 | The Day Ahead Economic releases and news. |
| 09:51 | Swing Trade Setups Dealing with chop. |
| 11:26 | Observation Talking heads only now getting worried. |
| 13:27 | Basic Skills: Drawing Trendlines There is only one correct approach to drawing trendlines. Here's how. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 20:12 | Crude Realities Weekly inventory report. |
| 21:07 | Swing Scanner Results Wednesday January 12 closing data. |
| 21:08 | Market Statistics For Wednesday January 12 |
Tuesday January 11th closing data.
Click on the title above to expand this document.
Statistics for Tuesday January 11, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 233 |
|---|---|
| Symbols in Down Swings | 533 |
| Up/Down Swing Ratio | 0.43 : 1 |
| Advancers | 24% |
| Decliners | 75% |
| Unchanged | 1% |
| Up Bars | 15% |
| Down Bars | 63% |
| Inside Bars | 14% |
| Outside Bars | 4% |
| Close > 20EMA | 24% |
| Close > 50SMA | 39% |
| Close > 200SMA | 62% |
| 20EMA > 50SMA > 200SMA (trend up) | 33% |
| 20EMA < 50SMA < 200SMA (trend down) | 19% |
Good morning – its Wednesday January 12th and until Friday the economic news calendar is generally light. From this morning:
“Trade gap soars to record $60.3 billion: U.S. exports decline 2.3%; imported oil bill jumps 17.7%”:
Exports fell to a five-month low of 155.8 billion as the bill for imported oil rose by 17.7 percent—more than 14.2 billion. (More | Source Data)Website: I’ve noted we are having a problem with certain web search engines causing our application to generate errors that show up to clients as “Session Expired” – I’ll have a look at this.
US Market Calendar
* 8:30 am: Goods & Services Trade Balance – Nov.
* 10:30 am: EIA Weekly Petroleum Status Report
* 2:00 pm: Treasury Budget – Dec.
* 5-year note auctionCanadian Market Calendar
* 7:00 am: MBA Purchase Applications
* 8:30 am: Merchandise Trade Balance – Nov.
* 8:30 am: New Housing Price Index – Nov.
* 30-year bond auctionEarnings 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 Tuesday January 11, 2005 closing data symbol scan
Jump to: Long Setups
Notes for the Day
Is the little wiggle down “the end” of the latest swing? Its going to take two full days of trade to determine this, unless crude oil inventories or some other catalyst manage to give the market a catalyst today to clear the recent range highs and hold prices there.
Price has been moving generally sideways now for a number of days. Its not uncommon for the market to grind along at a major swing low for 3 – 7 days, particullarly after a steep, fast, decline.
Short swing trades triggered yesterday, however markets did not hold weak enough to justify holding, so anything started should have have been closed at break even stops or better. We may get a second crack at putting these back on today however.
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.
One thing we have to remember is that price did push to minor new lows, and reversed, however lukewarm that reversal was, sellers did not fully control yesterday. Sometimes the mere observation that price is no longer going down is enough to bring buyers back in.
IF yesterday’s move can be followed up by price holding above the range lows, and if IF price can break above yesterday’s high, THEN we can stalk a long side trade above the first minor retracement AFTER price moves above yesterday’s high.
I prefer gaining market exposure using ETF’s since I can move one or two larger positions in or out rapidly, rather than numerous smaller positions.
DIA
QQQQ
On the short side, we can use the ETFs mentioned in yesterday’s list, adjusting our sell short alert to yesterday’s low and keeping a close eye out for price failure (or success) on any retest of those levels.
Noted just now on CNBC, a comment that if price declined much further, technicians would be screaming about the deteriorating market.
When the talking heads finally clue in that something is wrong with the market, quite often its time to be considering taking profits on shorts, and looking for long setups just in case.
If you are holding short positions, it is certainly at least time to look for nearby targets (such as today’s retest of the recent lows) and consider taking at least some profit off the table.
Hopefully “technicians” have been talking about market deterioration long before now, long before the recent sell off even started.
For quite some time we’ve been warning of weakening market internals:
12:17:31 Mike: those of you that have been around a while may have noted that I am holding positions – especially short futures positions – longer; that’s as a result of the observations we’ve been noting for several weeks. Fewer new highs, dramatic new lows in VIX, etc – all indications of a potential market top of some significance.
Fewer new highs, dramatic new lows in VIX, etc – all indications of a potential market top of some significance.
12:25:46 Mike: With ES in particular, we can make the argument that it has already a new down trend in the big picture, as price is trading below the uppermost range. I think we could redraw YM as well and come up with a similar view.
December 28, 2004 – Market Internals
The lack of expansion of new highs shows that fewer and fewer stocks are leading the charge – this is never a healthy sign for a continued advance. For now, chalk this up as a cautionary data point.
December 20, 2004 – Market Direction: Dow, SPX, NDX
Over the past several days we’ve repeatedly seen signs that the market may be in the process of topping out, from sentiment indicators making new 9 year lows (extreme bullishness) to the number of new highs declining even as the broader indexes made new highs.
Basic Skills: Drawing Trendlines
by Mike Watkins
There is, in my opinion, only one way to draw trendlines – and that is to be consistent and methodical. Lacking clear and predictable rules, many analysts and traders draw trendlines according to the whim of the day, perhaps purposefully or unconsciously fitting conclusions they may have formed before actually performing the analysis.
Being able to reliably draw trendlines is a skill of critical importance to us, where “us” is all classes of market participants, from the intraday scalper to the patient long term investor.
Fortunately, drawing trendlines does not require esoteric knowledge or software, and is a skill that is easy to develop and master once we have the basic rules fixed firmly in our minds.
The Rules
There is little new under the trading sun, and here again we stand on the shoulders of giants. Victor “Trader Vic” Sperandeo, tells it best, and for two pieces of information he shares, the cost of his book “Methods of a Wall Street Master” is well worth the price of admission.
- Pick a Time Frame.
- For the market or stock of interest, pick the important time based on your needs, and then pick the next time frame up.
- An intraday scalper may primarily use a 5 or 20 minute chart and the next time frame up will be the 15 or 60 / 78 minute chart. Swing traders may use 78 minute and daily charts. Longer term investors will frequently use daily and weekly charts.
- Once you have honed your trendline drawing skills, be sure to explore price in multiple time frames—you will be surprised at the additional perspective this gives.
- In Up Trends
- Draw a line starting at the lowest low, up to the highest low point occurring before the highest high, taking care to ensure that the line does not pass through price in between the two low points. Examples:
SUNW
CVX
UTSI
- Draw a line starting at the lowest low, up to the highest low point occurring before the highest high, taking care to ensure that the line does not pass through price in between the two low points. Examples:
- In Down Trends
- Draw a line starting at the highest high, down to the lowest high occurring before the lowest low. Examples:
UTSI
SWIR
- Draw a line starting at the highest high, down to the lowest high occurring before the lowest low. Examples:
Sneak Preview – Tieing it All Together
Once we can reliably draw trendlines, we have made a significant step forward in developing our ability to consistently identify trends, important tests, trade setups, and changes of trends. Examples:
SUNW, a “2B” Test of top, and trend reversal (up to down)
UTSI, a “2B” Test of top, and trend reversal in 2003. Stock currently is trading at 16.40, Jan 12 2005.
Homework
Practice drawing trendlines on intraday, daily and weekly charts, until you are confident that you can easily apply the rules to any chart.
As you work with your charts you will discover patterns and tests appearing where perhaps they were not obvious before. In subsequent articles we will build upon this basic skill and discover how trendlines are used in identifying trends, support and resistance areas, trade setups, and most importantly, trend reversals.
Today's transcript.
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Summary of Weekly Petroleum Data for the Week Ending January 7, 2005 (Last week’s summary)
U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ending January 7, down 186,000 barrels per day from the previous week’s average. Refineries operated at 94.0 percent of their operable capacity last week. Distillate fuel production tied the weekly record set the previous week, averaging nearly 4.3 million barrels per day. Gasoline production, however, fell significantly last week, averaging over 8.5 million barrels per day last week.
U.S. crude oil imports averaged nearly 10.0 million barrels per day last week, up 198,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged over 10.0 million barrels per day, which is 432,000 barrels per day more than averaged over the comparable four weeks last year. Distillate fuel imports averaged 270,000 barrels per day last week, while the level of total motor gasoline imports (including both finished gasoline and gasoline blending components) dropped significantly, averaging 589,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped by 3.0 million barrels from the previous week. At 288.8 million barrels, U.S. crude oil inventories are near the middle of the average range for this time of year. Distillate fuel inventories increased by 1.9 million barrels last week, and are in the lower half of the average range for this time of year. An increase in low-sulfur (diesel fuel) more than compensated for a slight decline in high-sulfur (heating oil) distillate fuel. Total motor gasoline inventories increased by 1.0 million barrels last week, and remain above the top of the average range. Total commercial petroleum inventories declined by 5.6 million barrels last week, and are near the middle of the average range.
Total product supplied over the last four-week period has averaged 20.9 million barrels per day, or 1.3 percent more than averaged over the same period last year. Distillate fuel demand over the last four weeks has averaged 4.3 million barrels per day, or 4.5 percent above the same period last year. Motor gasoline demand is up 1.8 percent, while kerosene-type jet fuel demand growth is up 2.0 percent over the last four weeks compared to the same four-week period last year.
Source: EIA Weekly Petroleum Status Report
Crude took a wild ride down and then back up by day’s end. Despite all the predictions coming out daily, so far we’ve seen nothing to suggest that price won’t find support at levels greater than 40, perhaps as high as 45 dollars a barrel.
Wednesday January 12 closing data.
Click on the title above to expand this document.
Statistics for Wednesday January 12, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 258 |
|---|---|
| Symbols in Down Swings | 508 |
| Up/Down Swing Ratio | 0.50 : 1 |
| Advancers | 62% |
| Decliners | 36% |
| Unchanged | 2% |
| Up Bars | 29% |
| Down Bars | 45% |
| Inside Bars | 10% |
| Outside Bars | 10% |
| Close > 20EMA | 62% |
| Close > 50SMA | 41% |
| Close > 200SMA | 64% |
| 20EMA > 50SMA > 200SMA (trend up) | 29% |
| 20EMA < 50SMA < 200SMA (trend down) | 21% |