Thursday, January 13, 2005
Issue Contents:
| 09:02 | The Day Ahead Economic releases and news. |
| 09:05 | Swing Trade Setups Featured charts for Thursday January 13th. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 20:31 | Swing Scanner Results Thursday January 13th closing data. |
| 20:33 | Market Statistics For Thursday January 13, 2005 |
Good morning – its Thursday January 13th and all the economic news of note today has been released, including currency moving news from overseas.
Declining manufacturing output and a weak holiday retail season in the UK are among reasons cited as one reason that the Bank of England kept lending rates there steady at 4.5%1, perhaps reaching an intermediate term peak. Also announced this morning, the European Central Bank held its key lending steady at 2%2, as its been for over a year and a half.
December retail sales came in slightly ahead of expectations3, import prices directly affected by petroleum declined sharply last month, which is no surprise given the steep sell off in crude then, but the cost of non-petroleum imports continued to rise another 0.5% after rising a revised 0.9% in November, closing out 2004 with a 3.8% gain in import costs, the largest gain in non-oil import prices since 19944.
Wrapping up a morning of mixed messages, initial jobless claims came in the second surprising increase in a row, rising to 367,0005.
“My biggest concern for the labor market is that corporations continue to be risk averse,’’ said Nariman Behravesh, chief economist at Global Insight Inc. in New York. Companies are still cautious about ``hiring additional workers and continue to try to squeeze productivity growth out of their existing workforce.5”
US Market Calendar
- 7:00 am: BOE Announcement1
- 7:45 am: ECB Announcement2
- 8:30 am: Retail Sales – Dec.3
- 8:30 am: Import and Export Trade Price Indices – Dec.4
- 8:30 am: Initial Jobless Claims – Jan. 8th week5
- 10-year TIPS auction
Canadian Market Calendar
- No releases
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 Bank of England holds interest rates
2 ECB holds rates at 2 per cent as euro strengthens
3 Dollar Stays Higher Against Euro After Retail Sales Increase
4 Import Prices Drop Sharply, Petrol Sags: But non-oil prices register strongest gain since mid 1990’s
5 U.S. Initial Jobless Claims Rose 10,000 Last Week to 367,000
Featured setups from Wednesday January 12, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
Difficult to find stocks still in up trends, and there are few stocks re-testing lows so tests of bottom are few and far between.
Entry and Exit Strategies
Entries: Each chart posted includes the TrendVue High/Low indicator in the chart legend, showing the high and low of the prior day. We refer to these values frequently for setting stops, alerts and initial protective stops.
Our trade entry methodology stresses that price should prove to us where it wants to go, consequently all of our setups involve placing entry stop/stop limit orders where a trade will be initiated for us automatically, if price is able to move in the expected direction.
When price does not comply, we evaluate the setup to determine if it is either a) an expanding pattern or b) an invalidated setup. For example, a 3 bar bull flag setup that does not trigger can be followed up the next day with a buy stop above the new 4th bar, provided that price doesn’t invalidate the bull flag pattern.
Exits: Once in a trade, we must place an initial protective stop as soon as possible. Consider this stop your crash stop – an emergency measure which you hope will never get used, but is there for your protection in case you lose all connectivity to your broker or some other unforseen event takes place. The initial protective stop, unless noted otherwise, is always at the opposite end of the bar used to trigger a trade.
For example, if our trade setup for a long trade is based upon a break of yesterday’s high, we will use yesterday’s low as our initial protective stop.
The next task for us, once in a trade, is to find the earliest reasonable opportunity to move stops up. Trade and risk management is a highly personal topic; we can only relate to what works for us. In general, once a trade is substantially profitable, or has started to trend on a 10 or 20 minute chart intraday, I move to a break-even stop immediately.
Once the trade has surivied its first day, we are already on watch to look for our profit exit. Here your personal objectives come into play. A longer-term investor using swing trading techniques to improve entry and exit will tend to give a trade some room. Our recommendation is to use the break even stop until the stock starts to trend (higher highs, higher lows or the reverse in a down trend).
Short term swing traders will tend to use price extension estimates and pre-place exit orders at these estimates. This discussion goes beyond the scope of our daily swing trade service, however we are happy to entertain questions in TrendVue Trader Talk on any subject.
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
IWM Russel 2000 ETF, probably offers one of the safer entry possibilities of the major index ETFs given the outside bars in symbols DIA and QQQQ.
Retracement or Pause in Up Swing / Up Trend
MWD – hold only of price closes strongly, be wary of a failed bull flag (minor wiggle up and weak close).
BCE:C (TSX) – first pause after a “breakout” from the ascending triangle below.
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.
Retracement or Pause in Down Swing / Down Trend
SMH – semiconductor sector ETF – should the market sell off, a candidate here.
LTXX, follow any minor bounce up for 1–2 more days.
LIM:C (TSX) – resource industry, stealth bear flag.
Today's transcript.
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Thursday January 13th closing data.
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Statistics for Thursday January 13, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 366 |
|---|---|
| Symbols in Down Swings | 400 |
| Up/Down Swing Ratio | 0.91 : 1 |
| Advancers | 31% |
| Decliners | 67% |
| Unchanged | 2% |
| Up Bars | 44% |
| Down Bars | 31% |
| Inside Bars | 14% |
| Outside Bars | 7% |
| Close > 20EMA | 31% |
| Close > 50SMA | 37% |
| Close > 200SMA | 62% |
| 20EMA > 50SMA > 200SMA (trend up) | 31% |
| 20EMA < 50SMA < 200SMA (trend down) | 20% |