Wednesday, November 9, 2005
Issue Contents:
| 09:45 | The Day Ahead Economic releases and news |
| 09:54 | Futures Today's Road Map |
| 10:08 | Swing Trade Setups Featured charts for Wednesday November 9 |
| 14:27 | Sleepy But constructive |
Good morning, today is Wednesday November 9th, the 313th day of 2005, a day with little in the way of economic news to help steer markets. Tomorrow a big dose of statistics will be injected into the fray, just ahead of what promises to be a quiet trading session on Friday November 11th, Veterans Day in the US, Remembrance Day in Canada.
At 10:00 am, Wholesale Trade numbers for last month will be released. At 10:30 the weekly EIA oil inventory status report comes out, and its clear that crude could certainly use a bullish surprise – there’s very little support nearby:
As oil supply has been ample of late, if there are surprises to be had it will have to come in on the consumption side – heating oil demand eventually will put strain on the system, but perhaps the real surprise lurking out there is pick-up in gasoline demand – recent weeks have shown a bottoming of demand destruction.
Market Statistics for Tuesday November 8, 2005
| Symbols in Up Swings | 323 |
|---|---|
| Symbols in Down Swings | 350 |
| Up/Down Swing Ratio | 0.92 : 1 |
| Up Bars | 24% |
| Down Bars | 49% |
| Inside Bars | 14% |
| Outside Bars | 8% |
| Close > 20EMA | 34% |
| Close > 50SMA | 55% |
| Close > 200SMA | 58% |
| 20EMA > 50SMA > 200SMA (trend up) | 34% |
| 20EMA < 50SMA < 200SMA (trend down) | 21% |
Aside from one good trade in the morning yesterday, price chopped about just under resistance identified yesterday near 10575, and again this morning that is the price to beat:
Plan of action:
- As noted on the chart above, aggressive traders will hunt longs on the first retracement after price pushes back into the triangle; aggressive sellers will be selling that retracement.
- Less aggressive traders hunting long-side setups will want to wait until price shows it can hold 10475; myself I’ll be looking for the first tradable setup – a retracement of some sort or test of the prior swing highs above 10475 – to establish a long.
- If markets continue to weaken today we certainly should be selling any minor bounce off a retest of yesterday’s lows, and, if a down-trend forms under yesterdays lows, selling at least the first bounce or two. The longer term direction of the market is still pointing up, but as price moves farther away from the uppermost trading range (above 10475), we’ll want to be open to shorting the market but only if speed picks up.
After a late start today, now scanning through the list it appears that many of the long-side trades I’d normally have posted have already been invalidated by a move below yesterday’s low. That might mean more downside to come; or it may simply mean this morning’s lows are the bottom of this particular retracement the broader markets have been undergoing now for a couple of days.
In either case, I’ll be restricting my shopping for new longs to charts such as these which have not broken down on the daily time frame as yet:
UNP – railway
APA – some energy producers have been holding up rather well
ECA – while some have not; the opportunity here is a three inside up setup; hold only on a strong close.
CNO – health insurance; may be able to turn old resistance into new support today, following what appears to be selling exhaustion in October.
CC – retail – the gadget kind, which is likely one of the more active sectors of retail for Christmas.
Provided 10475 ends up holding as new support (or regained support as the case may be), the rally, which pundits appear to have not realized is underway already, has a good chance at continuing if not even accelerating.
From the morning plan:
As noted on the chart above, aggressive traders will hunt longs on the first retracement after price pushes back into the triangle; aggressive sellers will be selling that retracement.
I apologize – for some reason this morning I had 10*4*75 stuck in my brain but the number was indeed 10*5*75.
True to form , the triangle breakdown reversed and then gave an opportunity to stalk longs on a retracement. Note also it had been fighting to hold the 50% fib retracement there, and held.
Following the big surge up there hasn’t been much opportunity to re-establish new longs; given the decline off the HOD has picked up a little speed, chances are that price will retest 10575 in the not-distant future and that will be where the next opportunity shows up.