Thursday, February 3, 2005
Issue Contents:
| 08:52 | The Day Ahead Economic releases and news. |
| 09:11 | Currency Standstill |
| 09:34 | Market Internals and Direction |
| 12:23 | Intraday Update |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 18:09 | Swing Scanner Results Thursday February 3rd closing data. |
| 18:10 | Market Statistics For Thursday February 3 |
Good morning – its Thursday February 3rd and the 34th day of 2005.
Today and tomorrow the G7 finance ministers meet in London – heads up on the currency front, perhaps the consolidation in various currencies which has been forming for days will finally break down based on political rather than strictly fiscal stimulus. After all, yesterday the FOMC raised US rates, as expected1, and today the ECB kept European key rates steady, again, and as expected2.
US Market Calendar
- 6:00 am: Monster Employment Index
- 7:45 am: European Central Bank policy announcement2
- 8:30 am: Productivity – Q4 P
- 8:30 am: Initial Claims – Jan. 29th week3
- 10:00 am: Factory Orders – Dec.
- 10:00 am: Non-mfg ISM Index – Jan.
- 11:00 am: Chain-Store Sales – Jan.
Canadian Market Calendar
- 8:15 am: Foreign Reserves – Jan.
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.
2 ECB holds interest rates at 2 per cent
3 US Initial Jobless Claims Fell 9,000 Last Week to 316,000
Eventually this log jam will break down, and with the G7 finance ministers meeting all eyes are focused on London for the next two days.
Classic consolidation patterns abound:
EURUSD well defined triangle.
USDCAD has continued to hold above the breakout we documented last week.
USDJPY in the wee hours had just pushed through the upper bounds of the upper trendline.
GBPUSD remains just inside its consolidation pattern
Looking at these charts, if left to its own devices the USD is on the mend at present, strengthening not weakening against other currencies. Some, like the USDCAD pair, have already given rise to a useful trade entry, many of the others are just testing consolidation boundaries and are bound to make an attempt to break out during or following the G7 meeting. As failure so often follows – even if for a bar or two – price breaking through consolidation, we have to pay particular attention here.
Of course, Gold will not be the place to be IF these breakouts in favour of the USD do continue and hold.
Market Internals and Direction
We’ve noted the improving market internals during intraday trade for a number of days now. So has the rest of the market no doubt – question is, are there more buyers lurking out there ready to support a further advance or is it time for a pause?
COMPX – Nasdaq has been underperforming, but performing. Its likely that technology will be harder hit by sellers given its relative performance to the less tech-heavy NYSE:
NYA – The NYSE has been on a tear, now having retraced more than 50% of the recent decline. The 50% level is where we’d expect any decline to first head to, prior resistance (marked near the 7125 level) will be next.
Targets Hit
Looking at the big-picture intraday chart we can see price butting up against overhead resistance here.
Trading Plan
When price hits a significant target we can expect it to pause, or potentially reverse.
What one does here is a matter of personal perspective and trading time horizon. Short term players will be locking in at least some profits here while the longer term swing trader is more likely to hold with break even stops on new positions.
On the broad S&P 500 index price has a significant distance it can retrace yet still remain in a new uptrend in larger time frames – so there’s little choice here but to decide which camp one is in and act accordingly.
In the meantime, any healthy retracement will mark the next significant opportunity to position new longs, assuming the new strength in the market internals continues to hold up.
Pre-open comments holding true so far as major markets continue to pause today after having run quickly up to resistance.
Nasdaq is without a doubt the weakest market, having actually started a new downtrend in shorter time frames.
NQ – Nasdaq 100 Futures: despite the positive outlook on other markets, we have to note that Nasdaq is starting to retrace to the point of no return at which, like when an elastic stretched too far suddenly gives way, price becomes more likely than not to retest the recent lows. Something to keep in mind if a sustainable bounce does not show up soon (by Friday).
The Dow and S&P 500 markets are stuck firmly in chop in a very narrow range, making it impossible to be inspired regardless of outlook.
YM – Dow 30 Futures, 5M chart
When we see swings overlap like this in a tightening range its time to sit back and wait out the chop – let other people chew up their trading captial trying to guess the direction.
Today's transcript.
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Thursday February 3rd closing data.
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Statistics for Thursday February 3, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 438 |
|---|---|
| Symbols in Down Swings | 327 |
| Up/Down Swing Ratio | 1.33 : 1 |
| Advancers | 34% |
| Decliners | 64% |
| Unchanged | 2% |
| Up Bars | 25% |
| Down Bars | 49% |
| Inside Bars | 12% |
| Outside Bars | 8% |
| Close > 20EMA | 35% |
| Close > 50SMA | 46% |
| Close > 200SMA | 61% |
| 20EMA > 50SMA > 200SMA (trend up) | 40% |
| 20EMA < 50SMA < 200SMA (trend down) | 20% |