Tuesday, February 8, 2005
Issue Contents:
| 08:48 | The Day Ahead Economic releases and news. |
| 08:48 | Swing Scanner Results Monday February 7th closing data. |
| 08:50 | Market Statistics Fr Monday February 7, 2005 |
| 09:16 | Quick Take: Market Direction And a reminder on Stops. |
| 09:27 | Swing Trade Setups Featured charts for Tuesday Feb 8th. |
| 10:14 | Quick Take: Currencies And Gold. |
| 12:16 | All Targets Hit |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 21:38 | Swing Scanner Results Tuesday February 8th closing data. |
| 21:39 | Market Statistics For Tuesday February 8, 2005 |
Good morning – its Tuesday February 8th and the 39th day of 2005. With another light day on the economic calendar one wonders if there is sufficient catalyst to break price out of the pause markets entered into yesterday.
On the currency front, the on-going or pending breakouts and retests have all transpired—GBPUSD bear flag hit its target in a single day. The currency market is now facing the prospect of an up-trending US dollar and still the commentators are talking about a falling dollar. At this point its rising until proven otherwise, and it doesn’t have very long to change this tack if indeed it can.
US Market Calendar
- 7:45 am: ICSC-UBS Store Sales
- 8:55 am: Redbook – Feb. 5th week
- 10:00 am: House Ways and Means Committee hears testimony from Treasury Secretary John Snow the administration’s budget proposal for fiscal year 2006.
- 3-year note auction
Canadian Market Calendar
- 8:15 am: Housing Starts – 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.
Monday February 7th closing data.
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Statistics for Monday February 7, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 537 |
|---|---|
| Symbols in Down Swings | 228 |
| Up/Down Swing Ratio | 2.35 : 1 |
| Up Bars | 53% |
| Down Bars | 20% |
| Inside Bars | 14% |
| Outside Bars | 7% |
| Close > 20EMA | 40% |
| Close > 50SMA | 52% |
| Close > 200SMA | 65% |
| 20EMA > 50SMA > 200SMA (trend up) | 42% |
| 20EMA < 50SMA < 200SMA (trend down) | 19% |
A pause yesterday wasn’t a big surprise, although perhaps a little disappointing to some traders who might have been banking on an aggressive gap up and direct continuation of the move higher.
As it is we’ve managed to catch this latest leg at virtually the swing low which should mean that any minor retracement stops well short of triggering any break even exit stops we’ve placed. Yesterday we discussed profit taking stops briefly – we should be in the habit of paying ourselves but at the same time we want to keep long exposure here in case price continues directly higher beyond the pause, or in the event that a minor pull back meets buyer support.
We can see that NQ / Nasdaq and YM / Dow in particular have run into resistance; and both the Dow and ES / S&P 500 proxies have travelled far in a short period of time – so even a little pull back here before an attempt at resumption would not be a big surprize. Note also that ES has actually plowed through former resistance so any retracement here will be testing to see if that resistance now offers new support – such a development will not be lost on traders and will become catalyst enough to spark a new leg to this rally.
Time to Plan Your Personal Profit Taking Stop Strategy
Price may not pull back much here, but the odds of it increase the longer price stalls. Decide how you are going to handle this pull back now, before it happens, so that your decision making process happens without the emotional burden of falling prices.
Featured setups from Monday February 7, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
Yesterday markets remained fully in pause mode – for much of the day it felt like the bias remained positive, however as the day wore on buying support appeared to diminish. See also today’s note on Market Direction.
More setups will be posted once we get a feel for the day.
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.
Retracement or Pause in Up Swing / Up Trend
SBC may have a “failed bear flag” setup here, now forming a bull flag on the daily. Trigger is yesterday’s high plus a tick or two – hold only if price clears the two day high and closes above yesterday’s high by a comfortable margin.
CMCSA – following the piercing line pattern of last week, a pause now presents a chance to try a long here.
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
TYC – bear flag forming, follow up for another day or two max if it does not trigger today.
Breakouts and retests all over the place.
EURUSD – Breaks down through range. Unless it can regain the range and push up, it has reconfirmed its down trend. +1 USD.
GBPUSD – comes in for a retest of range low. Neither +/- for USD.
USDCAD – breaks higher, nicely above our suggested entry of a couple weeks ago. Provided it remains above this break out area, +1 USD.
USDJPY – breaks out of declining consolidation zone, heading in for retest of December highs. +1 USD.
Predictable Effect on Gold
Both the USD and Gold, moving in opposite directions as they do, are quickly leaving the point of no return. At the moment, Gold shorts (or those flat this market) are feeling good about their decisions. Perhaps when the TV commentators finally stop talking about the falling US dollar, it will stop rising… but in the meantime, no long-side trade exists in Gold.
Naturally when all the primary targets have been hit, and hit quickly, the logical question is “what next”? More often than not, what’s next is a pause or pull back.
From this morning’s transcript:
11:32:09 Mike: One last comment—YM is running up right here into the next big target. Its done everything we could have wanted over the past week; now, if it manages to push right back into the range above and actually hold there, it will have far exceeded expectations but also changed the game somewhat from “bounce in declining market” to “potential resumption of the longer term up trend. Given all that is at stake you can expect fireworks of some sort today or in the next few days.
If we were to draw rising trend lines underneath the lows of price we’d be reminded just how fast price has bounced from January’s lows, with very little in the way of retracement along the way when measured on a large time frame intraday chart. If a pull back is to start, this seems like an opportune time as any given the overhead resistance on YM/Dow and NQ/Nasdaq 100.
Unless the morning’s lows are broken I am not going to get aggressive on the short side; and until that time I’m also likely to keep holding open positions established early Friday morning.
Today's transcript.
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Tuesday February 8th closing data.
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Statistics for Tuesday February 8, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 481 |
|---|---|
| Symbols in Down Swings | 284 |
| Up/Down Swing Ratio | 1.69 : 1 |
| Advancers | 50% |
| Decliners | 48% |
| Unchanged | 2% |
| Up Bars | 33% |
| Down Bars | 38% |
| Inside Bars | 14% |
| Outside Bars | 8% |
| Close > 20EMA | 50% |
| Close > 50SMA | 51% |
| Close > 200SMA | 65% |
| 20EMA > 50SMA > 200SMA (trend up) | 43% |
| 20EMA < 50SMA < 200SMA (trend down) | 19% |