Friday, March 11, 2005
Issue Contents:
| 09:00 | The Day Ahead Economic releases and news |
| 09:26 | Swing Trade Setups Featured charts for March 11th |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning – its Friday March 11th, the 70th day of 2005. Before the regular open stock index futures are trading slightly positive over yesterday’s close.
Last night Fed Chairman Alan Greenspan said in a speech that record trade gaps did cause him to be overly concerned about record trade gaps:
“The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit”, Greenspan said, adding: “Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances.”1
We can be glad Mr. Greenspan cleared that up, on the eve of the Trade Report which this morning shows the US international trade deficit gained more than expectations, hitting $58.3 billion, the second highest level on record2.
“We may be approaching a point, if we aren’t already there, at which exporters to the United States, should the dollar decline further, would no longer choose to absorb a further reduction in profit margins.”, Greenspan said.
``We’ve seen a sharp rise in the oil price, a decline in the dollar and inflationary pressures building,’’ said Oliver Mangan, chief bond economist in Dublin at AIB Capital Markets, Ireland’s second-biggest bank. ``Put it all together, and there’s been a shift to a more bearish view on the Treasuries. The Fed won’t pause raising rates.’’
Forex Reaction
Rather predictably, the US Dollar has weakened instantly on the news:
EURUSD
USDJPY
EURUSD – daily, steady on a heading to its all time high.
USDJPY, bear flag triggering under a 1 month consolidation zone. First target all but hit, the year low is next.
Markets typically overreact to big headline numbers, frequently reversing much of the initial reaction if the news was expected, but the longer term trend remains down for the dollar until proven otherwise.
Gold may be a benefactor, but this has not shown up in pre-market trade with Gold trading at or just above yesterday’s closing high of 446.
US Market Calendar
- 8:30 am: Goods & Services Trade Balance – Jan.2
Canadian Market Calendar
- 7:00 am: Employment Report – Feb.
- 8:30 am: Merchandise Trade Balance – Jan.3
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 Remarks by Chairman Alan Greenspan, March 10 2005
2 U.S. Treasury Notes Remain Lower After Trade Deficit Widens
Jump to: Long Setups
Notes for the Day
- Prices have rebounded to the point where continuation of the rally is possible.
- The flip side of this is if markets are unwilling to support prices, we’ll need to switch gears quickly and assume the current trend is now flipping from up to down.
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.
Reminder: A number of trade setups from yesterday’s list remain valid (MSFT for example) – be sure to review.
Test of Bottom – Reversal
Retracement or Pause in Up Swing / Up Trend
NEM
Test of Top – Continuation
ABX – long holders also need to consider taking some profit off the table if yesterday’s low is reconfirmed with another low today. Check FCX chart (downgraded yesterday) for an example of how quick price can turn.
DIA
SPY
SMH – semiconductor ETF
KLAC – deep in congestion but leaves a bull flag to position above.
Other
QQQQ – tech may see some additional support today, pre-market NQ is trading stronger than. Following a break of the trendline there may finally be enough fuel to push prices up and out of this range.
Short
IBM still looks tenuous, stealth bear flag above a test of bottom. The declining wedge is however a potentially bullish scenario lurking here.
Additional short setups will be published after the open.
Today's transcript.
Click on the title above to expand this document.