Tuesday, March 15, 2005
Issue Contents:
| 08:40 | The Day Ahead |
| 08:41 | Swing Scanner Results Monday March 14th closing data. |
| 08:42 | Market Statistics For Monday March 14, 2005 |
| 09:18 | Swing Trade Setups Featured charts for Tuesday March 15th. |
| 11:33 | Currencies and Gold |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning – its Tuesday March 14*th, the 74th^ day of 2005.
Ahead of the Treasury International Capital report at 9:00am the US dollar is trading somewhat weaker following yesterday’s significant bounce higher, in part following comments from the banking regulator in South Korea1:
``There is widespread recognition that the ongoing trade imbalance between Asia and the U.S.—that is, Asian savings financing U.S. consumption—can’t be sustained,’’ Yoon Jeung Hyun, chairman of South Korea’s Financial Supervisory Commission, told the Foreign Correspondents’ Club in Tokyo.
This morning’s TIC report will give investment managers the most recent feedback on potential changes in support for the US Dollar:
``There is a focus from people on whether appetite for U.S. assets is easing,’’ said Ian Stannard, a currency strategist in London at BNP Paribas SA. ``The diversification out of dollars by Asian central banks comes to the fore every so often and puts the dollar under pressure.’’
US Market Calendar
- 7:45 am: ICSC-UBS Store Sales
- 8:30 am: Retail Sales – Feb.2
- 8:30 am: Business Inventories
- 8:30 am: Empire State Manufacturing Survey – Mar.
- 8:55 am: Redbook – Mar. 12th week
- 9:00 am: Foreign Purchases of U.S. Securities (TIC) – Jan.
- 10:00 am: Business Inventories – Jan.
- 10:00 am: Fed Chairman Greenspan testifies on Social Security
- 1:00 pm: NAHB Housing Index – Mar.
- Manpower Survey – Q2
Canadian Market Calendar
- 8:30 am: Existing Home Sales – Feb.
- 8:30 am: Manufacturing Shipments & Orders – Jan.
- Manpower Survey – Q2
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 Korea Says Funding for U.S. Is Limited
2 U.S. Feb. retail sales up 0.5%
Monday March 14th closing data.
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Statistics for Monday March 14, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 281 |
|---|---|
| Symbols in Down Swings | 481 |
| Up/Down Swing Ratio | 0.58 : 1 |
| Up Bars | 28% |
| Down Bars | 36% |
| Inside Bars | 21% |
| Outside Bars | 8% |
| Close > 20EMA | 68% |
| Close > 50SMA | 57% |
| Close > 200SMA | 62% |
| 20EMA > 50SMA > 200SMA (trend up) | 43% |
| 20EMA < 50SMA < 200SMA (trend down) | 24% |
Featured setups from Monday March 14, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
- Am stalking long and short today – breaking and holding of either the high or low of yesterday will be the signal. Price has pulled back as far as we normally are willing to tolerate on a test of top—remember the test of top recently?
- This backing and filling is all part of determining if the intermediate term direction (up) is changing or not. All consolidations end eventually and as this current period is now aging to the point where a breakout and continuation is more likely than not, we have to be VERY alert.
- Gap up at the open – first task is to look for a buyable retracement, and it may be very short in duration.
- Further ideas will be discussed in TrendVue Trader Talk
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.
Retracement or Pause in Up Swing / Up Trend
NEM – also see comments on Gold re ABX
Test of Top – Continuation
DIA, SPY are all at the critical point where they must bounce back above resistance ASAP or we will have to conclude a trend change has taken place. As noted above, we can stalk these both long and short based on where price heads and remains.
ABX – keep an eye on the gold names for new longs or to tighten stops. Some of the stronger names are trading at or near 52 week highs. So far ABX remains a relatively simple test of top long continuation setup. Gold is up marginally following the TIC report this morning – keep a close eye intraday and do not hold if price weakens later.
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
EAT – may bounce more – follow for another day or two max.
Special Situations
QQQQ – not trending at all, and having broken below a triangle, we only want to swing trade QQQQ if we can trade on an intraday-basis. Occasionally when price breaks below a triangle a very good bounce results if sellers feel trapped – this is what we’ll be looking for if stopped into new longs here. Anything less and we should take our money and run.
QCOM – intraday traders only – rising wedge is frequently a bearish pattern however given the single down bar in a still intact upswing, here’s a good opportunity to attempt to catch what might resolve into a bullish running triangle. Stops / alerts just above yesterday’s high – monitor the first pull back after trigger and buy, moving to a break even stop ASAP.
Foreigners Buy U.S. Assets at Fastest Pace Since 2003
March 15 (Bloomberg)—International investors accumulated U.S. assets in January at the fastest pace in almost two years, signaling that record current-account and budget deficits haven’t soured foreigners on putting their money into the world’s largest economy.
Investors bought a net 60.7 billion in December, the Treasury Department said today in Washington. The total was the second highest behind the 59 billion, based on a Bloomberg News survey of five economists.
The biggest net increases were in holdings of Treasury securities and government agency bonds. The yield on the benchmark 10-year Treasury note fell 9 basis points, or 0.09 percentage point, in January to 4.13 percent. Today’s figure compares with a monthly average of about $58 billion over the last three years.
Data such as this should be the death knell for Gold as it should knock back other currencies trading against the USD – and so far this is bearing out. True, Gold is well off highs set before this mornings big surprise in international treasuring investment news; true, foreign (to US) currencies have lost gains made earlier in the day on weaker than expected US retail data; but all told, the moves have not been overly dramatic given the nature of the TIC data surprise.
EURUSD – initial reaction following TIC data.
EURUSD pulling back to first support.
USDCAD – breaks bear flag and currently reversing – tomorrow a buy setup will be in place above today’s range, the Failed Bearflag Trigger.
Lets revisit this once the news has been fully digested by world-wide investors.
Gold
Gold – 445 is near term resistance and had made the attempt once today to break above, the attempt dashed by the TIC data and currency moves once released. New positions stopped in today need to be monitored very carefully; those managing existing profitable positions may wish to wait for tomorrow before moving stops up more aggressively. Its interesting that Gold has not sold off more strongly following the currency news and moves, although the day is young.
Perhaps contributing to a slight disconnect in the traditionally inverse relationship between Gold and the US Dollar is speculation that raw demand for Gold may be much higher than anticipated, due in no small part to new ETF offerings:
Gold-linked funds fuel hunger for bullion
The World Gold Council spent three years developing a new security that would pump up gold demand by giving investors the opportunity to buy bullion that trades on the New York Stock Exchange, with the price of the security based on the price of a 10th of an ounce of gold.
The securities have now created demand for more than $2-billion (U.S.) of gold bullion.
The StreetTRACKS Gold Trust was launched on the NYSE in November, along with Gold Bullion Securities on British and Australian exchanges. It was the first exchange traded fund linked to the price of a commodity. Other such funds have tracked stock indices.
“To be successful, we felt the ETF had to attract $1-billion worth of investment within a year. It attracted that support within three days,” said James Burton, chief executive officer at the World Gold Council.
In an interview in Toronto last week, Mr. Burton said: “There are estimates within our organization that this ETF may eventually reach 30-billion in size.”
The ETFs represent new demand for what mining companies produce, as each time one of these securities is sold, the fund’s backers set aside bullion in a bank vault. Just a few months after their launch, these new ETFs already account for 7 per cent of world gold production.
Today's transcript.
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