Friday, March 4, 2005
Issue Contents:
| 08:49 | The Day Ahead Economic releases and news |
| 08:51 | Swing Scanner Results Thursday March 3rd closing data |
| 08:52 | Market Statistics For Thursday March 3, 2005 |
| 09:27 | Swing Trade Setups Featured charts for Friday March 4th |
| 10:24 | Congestion Breaks! |
| 15:37 | When the market looks too good... |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning – its Friday March 4th and the 63rd day of 2005.
Stock index futures are trading in positive territory before regular market hours, gaining ground following a positive employment report for January, with payrolls rising 262,000, the largest increase since October last year.
“The way the numbers are falling is consistent with economic growth slightly above trend,’’ said Ken Mayland, president of Pepper Pike, Ohio-based ClearView Economics LLC and the best overall forecaster in Bloomberg News surveys for the year ended in June. “There’s no glaring argument for the Fed to accelerate’’ its pace of interest-rate increases. Mayland predicted a gain of 225,000 jobs.
The US Dollar had been trading somewhat stronger in advance of the report; following the report and initial trading volatility, forex markets have generally sold off the dollar, apparently agreeing with Mr. Mayland.
Over these past few sessions stock markets have become reacquainted with volatility – its been quite a roller coaster ride. Lost in all the noise is the fact that – so far – key support levels have been holding since the start of the month. Experience tells us that the range is likely to be broken soon.
US Market Calendar
- 8:30 am: Employment Report – Feb.
- 9:45 am: University of Michigan Consumer Sentiment Index – Feb.
- 10:00 am: Factory Orders – Jan.
Canadian Market Calendar
- 10:00 am: Ivey Purchasing Managers’ Index – Feb.
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.
Thursday March 3rd closing data
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Statistics for Thursday March 3, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 422 |
|---|---|
| Symbols in Down Swings | 342 |
| Up/Down Swing Ratio | 1.23 : 1 |
| Advancers | 44% |
| Decliners | 54% |
| Unchanged | 2% |
| Up Bars | 36% |
| Down Bars | 33% |
| Inside Bars | 16% |
| Outside Bars | 8% |
| Close > 20EMA | 44% |
| Close > 50SMA | 55% |
| Close > 200SMA | 64% |
| 20EMA > 50SMA > 200SMA (trend up) | 43% |
| 20EMA < 50SMA < 200SMA (trend down) | 20% |
The Test of Top continues on into a fifth day today – will it finally clear, or finally break down? Either way, we’ll be happy to be clear of the range.
!
Long – swing traders off daily chart – by above the first retracement that shows up above yesterday’s high.
Our experience is that such congestion zones tend to last between 5 and 8 days – this one feels like its ready to decide – no doubt by the end of day Monday we’ll have a result, like it or not. There is reason to believe direction is up, as support has been holding the last three days:
Tests of Tops can and do switch direction on a dime – here we see where support must hold, and the likely paths out of this range. We merely need to be ready to act.
QQQQ – within a large triangle but in this case worthy of stalking for a long-side trade.
IWM – Russell 2000 ETF, similar to SPY.
Golds – reminder to follow up on Gold charts today – its likely to pop some at the open, don’t buy blindly, forex markets may settle down and the US$ might just surprise us yet. However – there is support for Gold which stronger Gold stocks have been telling us this for days now.
NEM
AEM
ABX and FCX have both been extremely strong. I hold this one, from the entry point marked, and remain surprised at its relative strength.
This is always a tense time in markets – breaking an important level of resistance, a new yearly high. While all looks perfectly rosy here, and despite us expecting this nice move up and being well positioned for it, it would be wrong for us not to point out that any test of top – and especially a major test of top – is the place where failure is a very real concern.
ES – S&P 500 futures break 2005 range high.
Lets monitor this move up very carefully until or unless it becomes obvious that a new trend is developing above the range. Remembering our Technical Analysis 101 – an up trend is a series of higher swing highs and higher swing lows.
We have that now in smaller time frames, now we need to see the same in larger intraday time frames before we really can rest easy, if indeed we can ever rest easy while committing our capital to the markets.
When the market looks too good...
All our targets hit now, lets look at the star of the show:
The Nasdaq NYA Composite index is the real star for 2005 – clearly leading over the Nasdaq equivalent and even the more diversified S&P 500 index. All the right ingredients were in place and so far being confirmed for a “running triangle” – a market so strong that it shoots out of the rising wedge and keeps on running:
- New highs are expanding dramatically
- Market internals including advancers, decliners and a/d volume all pointing in the right direction
- Price consolidated for several days at 2005 highs and surged forward
—All well and good. And when all is well and good, there is no reason for stocks to pull back much, so our next step of course is to move up profit taking stops, and trim weak performers outright.
Some profit taking into the close will not be a surprise nor a big concern. And, geopolitical events over the weekend notwithstanding, come Monday a gap up would also be in character as well.
Tests of the tops and bottoms of major ranges are frequently long, drawn out, and arduous affairs as players battle their way to the top, and then once there, battle to hold on to it and head higher. Throughout the entire process we must stand ready for the unexpected – a complete reversal.
Today's transcript.
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