Tuesday, March 8, 2005
Issue Contents:
| 08:27 | Swing Scanner Results Monday March 7th closing data. |
| 08:43 | The Day Ahead Economic releases and news |
| 08:46 | Market Statistics For Monday March 7, 2005 |
| 09:27 | Swing Trade Setups Featured charts for Tuesday March 8th |
| 09:28 | In The Event Of Pull Back Break Glass |
| 15:37 | Crude Realities Further to run? Or... |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Monday March 7th closing data.
Click on the title above to expand this document.
Good morning – its Tuesday March 8th, the 67th day of 2005.
Same-store sales1 were off 0.4% compared to the prior week, but up year over year 3.3% against the same period in 2004.
In Canada, housing starts2 rose 5.3% in February, coming in somewhat under analyst expectations but strong enough to allay some fears of a sector slowdown, sparked by January’s surprise drop of 11%.
US Market Calendar
- 7:45 am: ICSC-UBS Store Sales1
- 8:55 am: Redbook – Mar. 5th week
Canadian Market Calendar
- 8:15 am: Housing Starts – Feb.2
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 Retail chains´ comp-store sales off 0.4% last week
Statistics for Monday March 7, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 555 |
|---|---|
| Symbols in Down Swings | 209 |
| Up/Down Swing Ratio | 2.65 : 1 |
| Up Bars | 53% |
| Down Bars | 20% |
| Inside Bars | 14% |
| Outside Bars | 7% |
| Close > 20EMA | 60% |
| Close > 50SMA | 62% |
| Close > 200SMA | 66% |
| 20EMA > 50SMA > 200SMA (trend up) | 48% |
| 20EMA < 50SMA < 200SMA (trend down) | 20% |
Featured setups from Monday March 7, 2005 closing data symbol scan
Jump to: Long Setups | Special Situations
Notes for the Day
Question of the day – now that many stocks have been pushing up for several days and more folks are long than not, is there anyone left to buy to push prices higher?
See also In The Event of Pull Back for my stop management plan.
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
SWY – after retesting the 2005 low SWY moves up and offers a pause here; note also the gap up on Monday – gaps are both a sign of strength and exhaustion. More often than not they suggest a swing turn is near at hand, but once in a while they indicate that there is more underlying interest in a stock than first is obvious. If stopped long into SWY demand that price clear the Monday high and close strong before considering holding. Initial target marked in red overhead.
Golds
What’s very clear is that Gold stocks are showing BIG divergences in performance. FCX and ABX have been true stars now for weeks, while many others in the market have lagged significantly. First, the laggards – if Gold holds the gains its been making recently these may offer some quick upside:
BGO
PDG
GFI – barely broke the lower trendline, stalk a long above yesterday’s down bar)
ABX sold off some yesterday at a test of top. For the time being we need to stalk a new long entry; I continue to hold this and will until 24.
Special Situations
MU – long or short – be on guard for an outside day today as TXN news hits tech. Sometimes these turn into interesting opportunities for stocks positioned to go up while industry news rocks the boat.
MOT – short – similar in some respects to MU – but I can picture this triggering shorts and going no here, only to break the decending wedge at some point in the not distant future. Tech is at a cross roads here, in my opinion.
My stop management plan:
- Ensure all stocks have break even stops in place. Its my general rule never to let a winning position turn into a loss, once its had a number of days to move in my favour.
- Provided price remains above entry price, stocks with relatively minor profits I will move (or leave) protective stops at a point where a minor retracement to prior support will not trigger the stop. In other words, if I have the profit room to do so, I will risk some open profits to keep the stock in play as long as higher swing highs and higher swing lows are in place.
DIA example:
If long near 107 then there is ample room to tolerate a pull back first to prior resistance which should at least attempt to hold as new support.
Does oil have further to run or is a top near by? The answer may depend more on context than raw price, and the answer matters to more than oil-stock traders and investors, as we’ve seen reappear the clear inverse linkage between the market and Crude.
Long time readers know we’ve been consistent in pointing out that Crude has found higher and higher levels of support following the sell off after last year’s spike in the fall, and finally, analysts are starting to revise upwards their basic assumption – annual average crude price – which is a key factor in valuing oil companies. The rally in oil stocks has therefore been no surprise, but now with prices very stretched its time to at least locate the exit doors if not storm through them.
One of these weeks we can be sure heating oil demand will drop, as winter – already over here in my neck of the woods – will eventually fade from memory, and demand will drop, even if only for a short period of time before summer driving again drives up demand.
Tomorrow’s petroleum status report may provide just the catalyst needed to set a failed test of top in motion, or do quite the opposite. 10:30 am…
Importance of Context
It might surprise you to learn that Crude last week traded at an all time high, at least relative to what can be bought on the futures market, today.
Why is this not big in the news? Because the news often focusses on the spot price, or the historical contract high price which was indeed higher still. This is important: those prices are largely, if not completely, irrelevant.
This is true simply because we can’t buy or sell October’s record spot price – that was a one day, one second, event. Nor can you buy or sell the futures contract of that time, which has since expired. There are no lurking stops aimed at just that price as that price has little meaning in the context of today.
Since support and resistance, and fear and greed, are driven primarily on what traders and investors are able to buy and sell _today), the contract of the day is the one to pay attention to.
Crude Contract
Crude – current contract, intraday – in this context price is retesting last week’s high, on the eve before the weekly petroleum status report.
Crude – current contract, daily – in this context price is already trading at new all time highs. Any test of top spanning several months automatically puts traders on high alert, and with oil being the most talked about commodity in history, we know emotions are running high.
The long-side camp got their wish today; selling today’s low is the setup for a potential failed test of top, and for me will be a clear signal to take profit in, more, if not all, my oil holdings.
Waiting for price to prove itself is free… See you at 10:30.
Today's transcript.
Click on the title above to expand this document.