Tuesday, April 5, 2005
Issue Contents:
| 00:03 | Swing Trade Setups Featured charts for Tuesday April 4th |
| 12:58 | The Day Ahead Economic releases and news |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:45 | Swing Scanner Results Tuesday April 5th closing data |
| 16:46 | Market Statistics For Tuesday April 5, 2005 |
| 16:49 | Swing Trade Setups Featured setups for Wednesday April 6th |
Featured setups from Monday April 4, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
- test of bottom on Dow / INDU may be enough to spark a multi-day bounce, but be aware that new positions must be brought to break even stop by day two if at all possible – significant resistance overhead and news later this week may bring the downtrend back. Still, we have no choice at such times but to take the trade.
- lack of shorts is an indication that many stocks have started to bounce but not yet in a shortable situation – we’ll have to be content with the shorts we have for now and let this day play out.
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.
Test of Bottom – Reversal
DIA – Dow 30 ETF, two likely paths marked out
QQQQ – Nasdaq 100 ETF, ditto
XLF – financials ETF – price must close strongly in our favour in order to hold
NTAP – retracement just above test of multi-week lows. Will stalk long today only.
Retracement or Pause in Up Swing / Up Trend
CYMI – semi equipment – holding up better than semis as a whole (note KLAC is retesting range bottom yesterday and may pop on that event too) – pulls back to fill analyst inspired gap. On the weekly:
CYMI – weekly – big trendline nearby. Keep alert.
N (also N:C TSX) – basic materials – pull back yesterday gives a one shot opportunity to try to capture a move in a new up trend.
Test of Top – Continuation
CM:C (TSX) or BCM (NYSE) – banks – pull back below a big test of range top, hold only if price remains and closes over breakout level.
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
NSC – rail – following the failed test of top, a bounce provides a one day opportunity to attempt a short here.
Special Situations
TSG – services to airlines, not directly impacted by fuel – note price dropped out of a rising wedge (unmarked) and has since rallied over the past week – bullish.
ELX – object lesson for the long-term folks – timing can be made to work in your favor too – just use the weekly chart a little more often. I review every chart in both daily and weekly time frame before considering them for swing trades.
INFA – IT services – apparently some takeover speculation in this name, which may doom it to remaining within the range but one never knows. Note article in BusinessWeek Online
Good afternoon – another light economic news day, with a speech by Fed Chairman Alan Greenspan to the oil community (check the Fed website, links below, to access the contents at 1:50pm ET) being the major item of the day. In fact for much of the week the most notable economy-related events are speaking engagements by various Federal Reserve members.
On Thursday the European Central Bank and Bank of England will both release their latest update on interest rate policy for their jurisdiction – we may see some moves in foreign exchange ahead of these events. Neither have raised rates in some time.
US Market Calendar
- 8:55 am: Redbook – Apr. 2nd week1
- 10:00 am: Challenger Layoff Report – Mar.2
- 1:50 pm ET: Federal Reserve Chairman Alan Greenspan addresses the National Petrochemical and Refiners Association
Canadian Market Calendar
- 8:15 am: Foreign Reserves – Mar.
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 Chain Store Sales Fall Last Week of March
2 Firms Planned Fewer Job Cuts During March
Today's transcript.
Click on the title above to expand this document.
Tuesday April 5th closing data
Click on the title above to expand this document.
Statistics for Tuesday April 5, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 313 |
|---|---|
| Symbols in Down Swings | 444 |
| Up/Down Swing Ratio | 0.70 : 1 |
| Advancers | 53% |
| Decliners | 44% |
| Unchanged | 3% |
| Up Bars | 53% |
| Down Bars | 23% |
| Inside Bars | 13% |
| Outside Bars | 6% |
| Close > 20EMA | 54% |
| Close > 50SMA | 37% |
| Close > 200SMA | 55% |
| 20EMA > 50SMA > 200SMA (trend up) | 28% |
| 20EMA < 50SMA < 200SMA (trend down) | 31% |
Featured setups from Tuesday April 5, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
- Today we have the opposite issue – many stocks sporting charts with short setups and precious few I feel comfortable going long on. If markets surprise and push up strongly I’ll simply get exposure using ETFs. That’s what they are for – rapid deployment at minimal transaction cost!
- Market stats and swing scanner results confirmed what we noted during the session – “nr7” or Narrow Range 7 days (as well as inside days) are present on a number of the indexes and a great many stocks. Inside days and narrow range days are a heads up that there is much indecision in the market…
- While the general intraday trend in smaller time frames is still up, price needs to pick up the pace and blow through the highs of the prior big sell off before traders will trust that a bottom is in place. With nothing decided I am hoping to find within the scan data a decent selection of both long and short setups so we can be ready for either outcome.
- In index ETFs I shall be looking for an intraday location to add to my short positions if Tuesday’s lows are broken.
- Have a look at the discussion in Special Situations specific to EMC.
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
See special situations for EFII.
Test of Top – Continuation
VLO – refiner – VLO is no doubt a good energy related stock to stalk on the long side, given its leading ability to refine the type of sour crude which is increasingly coming from Saudi Arabia. For as long as gasoline prices remain high and while imported crude has a heavier than average sour component, VLO will be making money off the situation at a rate higher than many other refiners.
That said, now may not be the time, with a dark cloud cover here at a test of top – but the setup is here and we should monitor and exploit it if strength comes in tomorrow. Otherwise, follow up over the next 1–2 days.
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
AMAT – a preponderance of tall dark candles and a weak bounce so far suggest this one will retest target 1 at least.
FLEX – contract manufacturing (also tied to NT which is making new lows today)
QCOM
WMT – report on the weekend did little to help WMT – classic bear flag forming within a tall down bar. Perhaps we’ll get a second opportunity at this one on Wednesday.
Test of Bottom – Continuation
INTC – pushes marginally higher back into the chop; an ideal time to lurk below with a short, ultimately a sub 22 target.
BK – banking – single up bar in down swing at a test of bottom.
Special Situations
QQQQ – short – still in chop, still climbing up through Friday’s sell off. The short scenario is the easy one to see and react to; however if markets were able to stage significant strength, I would not at all be opposed to adding new longs at the two day high and hold provided Friday’s high is cleared and price closes strongly for the day.
EMC – short – but take to heart comments made on QQQQ.
Lesson: Specific to EMC, the mid-March sell off on increasing volume is indicative of the climax phase of selling, and since price has failed to retest those lows despite trying very hard to do so last week, there is every reason to give EMC the benefit of doubt.
What this tells me is that even though I can identify a reasonable short setup here, I will pass on selling EMC in favour of exploiting other, weaker, stocks (and of these there are plenty). It may be that EMC pulls back soon, but at this point the chart suggests it needs to be monitored closely for other long opportunities in the near term.
EFII – long, caution given the radical expansion in daily range and relatively low volume. My approach with such a name is to wait for the trigger to be hit and then stalk the first retracement following – provided it does not dip too deep into the prior day’s range – and then buy at the trigger value or above any suitable retracement pattern that may develop. You’ll find over time that its better to “miss” the odd move which shoots up rather than be stopped in automatically as price makes a minor wiggle up only to reverse.