Friday, April 8, 2005
Issue Contents:
| 09:22 | The Day Ahead |
| 12:43 | Market Direction Heads Up |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning, its Friday April 8th, the 98th day of 2005 and another deadly quiet day in terms of economic news. Monday also features little by way of economic releases and then, finally, we’ll again start to get various reports on the health of the economic for traders to sink their teeth into. It can’t come too soon…
Meanwhile, we have Crude. Following the 2B Test of Top set earlier this week price is homing in on the bottom end of the range.
CLK5 Crude Contract
Pre-market price is at 53.65, approximately 55 cents above the range bottom. A break of the range low will generate quite a bit of excitement, and although we won’t know for certain that the up trend on the daily chart has ended until indeed price starts to trend lower or has obviously broken down, we do assume that it has until proven otherwise. In other words, its a time of caution for all things oil related.
These days, everything is oil related, its only a matter of whether the relationship is inverse or direct. Case in point, four days ago the Dow 30 reversed course at a 2B Test of Bottom (of range):
INDU – Dow 30 Industrials Index
Again, until proven otherwise we have to assume that the up trend in the much bigger picture (daily and weekly) is at least not-yet-down but also not up – its stuck in a range which by definition is trendless. This doesn’t mean we can’t exploit the movement, but does tell us we have to be fairly circumspect about how we allocate capital and keep our failure detector on at a high setting.
Just like Crude, but in reverse, for now we assume that the trend has not reversed and is pointing up. Just like Crude, but in reverse, we will be looking for any signs of failure of this bounce as an excuse to exit, or tighten profit stops on new positions, and/or gain some short exposure.
US Market Calendar
- 12:30 pm: Federal Reserve Chairman Alan Greenspan speaks at the Community Affairs Research Conference, hosted by the Federal Reserve
Canadian Market Calendar
- 7:00 am: Employment Report – Mar.
- 8:15 am: Housing Starts – 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.
A potential change of trend is in progress here:
YM – Dow 30 Futures
In the early going we don’t panic, but we do get defensive. IF price starts to trend down below resistance here on the 5 and then 15M charts, we THEN call it a confirmed change in trend. Currently am short from 10550 with a break even stop in place.
NQ – Nasdaq 100 Futures
A similar picture exists on Nasdaq although it had taken over the leadership position over the past two days. Currently am short from 1508 with a break even stop in place, trade setup was a 2B test of top (shown) and the bigger picture is a rising wedge to resistance:
09:50:15 Mike: Speaking of consolidation patterns, the grand-daddy of them all is this rising wedge on Nasdaq, on the really big picture chart:
09:52:03 Mike: It has to potential to turn into a running triangle, which is a very “bullish” outcome, but all rising wedges also have a dark side, target is the base of the wedge. I was trading NQ yesterday on the long side on the expectation it may try to break higher and in fact it did but can it hold it or will the alternate, darker scenario, rule…
10:05:38 Mike: 1508 SELL STOP LIMIT NQ DANGER, high risk.
10:06:03 Mike: Only reason I am doing this is to try to capture the VERY top of a rising wedge. I WILL BE PUTTING A LONG ABOVE ANY PULL BACK HERE IN NQ.
If key support levels start to break below: 1185 ES, 10489 YM, 1494 NQ – then the risk of a retest of April lows rises dramatically.
Since there is no market moving economic news until next Tuesday at the earliest, the market remains at the mercy of oil, as it has been for weeks as the intermarket chart shows:
CL vs S&P 500
Which unfortunately means we’ve no choice but to watch crude and stock indexes. Even the US dollar increasingly seems pegged to the price of Crude, or vice versa (as is Gold).
Trading plan for the day: In general, I am not considering initiating new longs unless price regains the trading ranges marked out and starts to trend upward at least on 5M time frame. I will make stock specific exceptions. I won’t add long exposure using ETFs unless price has a good shot at breaking today’s high again. I plan on holding the remainder of my futures short at break even, but have taken profits on a small part of each position as price hit the bottom end of the range and clunked through. If this is a change in trend, my stops will not be hit.
Today's transcript.
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