Monday, May 2, 2005
Issue Contents:
| 09:22 | Swing Trade Setups Featured charts for Monday May 2 |
| 09:28 | The Day Ahead Economic releases and news |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 20:22 | Swing Scanner Results Monday May 2 closing data |
| 20:23 | Market Statistics For Monday May 2, 2005 |
Featured setups from Friday April 29, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
- with stocks expected to drift somewhat today we need to be careful. Do not buy a gap up in markets but wait for price to pull back and deliver a buyable retracement and/or wait for price to come back to the opening high and buy continuation with relatively tight stops below.
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.
Test of Bottom – Reversal
OIH – oil services ETF, on the off chance that this test of bottom holds up today. Stocks like RIG, PDS (PD:C), HAL, or RDC belong in this group:
RDC
QQQQ – Nasdaq 100 ETF, note the large volume, again.
IWM – Russell 2000 ETF
Retracement or Pause in Up Swing / Up Trend
CNET – internet
MOT – communications, reported
ALTR – pause after a big gap up, range high is primary target. Hold only if strength is obvious
MXIM, one for a “surprise” semiconductor strength day, should such a day turn up – bear flag trigger failure setup near a test of bottom. Hold only if price closes very strongly, ideally above 38
NOC – defense contractor, reported.
DIA – Dow 30 ETF
Test of Top – Continuation
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.
Test of Top – Reversal
Retracement or Pause in Down Swing / Down Trend
NEM – gold – recent poor results cause a gap down.
COCO – education
Test of Bottom – Continuation
XLE – energy ETF – the sector made a minor move up on Friday – short on break of Friday’s low with an initial target of April’s low.
F – autos
Special Situations
Gold: a reminder that this sector is going to move based on whatever language and actions the FOMC takes tomorrow. Be wary of minor wiggles in either direction – I shall be dumping my ABX or leaving my break even stop in place if price acts weak. Gold itself is off 0.57% before markets open here.
FCX
Good morning, its Monday May 2nd, the 122nd day of 2005, and the day before the Federal Open Market Committee next meets and releases its update on interest rate policy.
Crude oil is off 0.64% at 49.38 before the open; Natural gas is off 0.36% and Gold is also somewhat weaker down 0.71% from Friday at 432.90.
Most of the fireworks this week are going to be saved up for tomorrow, giving us time to decide what we might want to buy or sell depending on what the FOMC comes out with.
US Market Calendar
- 10:00 am: ISM Index – Apr.
- 10:00 am: Construction Spending – Mar.
- 4:00 pm: Auto Sales – Apr.
Canadian Market Calendar
- No releases scheduled
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.
Today's transcript.
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Monday May 2 closing data
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Statistics for Monday May 2, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 396 |
|---|---|
| Symbols in Down Swings | 355 |
| Up/Down Swing Ratio | 1.11 : 1 |
| Advancers | 63% |
| Decliners | 34% |
| Unchanged | 3% |
| Up Bars | 59% |
| Down Bars | 14% |
| Inside Bars | 18% |
| Outside Bars | 5% |
| Close > 20EMA | 64% |
| Close > 50SMA | 28% |
| Close > 200SMA | 46% |
| 20EMA > 50SMA > 200SMA (trend up) | 18% |
| 20EMA < 50SMA < 200SMA (trend down) | 33% |