Thursday, May 5, 2005
Issue Contents:
| 08:46 | Swing Trade Setups Featured charts for Thursday May 5th |
| 09:26 | The Day Ahead Economic releases and news |
| 15:00 | Market Direction Update Thanks F and GM! |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:36 | White House on Energy |
| 23:12 | Swing Scanner Results Thursday May 5th closing data |
| 23:14 | Market Statistics For Thursday May 5, 2005 |
Featured setups from Wednesday May 4, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
- Retail reports coming in mixed but weaker, a few short ideas today
- Semis still look weak; conventional wisdom is tech can’t rally without them but perhaps that’s different this time, nevertheless its a caution and a reason to be ready to take profits on weakness
- Some may be surprised to realize that yesterday was day 4 of the rally; if markets hold up today again it will be the longest rising streak since early March;
- Be cautious with the short ideas, markets are nearing the stretching/breaking point where the elastic is likely to snap back or break and let prices loose. A big rally day may lift all boats whether they deserve it or not.
Please note: I generally check every stock to see if its reported and glance over the results to see if there is a general reason for stocks to move in the direction expected (which is why it takes a long time to produce swing trade ideas during earnings season!) but I do not a) confirm the financial analysis nor b) guarantee that all have reported or that I’ve reviewed all – please check before the close for any name you are considering holding.
Now that earnings season is coming to a close I’ll be able to churn out ideas a little faster going forward…
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
Energy – lumping a number of energy stocks in “testing a bottom” since they are all generally near testing important swing lows. Energy stocks likely to gap up a little at the open, wait for a pull back if possible.
CNX – energy, coal and gas
TLM:C (TLM:NYSE)
ECA:C (ECA:NYSE) – both ECA and TLM have triggered (barely) against Tuesday’s bar already on NYSE – I will stalk an intraday entry to add to energy position, anywhere near the two day high or on a retracement if gap up.
VLO – energy, refiner
OIH – oil service HOLDRS ETF
XLE – energy SPYDR ETF
XEG:C – energy iUnits ETF (TSX) although I prefer to buy the individual names in Canada especially when in a range as price is these days
Retracement or Pause in Up Swing / Up Trend
WFC – consumer credit and mortgages
OPWV – software, telecom industry, has an honest to goodness trend happening but is already on third leg up so exercise caution – may need to base a while; beware of minor moves up through trigger which later reverse. Please note that a “Caution” doesn’t mean “avoid this” but “be careful for these reasons” – if we avoided anything with cautionary notes we’d miss many a good trade.
CNET – internet advertising and media – a minor controversy this past week over reporting an unsubstantiated story that McNealy was taking SUNW private; similar comment re OPWV – higher swing highs and lows—but please note the (undrawn) straight trendline below this rise – would not be a surprise to see a dip below at some point.
CIEN – first pause since breakout over last range
HCA – healthcare
Test of Top – Continuation
XLU – utilities ETF, defensive play. I bought a couple utility stocks yesterday, perhaps may not get to keep them but they ought to hold up some if this rally sputters.
MSFT – boring but perhaps willing to rise, potential 26–27 target
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
MAS – home hardware / fixtures
IP – paper
ADM – food / agribiz – hold through close only if solidly profitable and a reasonably tall down bar
ANN – retail – big pause, warns weaker results, perhaps an intraday setup will be there today.
WMT – reports slightly weaker same store sales than expected – tall up bar on Tuesday is a caution, hold only if price closes below the mid way point (dotted red line)
LTD – reports much weaker than expected on weekly reports
ROST – retail, note big volume two bars ago
RFMD – semis, communications; getting a little stretched to the downside so caution
SWIR – communications products – has been heading lower for eons, can it go lower? Sure.
NT – nuff said
XLNX
Good morning, its Thursday May 5th, the 125th day of 2005.
Before the market opens stock index futures have held on to their gains of yesterday; but so has Crude and Natural Gas, both of which are up more than 3/4 percent before their markets open at 10. Energy battle, coming to a trading floor near you.
Productivity came in at a surprising 2.6% over analysts expectations of a 2.0% gain for Q1. This number isn’t that volatile, so economists will be scratching their heads wondering where their slide rulers messed up on this one. Unit labour costs rose quarter to quarter 2.2%, slightly ahead of expectations.
``We are still seeing very solid growth’’ in productivity, said David Resler, chief economist at Nomura Securities International Inc. in New York. ``That does, however, seem to be affecting employment. Strong productivity growth has been translating into weaker employment growth.’’ Resler forecast productivity growth of 2.5 percent.1
When I was an employer I held back hiring when I felt times where bad or uncertain, and paid my own staff a little more and expected a little more out of them in return – that’s productivity. When times are very good, I hired more. There still seems to be a reticence to expand the workforce – is it the outsourcing of jobs overseas? Or is productivity remaining high because businesses fear uncertainty and a slowdown?
Time will tell, back to the charts…
US Market Calendar
Canadian Market Calendar
- 8:30 am: Building Permits – Mar.
- 10:00 am: Ivey Purchasing Managers’ Index – Apr.
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 U.S. 1st-Qtr Productivity Rises 2.6%; Labor Costs Up
2 U.S. Initial Jobless Claims Rose 11,000 to 333,000 Last Week
Dow 30 hits overhead resistance and clunks thanks to F and GM; the S&P 500 pushed into the overhead range (good) and is still within easy distance of confirming what was overhead resistance – if this holds it will become new support near the 1170 level.
S&P 500 Chart color coded with the approximate levels at which risk either increases or diminishes.
Remember – even with a weak close today, its still an “up” day, with a higher high and low (so far) than yesterday. After the big run up over the past few days, an pause or pull back is not a surprise at all. However these resistance levels marked (horizontal purple lines) must become new support fairly quickly (next session or two).
Myself – I am risking open profits on positions I hold but will not allow any position to turn into a loss.
Today's transcript.
Click on the title above to expand this document.
Lost in the news today after Standard and Poor downgraded Ford and GM bonds to junk status, was this little gem: White House wants to see oil, gas prices drop
WASHINGTON (Reuters) – The United States wants to see crude oil prices, which have sharply fallen in the past two weeks, slide lower to keep the economy healthy, White House spokesman Scott McClellan said on Thursday.
U.S. crude oil prices have tumbled by more than 58.
“What we want is to continue to see oil prices come down and gas prices come down so that they are more affordable for the American people. And that’s important to sustaining economic growth,” McClellan said. “We have a strong growing economy,” he said.
“But the president is concerned about high energy prices and high gas prices in particular,” McClellan said.
Bush, who met with Saudi Crown Prince Abdullah last week, has been urging oil producing countries to expand production to help ease prices.
McClellan would not answer questions about what the White House believes should be the price of a barrel of oil.
“You know where the price of oil is right now, it’s come down some. And the president wants to see it come down and be more affordable for the American people,” he said. “The government isn’t the one who sets the prices.”
News Flash!! Unless the White House starts selling Crude short in a massive way (momentary relief), lets loose with the Strategic Petroleum Reserve (unlikely, and risky) or increases lasting supply magically, they can whine all they want but prices won’t come down. Besides, what happened to the government’s love of free market economies? Perhaps some policy re-think is in order since, after all, its partly government policy which has landed us in this mess of dependency.
In seperate but related news Rising oil demand could severely strain the world’s oil production and transportation systems late this year, predicts Jim Buckee, chief executive officer of Talisman Energy Inc.:
“The system will be tested,” Mr. Buckee said yesterday after Talisman’s annual meeting. He suggested that projected demand of 86 million barrels of oil a day in the fourth quarter may not be met by enough supply.
While there have been predictions that global oil production eventually will rise past 100 million barrels a day, Mr. Buckee questioned whether the world will ever be able to produce 90 million barrels a day.
The average oil supply this year could be 84.8 million barrels a day, FirstEnergy Capital Corp. said in an April 12 report, up from 83 million last year. Next year’s supply is predicted to be 86.4 million barrels a day.
During the Talisman annual meeting in Calgary, Mr. Buckee said conservation and energy efficiency was the “most important” way to reduce oil demand, adding that widespread use of alternatives to oil and natural gas was “extremely unlikely.”
Dr. Buckee is a smart, very smart, oil man, head of Canada’s 3rd largest independent oil and gas producer. Prices are high enough already, we should take his comments as honest and informed speculation rather than as self-serving.
CLM5; next month contract $2.34 higher!
Crude continues to hold 49 and support and may just surprise us all and make a bottom here at the 50% retracement of the late winter rally. There sure seems to be a heavy bet on the short side – Japan’s commodity exchange shows total open interest almost 3:1 short over long; last available Nymex committment of traders report shows net short position on Crude as well, but is somewhat dated. With so many folks betting against crude, the diabolical scenario is of course higher. We shall see…
Thursday May 5th closing data
Click on the title above to expand this document.
Statistics for Thursday May 5, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 573 |
|---|---|
| Symbols in Down Swings | 177 |
| Up/Down Swing Ratio | 3.23 : 1 |
| Advancers | 41% |
| Decliners | 55% |
| Unchanged | 3% |
| Up Bars | 55% |
| Down Bars | 19% |
| Inside Bars | 12% |
| Outside Bars | 9% |
| Close > 20EMA | 42% |
| Close > 50SMA | 38% |
| Close > 200SMA | 52% |
| 20EMA > 50SMA > 200SMA (trend up) | 24% |
| 20EMA < 50SMA < 200SMA (trend down) | 29% |