Wednesday, June 1, 2005
Issue Contents:
| 07:33 | Swing Scanner Results Tuesday May 31 closing data |
| 07:34 | Market Statistics For Tuesday May 31, 2005 |
| 09:19 | Swing Trade Setups Featured charts for Wednesday June 1st |
| 09:58 | The Day Ahead Economic releases and news |
| 14:18 | Crude Realities Lets not forget Natural Gas either... |
| 14:47 | Market Direction Heads up |
| 15:19 | Pulse Nasdaq 100, S&P 500 and Dow 30 |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:53 | Swing Scanner Results Wednesday June 1 closing data |
| 16:55 | Market Statistics For Wednesday June 1, 2005 |
Tuesday May 31 closing data
Click on the title above to expand this document.
Statistics for Tuesday May 31, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 438 |
|---|---|
| Symbols in Down Swings | 308 |
| Up/Down Swing Ratio | 1.42 : 1 |
| Advancers | 37% |
| Decliners | 61% |
| Unchanged | 2% |
| Up Bars | 31% |
| Down Bars | 42% |
| Inside Bars | 7% |
| Outside Bars | 15% |
| Close > 20EMA | 37% |
| Close > 50SMA | 69% |
| Close > 200SMA | 60% |
| 20EMA > 50SMA > 200SMA (trend up) | 40% |
| 20EMA < 50SMA < 200SMA (trend down) | 17% |
Featured setups from Tuesday May 31, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
Was yesterday a single down bar in a strong up trend? Or the start of a deeper retracement. 10500 is the key level on the Dow, easy to remember too.
Energy names figure prominently here – they had a strong run of late and may well be due for a deeper retracement but following day one of an apparent turn we always want to be ready for resumption, just like on the broader indexes.
Steel and Aluminum also showing up here however if a very weak ISM report comes out the group may continue to sell off. I probably will trade the AL stocks over Steel. Merrill put out a value note on steel stocks recently.
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
AA – aluminum
AL – aluminum, see next.
AL(TSX) – aluminum, this is actually a declining wedge near a bottom rather than a retest of the bottom itself; just keeping AL and AA together in today’s list.
Retracement or Pause in Up Swing / Up Trend
STEEL
NUE – steel, perhaps slightly better albeit gappier chart than X
X – steel
AKS – steel. Frankly I prefer buying larger bigger cap names.
ENERGY
VLO – energy, refiner (see also TSO on test of top)
SU:TSX (also SU:NYSE) – energy, oil sands
ECA:TSX (also ECA:NYSE) – energy, largest North American Natural Gas producer; gap down on high volume has in the past been a swing low, or near one.
OXY – energy, producer – pause at resistance from late april breakdown – 52 week high is the next overhead target. Hold at close only if solidly profitable.
APA – energy
PDS (also PD:TSX) energy, services
HAL – energy, services
BJS – energy, services
TECH
QCOM
(see also TXN on test of top)
ETFS
OIH – oil service HOLDRs ETF
DIA Down 30 ETF (QQQQ, SPY could be traded in similar manner)
Test of Top – Continuation
TSO – energy, refiner, pause after range breakout
TXN – semis / tech – retracement at test of top
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
TOL – home builders – test of top. No doubt many a short seller has been burnt by this one in the past – we’ve passed on selling it or not been triggered on short setups. We don’t have to short this of course – note that a minor pull back will allow for a LONG setup within the next few days.
PHM – home builders – this one is clearly weaker than TOL – rising wedge breakout failure setup
Retracement or Pause in Down Swing / Down Trend
NOVL – tech, software – makes big gaps on news, be cautious and size positions appropriately for risk. Bounce to broken trendline setup here.
FRED – retail – one of the weaker in the group; gap down three sessions ago may mark a lasting swing low, in which case we won’t be hit. Otherwise we want to see that gap low broken within a day of being filled.
Good morning, its Wednesday June 1st, the 152nd day of 2005.
The US Dollar continues higher above yesterday’s larger than average range up bar following the news out of France. Oddly, Gold itself yesterday recovered most of its losses on what had been a very negative day for the metal. That recovery might be killed today yet, but its interesting and bound to suggest to the metals community that support for the yellow metal might be less tied to what the dollar does than has been traditional.
Energy pushes higher with Crude up 0.77% to 52.37 before the open this morning, matched by a similar move up in Gasoline futures on two-day old news of a pipeline rupture at a domestic refinery. Reminder: the EIA Petroleum Inventory Report is to be released on Thursday this due to the holiday weekend.
US Market Calendar
- 7:00 am: MBA Purchase Applications1
- 7:45 am: ICSC-UBS Store Sales
- 8:55 am: Redbook – May 28th week
- 10:00 am: ISM Index – May
- 10:00 am: Construction Spending – Apr.
- 4:00 pm: Auto Sales – May
Canadian Market Calendar
- Real return bond auction
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. mortgage applications decrease last week
Since the May 20 start of this rally crude and energy stocks have been rising sharply. Many in the sector are up 10 – 15% or more from our entry points. It goes without saying that we should be either taking some profits along the way, or following price up with protective stops. I’ve been doing both, trading in and out around a core position.
Crude – current front month contract – points to note:
- over five percent price increase at high of day* (so far)
- what was old resistance has now, until proven otherwise, turned into new support at $52.
- Price has rallied all the way to the 50% retracement of the decline from the start of April
There’s no reason why we should not expect a significant pull back here, but if prices hold firm, its entirely possible we will see the entire energy sector rally to new 52 week highs over the course of the next few weeks.
Little noticed by the press, so far, today, is what is happening in Natural Gas, up over six percent at the high of day:
Natural Gas, current front month contract – after making what appears to be near term bottom on selling exhaustion (prior month contract was a little more clear on this) NG breaks above descending trendline and makes the largest up move in months all the way to what ordinarily would be a 2 – 10 day price target above near resistance. This rally may have been inspired and driven primarily by technical trading and short covering that followed, however last week’s EIA report did show a substantial 8 percent decline in NG stocks and price then did not move much.
Clearly tomorrow’s report is going to be critical to the both crude and gas prices. If you’ve got big gains, be ready to protect them – but also be ready to let prices fly if the fundamentals allow for it. 10:30 am Thursday is all we care about at present.
This will come as no surprise to TrendVue Trader Talk regulars but I’ve been short Dow futures for much of today while price ground sideways and crude and natural gas shot up.
Dow 30 Futures – what was old resistance 10550 became support, briefly intraday, and is now, until proven otherwise, new resistance.
The importance of this failure can not be understated: Unless price can regain 10550, and stay there we have to conclude that this rally is over.
This doesn’t mean that I’ll be selling all my long positions, although a goodly number of them are levered to higher enery prices so chances are I will not have to – but it does mean that I will be very cautious with any new entries unless the Dow can regain 10550 – 10560 area and hold firm today or tomorrow.
Continuing on with the heads up, lets look at the big picture and see where the key areas of support or resistance. Like a road map these will help guide our actions over the next few days.
Nasdaq 100, S&P 500 and Dow 30
- Nasdaq 100 has rallied so far, so quickly that a pull back is more likely than not and because of this we can expect that most investors and traders will initially rationalize a pull back as being a healthy correction. Yours truly doesn’t hold stocks through multi-day declines because someone’s healthy correction has a nasty habit of turning into substantial declines or reversals days and weeks later. If price persists below 1540 we’ll have to assume that a deeper pull back lies ahead.
- S&P 500 has an extended rising wedge which I am inclined to ignore at this point however on both the S&P 500 and Nasdaq 100 a quick break of the rising trendline may provide to us a buying opportunity intraday today or tomorrow. If price remains below 1185 – 1190 for any length of time then the first major downside targets are 1180 and 1170.
- Dow 30 currently the weakest of all markets trading well below the breakout level and threatening to erase today’s gains. The upper most trading range in the big 135M intraday chart has a base near 10400 – but clearly if price trades below today’s low tomorrow we should at least have raised some cash through profit taking and be on high alert for a significant pull back, if not a complete reversal of the rally of the last two months. If price emerges back above 10560 and holds there we’ll have to conclude that the rally may extend itself but remain cautious until such time that price is trending higher and on its way to 10600.
Important: Please note that neither the S&P nor the Nasdaq 100 have broken their key support levels yet and that we will as a matter of course be looking for additional long-side opportunities (on the dip!) unless or until such time that key support breaks across all three markets.
Today's transcript.
Click on the title above to expand this document.
Wednesday June 1 closing data
Click on the title above to expand this document.
Statistics for Wednesday June 1, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 487 |
|---|---|
| Symbols in Down Swings | 260 |
| Up/Down Swing Ratio | 1.87 : 1 |
| Advancers | 75% |
| Decliners | 23% |
| Unchanged | 2% |
| Up Bars | 51% |
| Down Bars | 18% |
| Inside Bars | 8% |
| Outside Bars | 17% |
| Close > 20EMA | 75% |
| Close > 50SMA | 75% |
| Close > 200SMA | 62% |
| 20EMA > 50SMA > 200SMA (trend up) | 38% |
| 20EMA < 50SMA < 200SMA (trend down) | 18% |