Thursday, June 2, 2005
Issue Contents:
| 09:18 | Swing Trade Setups Featured charts for Thursday June 2 |
| 10:04 | The Day Ahead Economic releases and news |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Featured setups from Wednesday June 1, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
- Short list today, no pun intended, but I believe they are almost all shorts. This is natural from time to time, and its not like we don’t have plenty of long action ongong and behind us here. On the long side we have positions to protect – many of the picks of the last few weeks have just gone up and up and up and these profits need to be protected.
- Rarely after a big run up does it just turn around and head right down, but it happens. I don’t avocate switching direction all at once rather hedge your bet and be ready for chop at the minimum
I’m not utterly convinced the market is turning turtle but if crude holds the 43 – 54 level following the EIA report at 10:30 it does seem likely that stock markets will react badly to that. More than absolute levels, its direction that matters. Markets loved crude heading down, but are less enthused with crude heading up but also breaking prior resistance on the way, perhaps laying the ground work for much higher prices.
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
ADP – could go either way here – three inside up setup within a big triangle. Listed in both short and long category.
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
WEN – fast food – 2B test of top failure and a bounce to exploit. Caution, has been strong of late.
YM / Dow failed intraday test of top yesterday – we may just see chop for days but just in case, monitor yesterday’s low for a short entry.
NWAC – airlines – dark cloud cover is similar to a test of top in action. Hold only if closes solidly in favour of trade. Note yesterday was a gap up day, these are frequently the start of a swing turn, even if only a short turn…
Retracement or Pause in Down Swing / Down Trend
TEVA – bounce to broken trendline, opportunistic short. Pretty strong stock, hold only if it changes that demeanor quickly.
TYC – single, tiny, up bar in a down swing
JPM – we noted the big intraday swing yesterday during the day – news out after the close may make this hard to establish a position in. Other brokers may be fair game.
CSCO – up bar in down swing
ADP – could go either way here – three inside up setup within a big triangle. Listed in both short and long category.
Good morning, its Thursday June 2nd, the 153rd day of 2005. Reminder, the regular Wednesday EIA Petroleum Status Report will be issued today due to the Memorial Day holiday.
As expected, voters in Holland voted against adopting the proposed European Union constitution, and as expected (around here anyway) the US Dollar is no longer shooting up but taking a breather on news that was all but certain. Consequently Gold, which has somehow managed to hold levels despite the big surge in the USD over the past few days4, is heading higher this morning up almost one percent.
Also from Europe the European Central Bank held rates, again1. A survey of purchasing managers in Europe blamed high manufacturing declines in May on high oil costs2
``The economic recovery has clearly lost all momentum,’’ said Julian Jessup, chief international economist at Capital Economics Ltd. in London, before the decision was announced. ``They should cut, but political pressure on the bank isn’t helpful, it’s counterproductive.’’
Good news/bad news for inflation watchers on productivity and labour cost fronts with productivity gains rising at a brisk clip but labour costs coming in more than forecast at 3.3%. [2] Initial jobless claims rose last week5 to the highest level since the week of March 26th.
``The loss of auto jobs is not good news but it is not big enough to affect the macro scene and claims will revert to their prior trend of 320,000 to 330,000 over the next couple weeks,’’ said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. ``There’s no doubt that companies are hiring,’’ Anthony Chan, a senior economist at JP Morgan Asset Management in Columbus, Ohio, said before the report.5
The Challenger Job Cut report also registered an increase. Tomorrow’s labour report will be watched closely for additional clues on labour and cost fronts.
US Market Calendar
- ECB Interest Rate Policy1
- 8:30 am: Productivity – Q1 R3
- 8:30 am: Initial Claims – May 28th week
- 10:00 am: Challenger Layoff Report – May
- 10:00 am: Factory Orders – Apr.
- 10:30 am: EIA Petroleum Status Report
Canadian Market Calendar
- 2-year bond auction announcement
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 ECB keeps interest rates at 2 percent
2 European Manufacturing Shrank in May on Oil Costs
3 U.S. First-Qtr Productivity Rises at 2.9% Rate; Costs Rise 3.3%
4 Dollar Falls From Eight-Month High as Interest-Rate Gap Narrows
5 U.S. Initial Jobless Claims Rise Last Week to 350,000
Today's transcript.
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