Wednesday, August 24, 2005
Issue Contents:
| 09:26 | Swing Trade Setups Featured charts for Wednesday August 24 |
| 10:21 | The Day Ahead Economic releases and news |
| 14:53 | Crude Realities |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 19:29 | Swing Scanner Results Wednesday August 24 closing data |
| 19:30 | Market Statistics For Wednesday August 24, 2005 |
Featured setups from Tuesday August 23, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups
ETFSNotes for the Day
XLE – energy
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
XTO – energy – stuck in range = no trend at present so we only hold if price moves solidly in our favour.
APA – energy
ECA – energy / nat gas
CMS – smaller energy, possibly able to break out of the range however it is a potential head and shoulders; remain cautious as per XTO.
PLCM – the anti airline sector?
PAAS – silver
KGC – gold – follow up on yesterdays gold mentions.
ABX – Gold
AXP – credit
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
PCLN
AEOS – retail – gaps suggest this one may stall for a bit, but trending ADX gives enough reason to stalk a short here regardless.
PSUN – retail / clothing
FBR – brokerage
Good morning: today its Wednesday August 24th, the 236th day of 2005.
Durable Goods came in with a surprising decline, in part offsetting last month’s surprise to the upside. Business and economists appear to believe the trend remains generally up:
Mike Splinter, chief executive officer of Applied Materials Inc., the world’s largest maker of semiconductor-making equipment, said on Aug. 16 that he expected orders to pick up. ``Utilization of factories is going up as demand starts to increase and that gives people more confidence in investing,’’ Splinter said in an interview from Mountain View, California. ``We’re confident that we are going to see orders increase for the next couple of quarters.’’1
New Home Sales also surprised to the upside with a 6.5% gain in July.2
Meanwhile the market is marking time filling in the gap formed at the open, waiting for the EIA status report on oil, due at 10:30. In yesterday’s Crude Realities we noted a potential lever for the long side in the energy sector, and updated the rolling demand chart showing the four week US oil demand at 12 month highs and trending higher.
US Market Calendar
- 7:00 am: MBA Purchase Applications
- 8:30 am: Durable Goods Orders – July1
- 10:00 am: New Home Sales – July2
- 10:30 am: EIA Petroleum Status Report
- 2-year note auction
Canadian Market Calendar
- 5-year 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. Durable Goods Orders Declined 4.9% in July
2 U.S. New Home Sales Rise 6.5% in July to 1.41 Million Rate
Demand
From today’s EIA Weekly Petroleum Data for the Week Ending August 19, 2005, we see overall product demand hit another 52 week high of 21.3M bbl/day. This is a four week average; the trend is up.
Despite the second weekly drop in demand for Jet Fuel, overall demand heads higher. Perhaps folks are driving more, flying less. Gasonline inventories are down again this week, hovering at the lower end of the 5 year average.
Year over year demand growth continues to track well above EIA forecasts for 2005.
Commodities
Crude, October, made its second higest close ever today and is approaching the all time high for a test tomorrow.
NG – September – injections (inventory) report comes tomorrow but I want to highlight that NG made its higest close ever for this contract and is in a test of top situation here with high ADX. Long-side energy traders must use extreme caution (tighter profit / much tighter protective stops on new positions) in stocks that have a high NG exposure (such as ECA).
Last time NG hit these levels was due to cold weather in February 2003. Prices like this are not normally seen in the summer time.
Other Observations
Fill ‘er up, on credit: More and more drivers are financing their gasoline using credit cards, or are they? That’s the speculation in Credit cards soaking up gas woes –
(Card purchases jump to 70% of gasoline sales at convenience stores, up from 54% last year – but surely the advent of “Pay at the Pump” also has an impact on this migration as more and more gas stations upgrade to fully electronic pumps. Penetration of Pay at Pump stores in the US was 69% of market (convenience/gas stores) in 2000 – with almost all new stores using the technology. Surely market penetration must be quite high as of 2004.
Iran Oil Uncertainty: TEHRAN (Reuters) – Iranian lawmakers on Wednesday delivered a crushing vote of no confidence to the presidential nominee for oil minister, throwing the energy policy of the world’s fourth biggest oil producer into limbo. (Article)
Peak of Light Sweet Crude?: Another piece of the crude price puzzle is composition. Light Sweet Crude, such as Brent or West Texas, is preferred and therefore valued higher than heavier, sour crude. Yet both OPEC and Non-OPEC crude quality are in decline, according to reports from the US Energy Information Administration (PDF) and from OPEC itself, in the recently released August Edition of its Monthly Oil Market Report. Hat tip: Vital Trivia
Peak of Oil Majors?: As the oil majors were announcing results several weeks ago it struck me that few were announcing year over year increases for the last quarter. Thankfully have found someone who has already done the leg work to parse out production data from recent quarterly reports issued by the majors. Hat tip: Peak Oil Forum via Vital Trivia
Crude / Liquids Production Comparison vs Year Before Quarter
| Year | 2Q05 | 1Q05 | 4Q04 | 3Q04 | 2Q04 | 1Q04 | 4Q03 | 3Q03 | 2Q03 | 1Q03 |
| Chevron | -6% | -6% | -8% | -6% | -4% | -4% | -2% | -4% | -5% | -8% |
| Exxon | -5% | -4% | -1% | +1% | +4% | +5% | +4% | +1% | 00% | 00% |
| Shell | -3% | -8% | -9% | -5% | -5% | -3% | -1% | -3% | -2% | +9% |
| Total | -4% | -4% | -1% | +1% | +1% |
I spot checked some of the figures and found that the headline number was used in some cases – confusing oil and oil equivalents (translating NG into barrels of oil equivalent). But the overall story remains accurate – looking at Exxon’s first half 2005 production, 2005 output is off 3.99 percent. Also noted, Exxon production is down in every region of the world except for Africa, where the company is involved in some significant projects including offshore Angola.
What would be even more interesting is a more detailed review of the oil major’s growth via the drill bit as opposed to growth via acquisition. As traders, we’d be well advised to stick to companies with proven records of growth via the drill bit – for safety and also for potential takeover value.
Tropical Storm Katrina: is set to cross Florida and regain hurricane strength over the weekend, where it next lands, who knows. Recent five day direction forecast
Today's transcript.
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Wednesday August 24 closing data
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Statistics for Wednesday August 24, 2005
Our custom symbol universe of the most heavily traded or liquid US stocks is used as the base for analysis.
| Symbols in Up Swings | 286 |
|---|---|
| Symbols in Down Swings | 395 |
| Up/Down Swing Ratio | 0.72 : 1 |
| Advancers | 32% |
| Decliners | 65% |
| Unchanged | 2% |
| Up Bars | 29% |
| Down Bars | 44% |
| Inside Bars | 6% |
| Outside Bars | 16% |
| Close > 20EMA | 32% |
| Close > 50SMA | 46% |
| Close > 200SMA | 61% |
| 20EMA > 50SMA > 200SMA (trend up) | 37% |
| 20EMA < 50SMA < 200SMA (trend down) | 23% |