Thursday, August 25, 2005
Issue Contents:
| 09:25 | Swing Trade Setups Featured charts for Thursday August 25 |
| 09:53 | Quick Take: Gold and USD |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:46 | Swing Scanner Results Thursday August 25 closing data |
| 16:48 | Market Statistics For Thursday August 25, 2005 |
Featured setups from Wednesday August 24, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
- Crude is off marginally before the open; markets are up marginally. Reminder, today we will see the Natural Gas report – while not as closely watched as the oil inventory report, can spark a move (pun unavoidable) in the sector and other commodity. Remember the parabolic rise in NG noted yesterday in Crude Realities
- The sell off yesterday broke clearly out of the big 1 month range in YM; a first shot across the bow perhaps, follow through may not be immediate, if there is indeed more downside to come. We’ll want to cautiously take long positions just in case the sell off turns into fuel for a rally; however we should do so only with the view that price is somewhat more likely to resume the downward trend later today, or within the next couple of days (a bear flag bounce may form on the daily) and be prepared to exit accordingly.
- US Dollar is on the edge here – until 87 on the index breaks lower we can expect more chop but do keep an eye on Gold and gold stocks for intraday opportunity. Sometimes the metal moves first and allows for an entry ahead of the obvious move in stocks.
ETFS
IWM – easier setup for stalking the short side
QQQQ – tech, a long idea
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 unforeseen 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 survived 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.
Retracement or Pause in Up Swing / Up Trend
SSTI – some semi names look “not bad” – perhaps monitor SMH for intraday setups as well on long side.
ONNN – tech
MRO – energy – received broker upgrade this week; price must close above 2 day high to keep.
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
HDI – Harley – perhaps buying that next hog is something to be put off…
AFFX – gap fill may not come…
Special Situations
JNPR – based on performance of CSCO and JNPR lately (weak!) it feels hard to stalk the long side here – but there is a notion of a triangle break and pull back that can be stalked. The chart doesn’t offer a lot of confidence that a bounce will last – down does seem to have more oomph here.
Gold
USD
USD Intraday – Gold may move before the range low is taken out, but until 87.50 breaks and holds more chop is likely than not. Still, given the big sell off in some gold names, I’m going to be stalking intraday long opportunities – moving stops to break even as soon as possible – just in case.
Today's transcript.
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Thursday August 25 closing data
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Statistics for Thursday August 25, 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 | 268 |
|---|---|
| Symbols in Down Swings | 413 |
| Up/Down Swing Ratio | 0.64 : 1 |
| Advancers | 63% |
| Decliners | 35% |
| Unchanged | 2% |
| Up Bars | 23% |
| Down Bars | 40% |
| Inside Bars | 30% |
| Outside Bars | 4% |
| Close > 20EMA | 63% |
| Close > 50SMA | 48% |
| Close > 200SMA | 61% |
| 20EMA > 50SMA > 200SMA (trend up) | 35% |
| 20EMA < 50SMA < 200SMA (trend down) | 25% |
An inside day setups up the potential for an EX/RC/EX pattern setup —expansion, range contraction, expansion—with a target below roughly near 103 on this DIA Dow 30 ETF chart.
If the market decides to bounce from here we’ll want to see price push though overhead resistance and hold strongly into the close before getting excited that a bottom is in place. Otherwise, sellers may return in force near 105 and send the market back to the penalty box.
Life on the edge…