TrendVue :: Archive

Wednesday, September 7, 2005
Issue Contents:

08:47	The Day Ahead Economic releases and news
09:10	Swing Trade Setups Featured charts for Wednesday September 7
16:15	TrendVue Trader Talk Today's transcript.

The Day Ahead

Good morning, today is Wednesday September 7^th, the 250^th day of 2005, and this week is the first week in seven where crude oil has traded lower than the week prior. Trend change or mere pause? Only time will tell.

IF energy product prices do not end their trend soon, following the spectacular Katrina-inspired spike, consumers will have a lot less disposable cash in their wallets this winter. The problem with apparent spikes? Such sharp moves up are only considered spikes if they fully reverse, otherwise, we might with hindsight be looking at breakouts to new and higher levels.

Weekly charts of Natural Gas, Heating Oil, Gasoline:

Gasoline spiked on refinery concerns, as did Heating Oil:

HO has not retraced as much of the break-out move as refiners should be, at this time, rushing to build stocks for the winter season, not restarting plants. Stocks are at the high end for this time of year, but whether this remains the case as the weather cools is another question. In the latest special update from the EIA sheds little light on how much capacity is expected to be off-line for an extended period of time.

Natural Gas is the scariest chart of all, unless your home is heated by something else! The one “positive” we can see in this chart, if a positive outcome equals price reversal in our minds, is that price has been rising along a parabolic curve. Historically such moves do not continue forever and most frequently correct rather sharply.

Unless and until these commodities correct sharply, it would be good for investors to indulge in what-if thinking when looking at sectors for trading and investment.

In other news, productivity and cost data showed an unexpected and unwanted revision to productivity, which grew at a slower than expected pace in the second quarter and registered the smallest improvement in five quarters. On the other side of the ledger, labour costs picked up pace, ringing in a 2.5 percent increase for the quarter, bringing the annualized labour cost increase to 4.2 percent, the largest gain since FY2000.

US Market Calendar

7:00 am: MBA Purchase Applications
7:45 am: ICSC-UBS Store Sales
8:30 am: Productivity – Q2 R
8:55 am: Redbook – Sep. 3rd week
2:00 pm: Beige Book

Canadian Market Calendar

8:30 am: Building Permits – July
9:00 am: Bank of Canada Interest Rate Policy 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 U.S. Second-Quarter Productivity Rises at a 1.8% Annual Rate Sept. 7 (Bloomberg)—U.S. worker productivity grew at a slower-than-expected pace from April through June and labor costs accelerated, which may prompt the Federal Reserve to keep raising interest rates.

² BLS Data: Productivity and Costs

^ 05.09.07 08:47 #

Swing Trade Setups

Featured setups from Tuesday September 6, 2005 closing data symbol scan (while we are transitioning to the new site code you can access the scan output in text form at http://www.trendvue.com/latestscan).

Jump to: Long Setups | Short Setups | Special Situations

Notes for the Day

While oil pulls back, markets are likely to continue to rise, although at some point inflationary data starting appear will put investors on edge. In the meantime, provided the pull back in the stocks themselves remains relatively narrow, we should be looking for long opportunity in the sector. Yesterday’s swing trade setups included a number of ideas, many of which can be carried forward to today.
US Dollar remains in a tight range and at times has been quite volatile; keep monitoring the greenback and gold here – within the next 1 – 3 sessions we may see gold stocks move up off the current retracement.

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

ECA – please keep in mind comments made in this mornings The Day Ahead regarding parabolic rises… applies here as well. However, as the largest supplier of NG in North America, and with no Gulf of Mexico exposure, ECA needs to be watched for long opportunitity even if we must remain cautious due to the strength and length of the trend.

Test of Top – Continuation

SIRI bull flag just under an important test; do not linger in this one if price doesn’t hold strength once/if it attempts to revisit the prior highs.

BIIB – another opportunity following last week’s setup.

XOM – integrated oil and gas – in falling Crude environment the integrateds can still do well; particularly if refined products are gaining a premium. I don’t normally look to trade XOM but these times may suggest following a little more closely the likes of XOM, CVX, PCZ (PCA:C), as well as refiners including VLO, TSO and generalists like MRO with refineries.

MRO

TER – tech, selling assets

KGC – gold

GG – gold

GFI – gold

CDE – gold, lagging

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.