Featured setups from Monday April 4, 2005 closing data symbol scan
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Notes for the Day
- test of bottom on Dow / INDU may be enough to spark a multi-day bounce, but be aware that new positions must be brought to break even stop by day two if at all possible – significant resistance overhead and news later this week may bring the downtrend back. Still, we have no choice at such times but to take the trade.
- lack of shorts is an indication that many stocks have started to bounce but not yet in a shortable situation – we’ll have to be content with the shorts we have for now and let this day play out.
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
DIA – Dow 30 ETF, two likely paths marked out
QQQQ – Nasdaq 100 ETF, ditto
XLF – financials ETF – price must close strongly in our favour in order to hold
NTAP – retracement just above test of multi-week lows. Will stalk long today only.
Retracement or Pause in Up Swing / Up Trend
CYMI – semi equipment – holding up better than semis as a whole (note KLAC is retesting range bottom yesterday and may pop on that event too) – pulls back to fill analyst inspired gap. On the weekly:
CYMI – weekly – big trendline nearby. Keep alert.
N (also N:C TSX) – basic materials – pull back yesterday gives a one shot opportunity to try to capture a move in a new up trend.
Test of Top – Continuation
CM:C (TSX) or BCM (NYSE) – banks – pull back below a big test of range top, hold only if price remains and closes over breakout level.
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
NSC – rail – following the failed test of top, a bounce provides a one day opportunity to attempt a short here.
Special Situations
TSG – services to airlines, not directly impacted by fuel – note price dropped out of a rising wedge (unmarked) and has since rallied over the past week – bullish.
ELX – object lesson for the long-term folks – timing can be made to work in your favor too – just use the weekly chart a little more often. I review every chart in both daily and weekly time frame before considering them for swing trades.
INFA – IT services – apparently some takeover speculation in this name, which may doom it to remaining within the range but one never knows. Note article in BusinessWeek Online
05.04.05 00:03 #