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Every trading day, the ShadowTrader Focus List provides you with detailed trading ideas that have defined entries, defined stops and defined targets. Each issue contains 2-5 plays daily with full chart annotation explaining the rationale behind the setup. Stocks that are in focus may contain new breakouts to 52 week highs or lows, trendline pivots, pullbacks to moving averages, strong consolidations that are "building up steam" for a future move, or other technical events that foreshadow impending price action.
Additionally, each issue of the ShadowTrader Focus List always includes "The Big Picture" which gives a heads up on key technical levels in the broad market and a short term bias outlook. ShadowTrader feels strongly that the highest probability of a trade moving in the desired direction happens when the entry is correlated with pivots in the broader market which provide added momentum.
Good Morning, Traders. A first show of strength in the markets in some time on Thursday, however those in the trenches watching all day would call it quite a snoozer. The Dow ended up 93.73 with the S&P gaining 14.31 and the Nasdaq 29.07, but it certainly didn't feel like it. An opening gap up on early morning economic data just ground sideways to higher for the entire day ensuing in the aforementioned gains. Breadth was positive on both exchanges, however overall volume contracted greatly, being down by over 22% on the NYSE and Nasdaq. This of course is not good news for those who are looking to the long side of things as we would have liked to see an increase in overall volume to show some signs of institutional accumulation on these increasingly rare up days. Given that the bounces have been weak as of late, the Big Picture today offers up a daily chart of the S&P with Fibonacci retracment levels marked from the low to high of the recent down move. We find it interesting that the key levels of 38.2% and 50% (the most likely places where markets or stocks usually pivot before resuming trend), both lie very close to prior swing lows (circled in purple). This could be just one more chink in the bulls armor as we all know that areas that were bottoms before can often become tops when tested from the downside. If the overall volume patterns continue as they have, then odds are strong for another leg down in the near future. Keep a close eye on the circled areas in the S&P during Friday's trade.
ShadowTrader expects overall volume to be light ahead of the three day weekend during Friday and as such does not recommend new entries for swing or position trades. As such, today's Focus List does not include any stock ideas. Have a safe and restful Memorial Day weekend.
The ShadowTrader Focus List will not be published on Monday, May 29th which is a NYSE holiday. Publication will resume with the Tuesday, May 30th issue.
For questions or comments regarding the ShadowTrader Focus List, email to focuslist@shadowtrader.net
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