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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 late day report from semiconductor stalwart, KLA-Tencor (KLAC) turned around an otherwise bearish day, ripping the markets to new highs and closing positive in yesterday's trade. After trading negative in the morning session, the reversal caused a positive close in the Dow of 31.22, a gain in the S&P of 5.18 and an uptick in the Nasdaq Composite to the tune of 11.93. Overall volume kicked in on the reversal and closed up an average of 23% on both exchanges. The late day strength in the semiconductors brings us to our chart of the day which is the $SOX on a longer (weekly) timeframe. ShadowTrader clientele are coached to know that the Philadelphia Semiconductor Index is an internal indicator in and of itself and is regarded as extremely important in guaging sentiment and direction, much like our use of the advance decline line, breadth readings and TRINS. That being said, it is important to note just how far the semis have sold off recently and the fact that they may be setting up for a bounce here shortly which might pull the Nasdaq and then the S&P upwards a bit with it. In the chart above, note the overextension from the primary trendline (upper blue) and also the 20 period weekly moving average. In the markets there is always sector rotation as institutional money flows out of one area and into another. It's apparent from the chart that semis are currently out of favor. However, we must note that even if there is only a sideways correction here and not an all out bounce, the oversold condition will correct itself one way or another. Before skipping down to the focus list plays for today, note also the trendline moving along the bottom of the chart. This support is from lows of September of 2004 and also corresponds to a 200ma weekly support level as well. This confluence of technical support levels along with the overextension from the primary trendline is what may shake things up for the bears at least in the near term. Be careful out there. S&P continues to languish near its 200 day moving average and is also at a pivotal point where it needs to "make or break". That, coupled with earnings season getting under way in earnest could make for an interesting rest of the week.
For questions or comments regarding the ShadowTrader Focus List, email to focuslist@shadowtrader.net
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CORS - Corus Bankshares
Industry - Banking
Side - Short
Trigger - 25.65
Stop - 27.10
Target - 22.50-
Timeframe - multiweek
Notes
- Company is quite leveraged to the South Florida condo market
- After strong move down on weeklies, stock has shown no evidence of covering or bounce
- Stock tested prior swing lows and has next support at 200ma weekly (not shown) at $20.63
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DAKT - Daktronics Incorporated
Industry - Electronics (Displays)
Side - Long
Trigger - 28.22
Stop - 26.85
Target - 30.00+
Timeframe - 3 days to multiweek
Notes
- Pullback to 20ma daily (green)
- Retracement ending in doji, and bottoming tail on previous day indicating support in this area
- Market enviroment is not condusive right now for long buy and holds so trail stops tight and take profits
- Stock is slightly overextended on weeklies but not yet showing signs of slowing
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