ShadowTraderPro Focus Report for March 19, 2008

The ShadowTraderPro Focus Report is your every morning dose of market reality brought to you from the resident geniuses at ShadowTrader. Overseen by Chief Equity Strategist, Peter Reznicek, each issue contains a full report on the prior day's action, including market internals, technicals, and what sectors were hot and cold. Each issue also includes the ShadowTraderPro Model Portfolio, which updates members on what stock plays STPro is currently engaged in officially, as well as provide a daily list of long and short setups for more self-directed traders and investors.

If you have any questions regarding commentary or plays in this newsletter, please email to focusreport@shadowtrader.net.

The Big Picture




Good Morning, Traders. With the market at its darkest hour and plenty of bearish sentiment to go around, the Fed delivered a less than expected rate cut of .75 basis points. The market was looking for a full point cut, however, a little "tough love" by the Fed inspired some heavy buying and strong price action in the final hour of trading. So what has changed? Monday's reaction to the Bear Stearns fire sale and the Fed's emergency discount rate cut looks to have been the final shakeout that is always needed to jump start a rally. Tuesday's heavy gains across the board confirmed Monday's reversal, which we were hesitant to label as bullish in yesterday's report. There are so many reasons out there not to buy, but the stock market is always forward looking, so we are more concerned with what it is telling us now....which is.....it's going higher.

GS and LEH logged monster gains and restored some much needed confidence to an industry teetering on disaster. The strength of today's move was confirmed by impressive market internals. A/d lines were glued to the highs and trins glued to the lows. Up volume accounted for over 90% of the day's total volume which is a very substantial reading.

Basically we see the situation like this in a nutshell. Tons of bearish sentiment out there. One of the most venerated firms on Wall Street gets crushed to nothing. S&P 500 answers by doing a classic undercut gap down and rally off of its prior low and thus fails to close at new lows. While this is happening, Nasdaq does same and Dow never comes close to swing low, manifesting the classic ShadowTrader "'out of sync breakdown" that has frustrated short sellers of new low breakdowns since the beginning of time. This is causing the market to make what we have referred to in the past as a "possible complex bottom". We have only skirted this issue before because we had not seen enough of it fully form yet to call it that. With the recent multiple repeated tests of the same area, we feel more confident now that it may be indeed what has developed.

At the end of next week we'll do an analysis on the monthly charts of the major averages. If you want to cheat and take a sneak peak yourselves, feel free.....

Under The Hood

When we say "under the hood" we mean market internals, ie: what was really happening behind the scenes. ShadowTraders who listen to our daily broadcast every day live on the thinkorswim platform know that all closing figures on the major averages should only be interpreted in the context of market internals. Look for convergences and divergences in the breadth, a/d line, and trin figures below to either confirm or cast doubt on what all those talking heads on TV are telling you.

Dow Jones Industrial Average 12,393.00 +420.75 +3.51%
S&P 500 1,330.74 +54.14 +4.24%
Nasdaq Composite 2,268.26 +91.25 +4.19%
Nasdaq 100 1,761.05 +73.86 +4.38%
Russell 2000 681.93 +31.45 +4.83%
Spot Gold $1,004.30/oz. +1.70 +0.17%
Crude Oil $109.42/bbl. +3.74 +3.54%
NYSE Overall Volume 1,797,090K n/a -6%
Nasdaq Overall Volume 2,101,570K n/a -2%
NYSE Breadth 18.9 : 1 positive
Nasdaq Breadth 11.1 : 1 positive
NYSE Breadth Ratio 94.89
Nasdaq Breadth Ratio 91.26
NYSE Advancers/Decliners +2,482
Nasdaq Advancers/Decliners -+1,585
NYSE Trin .37
NASDAQ Trin .27
$VIX 25.79 -6.45
Strongest Groups: Mortgage Finance Brokers Homebuilders
Weakest Groups: Gold Utilities Mining

Heads Up

Up and coming economic and corporate data that may move markets this week:

Today
Visa IPO debuts under the ticker V
10:30am EST - Crude Inventories
Reporting earnings before the open: AES, GIS, MS
After the close: DDS, NKE
Thursday
Quadruple Witching
08:30am EST - Jobless Claims
10:00am EST - Leading Indicators
10:00am EST - Philadelphia Fed Survey
Reporting earnings before the open: CCL, FDX, KBH
After the close: PAY
Friday
US markets are closed

Bulls and Bears

This section is for self-directed traders and investors who like to "do it themselves". Every trading day, Bulls and Bears will list long and short equity setups with defined entries and stops. Note: A listing in this section does NOT necessarily mean that the stock will end up as a part of the ShadowTraderPro Model Portfolio. Plays listed here change daily and are not managed or tracked by ShadowTrader unless traded via e-mail alert.

Long Ideas
 Symbol Trigger Price Stop Price Notes
TNE 26.00 23.42 break of downtrend line on bullish consolidation
OFG 22.25 20.57 breakout to new 52-week highs from tight range
SID 40.11 36.50 breakout from tight range near the highs
Short Ideas
 Symbol Trigger Price Stop Price Notes
none

ShadowTrader Model Portfolio

The matrix below shows all current ShadowTrader Pro plays in the Model Portfolio. The Model Portfolio contains only those plays that are sent out in real-rime via email. Bulls and Bears plays above are not actively managed or tracked. Current open positions are on top, with positions that were closed in the current calendar week on the bottom. Closed positions are moved out of the matrix on Monday mornings and posted in our performance page here.
To get the most out of your subscription and for detailed instructions on how to structure your own portfolio, read our Focus Report User's Guide

sym dir size date
entered		 entry
price		 date
closed		 exit
price		 target stop status mark
to
market		 p&l
points		 p&l
capital		 capital
commit
 OPEN POSITIONS - week of 3/17 - 3/20
 CLOSED POSITIONS week of 3/17 - 3/20
PTNR long 400 3/3/08 21.96 3/17/08 22.20 n/a n/a closed n/a +0.24 $96 n/a
 comments: sold for a small gain after false breakout to new highs in weak market
  TOTALS: 0 open shares (open capital committed doesn't include closed trades) $0
Click here for ShadowTrader Pro closed trade stats
All content © 2007 by ShadowTrader Technologies, LLC. All rights reserved.

Disclaimer and Waiver of Claims: Disclaimer and Waiver of Claims: The ShadowTraderPro Focus Report is a newsletter service, designed as supplemental material for the ShadowTraderPro Newsletter subscription service and it is not intended to be a stand alone newsletter. The risk of loss in the trading of any securities products can be substantial. The strategies mentioned here are active trading strategies, therefore you should carefully consider whether such trading is suitable for you in light of your personal investment objectives and financial resources. This material is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. Past performance of any trades mentioned never guarantees future results.

Securities and options involve risk and are not suitable for all investors. See the characteristics and risks of standardized options.