ShadowTraderPro Focus Report for June 12, 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. As mentioned in yesterday's report, the weak price action over the past two sessions, the poor breadth ratio, and the gentle slope of the uptrendline on the 15-minute chart above pointed to another leg down in the S&P. Our analysis proved to be dead on, as the $SPX never recovered from a sharp morning selloff and suffered further selling into the close. The ShadowTraderPro Model Portfolio established a short position Wednesday morning in SPY to capture the short term momentum to the downside, which closed in the money by 1.33 points.
We felt that the two day consolidation in the $SPX was a very weak response to Friday's ugly, big bar selloff. The two consecutive doji's (circled in blue on the chart above) suggested further weakness to be resolved by another leg down to test support around 1325. The 1325 area is a prior swing low from 4/14 and 4/15 and is the target to cover our SPY short.
Looking at the weekly chart above we have listed a few key points clustered together near 1320 that should provide a great deal of support in addition to the prior swing low at 1325. Points 1 & 3 on the weekly chart of the $SPX above lay on the primary downtrend line of the selloff. Point 1 references the break of the downtrend line to upside in mid-April that confirmed the rally. This trendline that was once resistance has now become support at point 3, where the $SPX meets the backside of the trendline around 1317. Point 2 is the 200ma, which is the rising blue line that is currently sitting at 1317. Point LS is the left shoulder of the inverted head and shoulders pattern that is setting up. The head is the undercut in March, and $SPX is currently working on the right shoulder which should find support in between 1310-1320.
The selloff to the 1325 in the $SPX is key to setting charts up on the long side for a decent run. We are monitoring stocks with relative strength (see yesterday's report) for potential buy entries late this week or early next week.
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 |
12,084.00 |
-205.76 |
-1.67% |
| S&P 500 |
1,335.49 |
-22.95 |
-1.69% |
| Nasdaq Composite |
2,394.01 |
-54.93 |
-2.24% |
| Nasdaq 100 |
1,924.33 |
-48.21 |
-2.44% |
| Russell 2000 |
717.88 |
-14.74 |
-2.01% |
| Spot Gold |
$882.9/oz. |
+11.78 |
+1.35% |
| Crude Oil |
$136.38/bbl. |
+5.07 |
+3.86% |
| NYSE Overall Volume |
1,321,790K |
n/a |
-5% |
| Nasdaq Overall Volume |
1,889,900K |
n/a |
-9% |
| NYSE Breadth |
5.5 : 1 |
negative |
|
| Nasdaq Breadth |
6.6 : 1 |
negative |
|
| NYSE Breadth Ratio |
16.82 |
|
|
| Nasdaq Breadth Ratio |
12.93 |
|
|
| NYSE Advancers/Decliners |
-2,080 |
|
|
| Nasdaq Advancers/Decliners |
-1,525 |
|
|
| NYSE Trin |
1.17 |
|
|
| NASDAQ Trin |
2.15 |
|
|
| $VIX |
24.12 |
+0.94 |
|
| ES Pivot Points for Thursday |
R3 | 1371.75 |
R2 | 1364.25 |
R1 | 1350.00 |
Pivot | 1342.50 |
S1 | 1328.25 |
S2 | 1320.75 |
S3 | 1306.50 |
|
| Strongest Groups: |
Amex Oil | Coal | Natural Gas |
| Weakest Groups: |
Homebuilders | Airlines | Railroads |
Heads Up
Up and coming economic and corporate data that may move markets this week:
- Today
- 08:30am EST - Import and Export Prices
- 08:30am EST - Jobless Claims
- 08:30am EST - Retail Sales
- 10:30am EST - Business Inventories
- 11:30am EST - Fed Chairman Ben Bernanke speaks
- Friday
- 08:30am EST - Consumer Price Index
- 10:00am EST - Consumer Sentiment
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
| RIMM |
136.05 |
130.85 |
break of downtrendline |
| HERO |
34.72 |
32.27 |
breakout over highs of range and 20ma |
Short Ideas
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 6/9 - 6/13 |
| SPY |
short |
250 |
6/11/08 |
135.27 |
n/a |
n/a |
132.50 |
137.20 |
n/a |
133.94 |
1.33 |
$333 |
33,485 |
 |
| CLOSED POSITIONS week of 6/9 - 6/13 |
| SOL |
long |
200 |
6/5/08 |
24.10 |
6/9/08 |
22.80 |
n/a |
n/a |
closed |
n/a |
-1.30 |
($260) |
n/a |
|
| SDA |
long |
450 |
6/4/08 |
24.27 |
6/9/08 |
23.39 |
n/a |
n/a |
closed |
n/a |
-0.88 |
($396) |
n/a |
|
| |
TOTALS: |
250 |
open shares (open capital committed doesn't include closed trades) |
$33,485 |
Click here for ShadowTrader Pro closed trade stats
|
