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ShadowTraderPro Swing Trader for September 9, 2009 The ShadowTraderPro Swing Trader 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. To get the most out of your subscription, please read our Swing Trader User's Guide If you have any questions or comments regarding commentary or plays in this newsletter, please email to swingtrader@shadowtrader.net. The Big PictureGood morning, traders. Our after hour scanning prompted a closer look at the Dow Jones U.S. Real Estate Index ($DJUSRE), the chart of which is pictured below. Let's review why we like the pattern on the daily chart and then drill down to review a stock that we favor in this sector.  There are two major signals we see on this chart which lead us to believe the $DJUSRE is not only establishing a solid support area but also has an increased probability of moving higher. We have drawn a Fibonacci Retracement study from the low on 07/10/09 up to the high on 08/07/09. After the 44.70% increase in price between these two dates, the index retraced to the 38.2% level for the first time on 08/17/09 (orange circle). After a subsequent bounce higher, the $DJUSRE came back down to test the 38.2% level again before moving back higher over the last three trading days. The green circle on the chart highlights the second touch of the 38.2% level which we also view as the second point of a bullish double bottom pattern. Yesterday's follow through higher off Friday's bullish daily price bar gives us reason to think that the move off the double bottom has strength. One stock in the sector that is just breaking out of a bullish set up is Entertainment Property Sbi (EPR). Please observe it's chart below.  The EPR chart above looks very much like the chart of $DJUSRE. Yesterday's solid gain off the double bottom (orange circles) pushed the closing price just outside of the top descending trendline on the bullish pennant formation. We have noted to entry and trigger prices on the chart and listed EPR in today's Bulls and Bears section. Switching sectors, we have talked about the natural gas sector several times recently and it's price continues to linger under $3.00. However, companies that provide infrastructure for the natural gas industry and it's consumers are less effected by the price of natural gas itself as their services of storing and bringing the commodity to end users will continue to be in demand. This is exactly what Enterprise Product Partners (EPD) does and it has been a holding in the ShadowTraderPro Model Portfolio since 08/24/09. We are updating subscribers on the position with the chart and discussion below.  Last evening, the SEC accepted a required Form 4 from the company's chairman specifying his indirect purchase of almost 6 million shares of EPD at $25.25 per share. This equates to a $150 million purchase by the chairman. The company actually announced the transaction on September 4, 2009 so one could argue that the event has already been absorbed by the market since shares have traded higher since the announcement. So for the moment, let's set this aside and look at the daily chart of EPD as if this massive insider purchase had not taken place. Based on the chart alone, we think EPD still presents an attractive long opportunity. The stock has been channeling down since it peaked on 07/29/09, but notice that the OBV actually stands at nearly the same level that it did on that date (orange circles). This tells us that the price of EPD has "drifted" lower, but it's shares (or units) have certainly not been dumped by larger investors. EPD is also coming off a double bottom that we have highlighted with green circles. Yesterday, price closed back above the 20ma and above the top line of the descending channel. Put the latest bullish technicals together with the chairman's insider purchase and those that missed our original entry on 08/24/09 may consider a long trade here at the entry price noted on the chart which is more favorable than our original entry price on 08/24/09. Under The Hood
Heads UpToday - 09/09/2009 Thursday - 09/10/2009 Bulls and BearsLong Ideas
ShadowTrader Model PortfolioTo get the most out of your subscription and for detailed instructions on how to structure your own portfolio, read our Swing Trader User's Guide
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