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ShadowTraderPro Swing Trader for October 23, 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. The sustained weakness we were looking for did not play out, however the enormous number of long plays we were anticipating as a result of the last two days of trading has materialized. Some of the names on our list for potential long plays include UPS, AAP, LIFE, ADTN, BRTX, FAST, X, HIG, and FRT. We have profiled four other long plays from our list on the charts below and have included all four of these long plays in today's Bulls and Bears section. Please remember to be aware of the earnings release schedule for any stocks you are considering. In general, stocks tend to rise as the earnings release date approaches, however we do not want to be involved in any stock on the day of it's earnings release. Now let's get to the charts.  The first chart is a daily of O'Reilly Automotive, Inc. (ORLY). After rocketing up over two days last week, the stock has retraced over four consecutive days, but did not undercut the previous low. Yesterday's price action formed the first reversal bar after the large decline which indicates a long trade opportunity. We have listed an entry of 36.19 and a stop trigger of 34.98 for the trade in the Bulls and Bears section below.  Next in the lineup is RR Donnelley & Sons Co. (RRD) which has been channeling sideways in the "flag" section of a bullish flag price pattern. In this case, we are looking for a break higher out of the top side of the channel as the on-balance volume (OBV) has maintained it's higher level throughout the recent price consolidation. The entry and stop triggers are noted on the chart above and in the Bulls and Bears section below.  Today's third chart is of Nalco Holding Co. (NLC). This stock also had a large retracement after a run up. The key difference between this play and ORLY above is that the first bullish bar bounced off an ascending trendline which is acting as support. This indicates another long opportunity where and entry would be made just over yesterday's high and the 20 day moving average. The stop trigger is placed just under yesterday's low and the ascending trendline. Please note that this play is only good as a bounce play which should not be held longer than the close on Monday (10/26). Earnings for the company will be released on Tuesday (10/27) and as a rule, we do not want to be holding a position in any name on the day of an earnings release.  The final chart is of Millicom International Cellular (MICC). We are anticipating that the stock will make the second bottom of a double bottom price pattern (the first bottom is circled). Our plan is to enter a trade to the long side as price enters the range between 68.50 and 67.75. We think the stock will reverse higher from this level, but we have given it some leeway to move a little lower by placing the stop trigger at 66.25. Today's Big Picture was inspired by a question we received this week which asked the ShadowTrader what price patterns he thinks are the most powerful and to rank them in order. We have displayed some of our favorite patterns here, but check out the next issue of the ShadowTrader Weekend Update for Peter's rankings of what he believes to be the strongest price patterns. Under The Hood
Heads UpToday - 10/23/2009 Monday - 10/26/2009 Tuesday - 10/27/2009 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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