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ShadowTraderPro Swing Trader for May 11, 2010
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. We first want to state that ShadowTrader has developed a broader theory of future S&P 500 Index (SPY) price movement which we plan to take full advantage of via trading it for profit, however it may take weeks for the set up to come together. In the meantime, we will be presenting it over the course of a number of Big Pictures in the near future. For starters, we wanted to point out a shorter term possibilities of SPY price action on the chart below.  We have drawn two 61.8% Fibonacci retracement lines on the chart above. The gray line which is at 115.58 was drawn from the high on 04/26 to the low on 05/06 (gray circles). Yesterday, price broke above this level which could be taken as one indication that the market will continue higher. The magenta line at 117.26 marks the second 61.8% level derived from the Fibonacci retracement being drawn from the high on 04/26 to the low on 05/07 (magenta circles). This 61.8% level ties in nicely with the 50 day moving average (50ma-red line). In time, we think the market will back to the highs on 04/26, but this 61.8% level and the 50ma could be the first point where the index meets interim resistance. With the VIX still in the high twenties and the market's capacity for wide price swings intact, the SPY may move down off the 117.26 level and perform some "housekeeping" by filling the gap between the 05/07 and the 05/10 price bars (blue oval) before moving back higher through 117.26. What we want to get across most to subscribers today is that a move back to previous highs, no matter how the SPY eventually gets there should not be looked upon with bullish excitement. Healthy markets don't experience the type of volatility we are seeing now. It usually occurs around market tops. Good feelings about a return to prior highs is exactly what the market wants before it flushes the most people down the drain as possible. In fact, the market will only go lower when it has fooled the greatest number of people possible into thinking that the market is going higher. Today we are giving you notice that we see this day coming. Not only do we plan to avoid being one of the fools, we plan to derive large profits from it. Until then, ShadowTrader will be minimizing trading operations in the Swing Trader Model Portfolio. Setups from our scans were once again few and far between. Given the short term resistance and possibility of the gap fill discussed above, we have only listed trades coming into resistance as short term trading ideas. It may take more than one day for the stocks listed to reach the entry ranges listed so keep them on your radar. Under The Hood
Heads UpToday - 05/11/2010 Wednesday - 05/12/2010 Thursday - 05/13/2010 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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