ShadowTraderPro Focus Report for February 28, 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. For the second session in a row broad market indices came under selling pressure in the afternoon. We think the action to be a mixture of traders cashing in ahead of the 50 day moving average, as well as some anxious short sellers looking to get in ahead of the crowd. Yesterday's price action was an inside day in the S&P, which wasn't a bad deal for the bulls considering there were three consecutive higher closes. A few days of horizontal action at/near the 50ma could potentially lead to another leg up in the SPX, which would have all the intermediate-term traders salivating over short entries.

Gold is back on traders wish lists, as the euro broke out to new highs above 1.50 against the dollar. If the breakout continues to trend higher then we should be sitting pretty with our two gold positions. Aside from gold, most of the leading groups of the past few weeks were in consolidation mode yesterday. The number of quality setups to the long side has dried up, however, this is something that is easily curable with one or two more days of sideways action.

Today's chart is a 'lil something for the bears who we have been neglecting over the past two weeks. For traders looking to hedge their long exposure with a short or two, we recommend shorting stocks that have big time relative weakness to the market. These stocks for whatever reason are ignoring broad market action and have the ability to go lower while the market pushes higher. A strong example of this would be the chart of GPRO above which has recently broken down from a weekly bear flag consolidation, and looks poised to see further selling on a continuation breakdown from a tight trading range. We have two simple indicators listed on the chart above, OBV (on balance volume) and RS (relative strength). The OBV tracks the volume flowing in and out and the RS measures the relative weakness of GPRO versus a broad market index (SPX). Both the OBV and the RS lines have broken down ahead of the price action in the chart above which is a bearish signal. This negative divergence is a great confirmation tool and gives us confidence that the setup will follow through to the downside when it triggers (email us if you have questions regarding these indicators).

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	12,694.28	+9.36	+0.07%
S&P 500	1,380.01	-1.26	-0.09%
Nasdaq Composite	2,343.78	+8.79	+0.37%
Nasdaq 100	1,799.94	+8.63	+0.48%
Russell 2000	716.57	-0.87	-0.12%
Spot Gold	$961.00/oz.	+12.10	+1.28%
Crude Oil	$99.616/bbl.	-1.27	-1.26%
NYSE Overall Volume	1,393,310K	n/a	-5%
Nasdaq Overall Volume	2,216,800K	n/a	-3%
NYSE Breadth	1 : 1	parity
Nasdaq Breadth	1.9 : 1	positive
NYSE Breadth Ratio	49.86
Nasdaq Breadth Ratio	61.31
NYSE Advancers/Decliners	-451
Nasdaq Advancers/Decliners	-127
NYSE Trin	.79
NASDAQ Trin	.49
$VIX	22.69	+0.79
Strongest Groups:	Homebuilders	Gold	Insurance
Weakest Groups:	Airlines	Coal	Gambling

Heads Up

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

Today: 08:30am EST - GDP (preliminary); 08:30am EST - Jobless Claims; 10:00am EST - Fed Chairman Ben Bernanke speaks (busy guy!); 10:00am EST - Help Wanted Index; Reporting earnings before the open: FLR, FRE, LEAP, SHLD, S
After the close: AIG, BVN, CPHD, CMED, RIO, DECK, DELL, HANS

Friday

08:30am EST - Personal Income and Outlays

09:45am EST - NAPM-Chicago

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

Symbol	Trigger Price	Stop Price	Notes
CLF	127.55		stop beneath low of breakout bar (using daily chart)
PCLN	128.70	125.70	stop beneath low of breakout bar (using daily chart)

Short Ideas

Symbol	Trigger Price	Stop Price	Notes
GPRO	50.33	51.05	breakdown from tight range
T	35.05	35.86	reversal bar after weak bounce to fill gap
PSYS	28.26	29.20	break of tight pennant

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 2/25 - 2/29
BNI	long	100	2/26/08	89.50	n/a	n/a	95.00	88.80	open	89.57	0.07	$7	$8,957
	comments: closed at our trigger price
AEM	long	125	2/19/08	65.25	n/a	n/a	70.00	61.70	open	69.11	3.86	$483	$8,639
	comments: led gold stocks higher, showed great relative strength
GLD	long	200	12/21/07	88.70	n/a	n/a	100.00	87.00	open	94.78	6.08	$1,216	$18,956
	comments: gapped to new highs
CLOSED POSITIONS week of 2/25 - 2/29
SPY	long	200	2/25/08	137.30	2/27/08	138.73	n/a	n/a	closed	n/a	1.43	$286	n/a
	comments: sold into resistance of the 50ma
AG	long	150	2/25/08	66.10	2/27/08	66.13	n/a	n/a	closed	n/a	0.03	$5	n/a
	comments: breakeven stop on light volume breakout that failed to impress
JRCC	long	350	2/25/08	17.00	2/26/08	17.35	n/a	n/a	closed	n/a	0.35	$123	n/a
	comments: trailed a tight stop due to sharp reversal
	TOTALS:	425	open shares (open capital committed doesn't include closed trades)										$36,552

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.