November 29, 2009
Issue No. 26 - FREE!

The enclosed video is produced by Chief Technical Strategist, Peter Reznicek. Each video contains a look ahead at what the market is going to do next week (SPX, Dow, & Nasdaq), along with what sectors are about to move, and specific trading ideas for the coming week ahead.

At ShadowTrader.net we believe that every investor's success begins with a good trading plan. For maximum benefit, please review the enclosed video prior to start of your trading week.

Grab some popcorn and enjoy!

Shadow Trader Video Weekly 11.29.09

$tick divergence on Friday

Look at dollar/gold

5 higher highs in market now...

Each week, we select one email from the hundreds of thousands that we receive each week (slight exaggeration), and answer it live here in this forum thereby educating readers and making one lucky person famous for the day.

Email your questions in to asktheshadow@shadowtrader.net and we'll take it from there.

Dear Shadow,

I know you are vegetarian and when you used to do the broadcast there were a lot of jokes about veggie burgers being thrown around. I'm thinking of making some changes to my diet and was thinking that might be a good place to start. There seem to be a lot of brands out there, which ones do you eat?


Rob Keene - Hartford, CT


Rob, I got two words for you, Amy's Kitchen. Hands down, the absolute best. Boca burgers? Morningstar Farms? Nah, both contain artificial flavoring and a bunch of other things that nobody can pronounce. Amy's has none of that and their list of ingredients is mostly organinc stuff that everyone is familiar with like onions, mushrooms, potatoes, bulgur wheat, etc. They don't try to imitate the taste of real meat, but rather succeed in simply providing a very tasty veggie/soy patty that stands in a class of its own. Expect to pay a bit more for this quality (sometimes as high as $6.50 per box of four at some upscale markets), but its worth it. My personal favorite is the "California" which is made of just vegetables and doesn't even have soy in it. Go from freezer to belly in 3-4 minutes with the help of a lightly oiled skillet. It's that simple.

After that if you want to take it to the next level (and save some money to boot!), then make your own. Here's a really simple recipe as a starting point:

1 can red kidney beans
1/3 - 1/2 cup of breadcrumbs
1 egg white
1 onion (optional)
Salt and pepper to taste
Olive oil

Drain the water out of the can of beans and pour contents into a mixing bowl. Add the breadcrumbs, salt and pepper, and the egg white. Mash it all up with a large spoon, serving fork, or whatever you like, until all the ingredients are thoroughly mixed and its all in one big lump. If too loose, just add more breadcrumbs until you get it to your desired firmness. If you like, chop an onion very finely and sautee it well until its good and brown and add this to the mixture. Any type of soy or other marinade type of sauces you like can also be added during the mixing process for flavor. Be creative.

Once you have your mixture ready, pour olive oil in bottom of skillet, just enough to cover bottom. Grab a small amount of the mixture and roll into a ball and then flatten into patties with your hands. Sautee them in the skillet until good and brown on both sides. Keep the heat as low as possible so that you can cook slowly so that the beans cook inside as well as out. Cooking too fast will just brown the outsides but leave them raw inside.

Put on buns and garnish with your usual hamburger toppings of choice. You should be able to yield about 4-5 good sized burgers from this recipe. Any unused portion can be stored in a covered container for about a week. Enjoy.

ShadowTrader Weekly FX Recap

ShadowTrader Weekly FX Recap is your weekly scoop on all things Forex, with fresh content catering to both the experienced FX trader and those just starting to get their feet wet. ShadowTrader Pip Academy is a weekly online lesson where traders will learn the basics of the Forex market, technical analysis, and fundamental analysis as it applies to trading currency. ShadowTraderPro FX Trader Live Call of the Week will highlight as actual trade taken in the newsletter over the past week and recap the setup and successful execution of the trade from start to finish. Things You Should Give a Pip About is a look at ahead at the news and markets that you should be paying attention to in the coming week to improve your chances of success in the currency markets.

Systems (II) - Adjusting Systems for Individual Pairs

In pip academy this week we continue with a discussion of systems. We will not be showing the full systems we will be using in our newsletter but we will be discussing the frame work we have used to build our systems. In earlier pip academies we discussed the stochastic, how it was to be used and how to adjust the indicator. We will be applying the stochastic to 3-4 specific currencies, looking for very precise entry points based on back testing and adjustments to the stochastic, making the values unique to the currency pair.

For example, those who attended the FX Hour a number of weeks ago saw the 9,3,5 full stochastic applied to the GBP/USD with precise stop loss and target that were used on every trade. We will be using this same indicator value on the GBP/USD but we may be using different values for the AUD/CAD and different profit targets and stop losses. The intent is to have a system that is adjusted appropriately for the currency pairs we are trading, being prepared to adjust the indicator or the money management as the market conditions change.

Specifically, the indicator will adjust as the cyclical nature (think frequency) of the currency pair changes and the money management will change with the price volatility (think amplitude). Below is a image of the GBP/USD showing the frequency and amplitude coordinating with the indicator.

We waited for specific price action responses this past week and some came to fruition but many during the night with highly aggressive price movements. We were fortunate to have missed the break out as most reversed and erased large breakouts.

The trade of the week then is one that hasn’t happened and we are watching for it to break out. Consider it a free preview of what we are looking at in the newsletter advisory. We are watching for the GBP/CADto break out of its channel. The pair has been channeling for a number of weeks but more importantly, has formed an amazing inverted head and shoulders. If the pair breaks above the neck line we are expecting a move of at least 1700 pips to the top side. If the pair breaks channel support, we expect it to retest previous support, also a very large move. This may take a 300-500 pips stop loss depending on our timing but it will be well worth the trade if our target is reached.

This week is a busy week again; remember we are in the first week of the month which means non farm payroll numbers. The employment data is critical in the overall health of our economy. There was a lot of talk about the weekly jobs data improving and many were saying it was a great sign of recovery that the weekly jobless claims had dipped. That, in our opinion, is a little too simple of an explanation. The fact is there are less people to be fired and we are continuing to see roughly the same percentages of people filing for new unemployment benefits each week when looking at the number as a percentage of the currently employed. That's the reason this number may be reducing the number of people that can be laid off. Until we see job creation, lower new jobless claims may not be a positive thing. Watch non-farm payroll and read the report. We will likely digest the data in next weekends report.




Not much to report in this week's Pairs Corner so we thought we'd just showcase a good pair which we've had some success with lately. The pair below has a lot going for it and exhibits many of the characteristics of pairs that consistently provide good trading opportunities in both directions.

The picture above is somewhat "scrunched" so it doesn't do the pair justice so to speak. Enter "RGLD-NEM" into your tosCharts to get a better view. When doing so you'll see that the 10 period moving average (our standard measure of trend vs non-trend in any pair) is very flat. Additionally, correlation in between these two mining symbols is at 99% which is about as high as you can get it. Use the fast RSI2 shown at the bottom for entries and exits. Right now it's looking like a buy on RGLD and a short on NEM based on that indicator. Test it out in PaperMoney if you're new to the game.

RGLD-NEM is indicative of the types of pairs that we unearth and showcase daily in the ShadowTraderPro Pairs Trader. If you are interested in receiving the Pair of the Day, along with real-time email alerts of pairs trades you can follow along with, all for the low, low price of just $20 per month (We tried to get Vince from Sham-Wow to shill for us but the guy is way more expensive than we thought!), click here.

The Pairs Hour with Peter Reznicek is happening on Thursdays at 4:15pm EST in the ShadowTrader chatroom. Last week's show is archived here.

Feel free to send any pairs trading questions to asktheshadow@shadowtrader.net


Each week Peter and his minions scour the markets to find the best equity and forex setups for the subscribers of the Swing Trader and FX Trader. Premium subscribers get 2-5 of these daily. Every weekend we present one trade idea from either the equity or the forex side here. Note: Free weekly trade ideas are strictly DIY (do it yourself!) and are not actively managed or updated once presented and may or may not be stocks that are currently in play in our newsletters. For a more "full service" feel, with real-time email alerts and updates, please check out the ShadowTraderPro Swing Trader and ShadowTraderPro FX Trader.

Schlumberger Ltd (SLB) - Long

Entry - 63.60
Stop - 61.95
Target - 68.35

Pickings are rather slim in the scanning department this weekend with the broad market being stuck in a trading range currently. Some oil and gas and oil services names came across our radar, however and we are showcasing one that looks the best to us.

SLB is a classic trendline support play as evidenced in the chart above. There is a clean touch of support right here in the low $60's area. The entry and exit parameters that are listed are referencing Friday's bar whose lows stopped right on the line, practically to the penny. This is not uncommon as far as trendlines are concerned. The target listed is the last prior swing high from October. Note that this touch of the trendline is coming off of a lower high. Sometimes this is a red flag and sometimes it is not. Oftentimes a stock can just get so overextended from its primary trendline that this pattern is formed as it comes back down to meet it. Either way, always honor stops. A violation of Friday's low would also be a violation of the trendline support and a signal to get out of dodge.

ShadowTrader on Your Money Matters Radio - Peter Reznicek of ShadowTrader recently wrapped up a second appearance with Marc Pearlman on Your Money Matters Radio. Click here to listen.

Twitter & Facebook - Over 2,000 of the faithful are now following ShadowTrader on Twitter! Click here to get our tweets. Don't worry, all market related info only. We know you don't care what we had for lunch! ShadowTrader is also on FaceBook here.

ShadowTraderPro Pairs Hour with Peter Reznicek - Thursday's, Peter Reznicek is hosting a 1 hour program on the basics of pairs trading. Tune into the ShadowTrader chatroom under the Support/Chat tab on your platform at 4:15pm EST.