November 28, 2010
Issue No. 75 - FREE!

The enclosed video is produced by thinkorswim's 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 11.28.10

How to use RSI2 on charts

Is Gold shrugging off dollar strength?

Some currency ideas

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,

Can you please send me the ShadowTrader Pivot Point study that allows me to plot those right on my /ES chart?

A hundred people from Everywhere, USA


So if you tuned in on Monday, 11/22 you would have heard me sit in for the illustrious Brad Augunas on "the big show". Over the course of the day, it leaked out that I had some ShadowTrader Pivots in my studies list. Much mayhem ensued as listeners who saw the screenshow started emailing tos and asking where and how they could get the study. Turns out someone sent it to me long ago and it was a proprietary thingy and not included in the study list by tos themselves.

So, two points I want to bring up here. Firstly if you would like the thinkscript code, I've posted it to our site here.. Secondly, there IS an easier way. Most of you reading this by now should have Prodigio inside of your TOS Platforms. If you don't just send an email to prodigio@thinkorswim.com and the good people over there will hook you up pronto and get it turned on for you!

Check out the cool chart above. Note how its on SPY and not the futures. On Prodigio, you can just choose the ShadowTrader Pivots as a study the same way you would choose a moving average or Bollinger Band to put on your chart. There is no code to insert and you don't have to input any values from the previous day's High, Low, and Close. To shut it off, just click on the little "X" in the study and it deletes from your screen. Change the symbol and the studies will persist, just like any other.

Just as a side note now that I've got your mouth watering, 2011 for me is going to be a lot about automation and building strategies that Prodigio can manage for me while I sip superpremium vodka and chat on my Vertu phone with supermodels. Stay tuned. There will soon be a sharing function that will allow users to share WizardLab strategies with each other. That's exciting to me that something that I create might be tweaked by a hundred other people and made better. Happy Thanksgiving!


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.

Pivot Points, Fading the Trade

In this week's pip academy, over the past 2 weeks, we have discussed what pivot points are and how they can be traded in the direction of the pivots from day to day and using the pivots from day to day to decipher a trend. This week we are going to look at the right time to take counter trend/pivot trades.

If you take the time to look back historically, most pairs will rarely hit the R2 or S2 levels and will reach the R3 or S3 once in a blue moon. We will use the R2 as the example but know that the S2 works in a similar way, just in the opposite direction.

Look at every time price hits the R2, nearly every time it reaches this level, price will correct and pull back to the pivot level of the same day (if it occurred early enough in the day) or the pivot of the next day. If one were to short the pair at the R2 level and target the pivot the next day, they would be right between 60 and 87% of the time depending on the pair and based on the past 60 days of intraday charts. Make sure you validate the method on whatever pair you are considering.

Now we can add an additional oscillator to the mix and look for a cross out of the upper reversal zone or a divergence to confirm the short scalp. Notice in the chart below, price reached the R2 and we had a stochastic that crossed shortly after the price reached the level, confirming the opportunity to short and price hit the pivot was reached the same day and the next day in the two examples shown.

The trade of the week is on one that will likely trigger on Sunday’s open. We have been watching for the EUR/USD to pull back to the trend line over the past week.

Though the euro has some weakness in response to worries that Ireland may default on their debt, this is not very different compared to California possibly defaulting on its debt and the dollar doesn’t look too much better in the long term. We are going to be buying this pair with a test below the current support level as a buy limit at 1.3185. Watch for updates in the daily newsletters.

Thanksgiving is always a great time to remember how blessed and fortunate we are to live in the country we do and to have the freedoms to do as we please, including the freedoms of life, liberty and the pursuit of happiness (yes, trading is a pursuit of happiness). Keep friends and family close and let them know how grateful you are for them at this time. Happy Thanksgiving everyone!


Lori (one of our groupies) asked us. "We have seen you use that excel file for tracking and or calculatig Risk/Reward, spreads and seeing that it links TOS to the excel file. Can you share it with us.?"
Lori, No Problem. I would be glad to share my excel file with you and everyone else.
To get this excel file please click this Link to get Evan's Pair Excel Sheet . Please note you must have the TOS platform open before opening this excel sheet. Once you click on the excel file you will be asked if you want to update your values, Click Update and continue.

For more information on this excel and how to use it click this Link to see a quick video and we will also review more details in next weeks broadcast as well.

Now that ShadowTrader has moved to MyTrade, email alerts are no longer available for advisories. However you can get real-time text messages sent to your phone every time we trade or post a new newsletter. Just text "follow st_pairs" (without the quotes) to 40404 on your cellphone. No twitter account is needed. Enjoy.

Any questions, email us at pairstrader@shadowtrader.net and we'll unleash Herby our homing pidgeon who will deliver your answer personally. Keep your windows open.

The Pairs Hour with Evan Matz is happening on Thursdays at 4:15pm EST in the ShadowTrader chatroom on the TOS platform. Last week's show as well as all previous shows are archived here.



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.



Prudential Financial, Inc. (PRU) - Short

Entry - 51.38
Stop - 52.38
Target - 48.56

It appears that the insurance giant PRU is destined to trade down to the prior low of 08/25.

After two prior attempts (magenta circles) the stock has broken the 61.8% level of the Fibonacci retracement study drawn from the low of 08/25 to the high on 09/22. This is a good indication that the stock will continue it's medium term trend lower.

A look at a wider term chart shows the stock is continuing to make lower-highs and lower-lows. We have specified a target for this trade at 48.53 which is the level of the most recent lower-low, but if PRU trades down past this point to make a new lower-low, it could go as far as the next point of support which is 46.20.



For an average of 2-5 trade ideas like this every day along with daily market analysis and trading guidance, subscribe to the ShadowTraderPro Swing Trader for just $20.00 per month here.

ShadowTrader moving to MyTrade - All three ShadowTraderPro newsletters have moved from RedOption to MyTrade and are posted FREE daily. Click on "Tools" tab on your platform on August 1st, or go to www.MyTrade.com.

Twitter & Facebook - Did you know you can get real-time tweets when ShadowTrader advisories send out newsletters or trades? Just text the following (without the quote marks) to 40404 on your cellphone. Twitter account not necessary.

For Swing Trader text "follow st_swing"
For FX Trader text "follow st_fx"
For Pairs Trader text "follow st_pairs"
For Weekend Update text "follow st_weekend"

ShadowTrader is also on FaceBook here.

ShadowTraderPro Pairs Hour with Evan Matz - Thursdays, live on the TOS platform, Evan Matz 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.

ShadowTraderFX Hour with Blake Young - Tuesdays, live on the TOS platform, Blake is hosting a 1 hour program on the basics of FX trading. Tune into the ShadowTrader chatroom under the Support/Chat tab on your platform at 4:15pm EST.

ShadowTrader.net relaunch! - The shadowtrader website has been redesigned to reflect our new relationship with MyTrade. Check it out here.