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've been watching this Flir Systems stock closely. Is it breaking out of a downtrend going all the way back to Jan 1st 2009, and even farther back to July 2007? If it is, the long term channel would show FLIR going to $40 in the next year. Usually I wouldn't look at that big of a picture, but this time I found it interesting. Are my "calculations" correct?

Micah from Santa Barbara, CA

Micah, you are off by just a little bit, but your reasoning is sound. Let's look at the FLIR chart.

As you can see in the photo above, the peak in FLIR was actually in the summer if 2008. In 2007, the stock was still advancing strongly and spent most of the year going upwards. Since that July '08 peak we have indeed been in a downtrend as defined by the lower and lower highs that the trendline connects. Your assessment of the change in tone here is correct as the recent price action (green circle) clearly shows price now holding up above the trendline and even closing some monthly bars there.

In your email you say that you don't often look at "that big of a picture", so I chose your email purposely to remind people that they should. Very often looking at monthly charts on a 10 year time frame will show you support and resistance levels that you didn't even know existed. I personally like to flip through a bunch of monthlies on the evening of the last trading day of the month, when the monthly bars "print" and become "official".

Whether FLIR does indeed revisit its old glories in the $40 - $45 area is not known for sure, but the long term trendline break here does indicate that the odds currently favor that scenario more than a return to the teens.

Durable Goods Orders

In this week's pip academy, we discuss the impact of durable goods orders. Durable goods are those goods that have an average life span of three years or more. This would include things such as washing machines, refrigerators, other large appliances, computers and even transportation such as airplanes and automobiles.

Durable goods are an interesting number to watch because not only is it a good measure of purchases by consumers but it is also a measure of conservative behavior of the consumer. Consumers will still have to buy goods that are worn out and have to be replaced but consumers can usually fix those items in the durable goods category. In rough economic times, consumers choose to fix these items rather than trade them in or sell them and buy new.

This may be part of the reason we have seen O’Reilly Auto Parts (ORLY), Home Depot, and Lowes have done so well in the past year. People are not trading in their vehicles, they are having them fixed. People are doing the fixing in their homes and their appliances rather than getting new ones. So a low durable goods order and rising prices on those that supply the parts and services for repairs is an indication of consumers making do with what they have.

Durable Goods orders were expected to do better this past month and approach break even from the previous months orders but they fell by 1.3%. Reports have also indicated that this holiday season has still seen a lot of buying necessities and not extras. This may mean that we are not out of the woods yet but, as consumers, we are doing what we can to make things work.

This method will be wrong more than it is right but will take small losses, lock in profits quickly and the wins will outweigh the losses significantly.

In Thursday's show one of our new listeners asked a great question, "How do you make money in pairs if your long one stock and short another? Why not just go long both stocks? why go long one and short another "?
This is a Great Question.
First off, when you Pair Trade, you should always pick two stocks that are in the same sector. By keeping them in the same sector ensures that they should move in some kind of harmony. Typically when a sector moves in a direction, the majority of the stocks also move in that same direction. Now for our example we will assume we are going long some pair and thus when you go long the first stock and short the other, you are performing some kind of technical analysis that will draw you to some conclusion that your first stock should outperform your second pick. Thus as long as your first stock moves more than your first, you should have a winning trade.
Now with that being said lets say the market takes a dump. You were long your first but you were short your second. If your second falls more than your first stock, again you win and you will be able to take profits as well.
This style of trading pairs is also called hedging. One will win and the other will lose, but the net effect will be that the difference will be a profitable trade.
BUT...., Keep in mind if your first symbol of the pair moves down while your second symbol moves up (or moves up faster than your first) then you can lose.

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 Brandy our St Bernard who will deliver your answer personally. Keep your doors open wide. You wouldnt want to see what happens if your doors are shut when Brandy comes a runnin.

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.

Wynn Resorts Limited (WYNN) - Long

Entry - 104.00-to-101.84
Stop - 99.05
Target - 124.05

WYNN Broke out of its Bull Flag Pattern last week. Recently, the stock pulled back to retest the top of the flag from above. This is a perfect opportunity to enter long here in this area as shown above.

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. This service is now available for free. All you have to do is click on "Tools" tab on your TOS platform or go to www.MyTrade.com and "follow" ShadowTrader.

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, 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.