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Here is just the commentary and chart of today's focus report. The full version with stock picks and real time email trade alerts is available at our site for $20 per month.
The Big Picture
<img border=5 width= 559 height=659 src="http://www.shadowtrader.net/focus_report_charts2008/080428NEU.gif"><br><br/>
Good Morning, Traders. Though we are bullish on the market we are opening up today's letter with a potential short candidate. Note the vicious selloff on the chart of NEU above, as investors did not respond favorably to earnings on 4/23. The gap down-destruction bar of 4/24 trapped all the longs who were patiently waiting to take profits on this IBD 100 darling (currently ranked 30th). NEU basically doubled off the lows in just three months, forming virtually no areas of support along the way. Once the trend reverses on these type of advances, watch out below, as there is nothing left to slow the fall. Look for a light volume bounce into the 50ma as a low risk short entry point. This stock could easily slide back down to the 200ma over the next few weeks.
Some market leaders bounced back nicely on Friday while others have a tough road ahead. Heavy volume selling in fertilizer stocks suggests they need a few weeks of consolidation to digest recent gains. These stocks have made an impressive run but are now on everyone's radar, so who is left to buy? Coal stocks look buyable on this recent pullback. CNX, BTU, ACI, and JRCC are swing setups over the prior day's high. BUCY pushed to new highs on big volume which should benefit other farm & mining machinery stocks such as CAT, AG, DE, and JOYG (all strong chart patterns pulling back off the highs). We see quite a few pullback opportunities in oil stocks like DO, DRQ, ATW, RIG, WHQ, HES, XOM, and SLB (mostly oil equipment and services).
Markets got off to a rough start due to weak earnings from MSFT, but managed to stabilize during lunch and extend higher through the afternoon session. The SPX closed positive on the day and finished the week just below the all important 1400 pivot level. The early selling was heavier in the Nasdaq, as evidenced by the internals. At the session lows, the NYSE breadth was a minimal 1.4 to 1 versus a bearish 3 to 1 negative reading on the Naz. While the Naz struggled to push higher late in the day, the S&P set new intraday highs led once again by the financials. The Fed meets this Wednesday, so it would seem unlikely that the S&P will take out 1400 prior to the decision. The market knows that there is a chance the Fed is through cutting rates but doesn't seem to care (the dollar has rallied ahead of the Fed possibly signaling no cut at all). Leading groups recovered from heavy selling on Thursday and new groups and names are continuing to emerge, so the technical picture for bullish patterns remains very positive. We remain cautiously bullish ahead of the Fed and look for broad market indices to eventually push higher.
Here is just the commentary and chart of today's focus report. The full version with stock picks and real time email trade alerts is available at our site for $20 per month.
The Big Picture
<img border=5 width= 559 height=659 src="http://www.shadowtrader.net/focus_report_charts2008/080428NEU.gif"><br><br/>
Good Morning, Traders. Though we are bullish on the market we are opening up today's letter with a potential short candidate. Note the vicious selloff on the chart of NEU above, as investors did not respond favorably to earnings on 4/23. The gap down-destruction bar of 4/24 trapped all the longs who were patiently waiting to take profits on this IBD 100 darling (currently ranked 30th). NEU basically doubled off the lows in just three months, forming virtually no areas of support along the way. Once the trend reverses on these type of advances, watch out below, as there is nothing left to slow the fall. Look for a light volume bounce into the 50ma as a low risk short entry point. This stock could easily slide back down to the 200ma over the next few weeks.
Some market leaders bounced back nicely on Friday while others have a tough road ahead. Heavy volume selling in fertilizer stocks suggests they need a few weeks of consolidation to digest recent gains. These stocks have made an impressive run but are now on everyone's radar, so who is left to buy? Coal stocks look buyable on this recent pullback. CNX, BTU, ACI, and JRCC are swing setups over the prior day's high. BUCY pushed to new highs on big volume which should benefit other farm & mining machinery stocks such as CAT, AG, DE, and JOYG (all strong chart patterns pulling back off the highs). We see quite a few pullback opportunities in oil stocks like DO, DRQ, ATW, RIG, WHQ, HES, XOM, and SLB (mostly oil equipment and services).
Markets got off to a rough start due to weak earnings from MSFT, but managed to stabilize during lunch and extend higher through the afternoon session. The SPX closed positive on the day and finished the week just below the all important 1400 pivot level. The early selling was heavier in the Nasdaq, as evidenced by the internals. At the session lows, the NYSE breadth was a minimal 1.4 to 1 versus a bearish 3 to 1 negative reading on the Naz. While the Naz struggled to push higher late in the day, the S&P set new intraday highs led once again by the financials. The Fed meets this Wednesday, so it would seem unlikely that the S&P will take out 1400 prior to the decision. The market knows that there is a chance the Fed is through cutting rates but doesn't seem to care (the dollar has rallied ahead of the Fed possibly signaling no cut at all). Leading groups recovered from heavy selling on Thursday and new groups and names are continuing to emerge, so the technical picture for bullish patterns remains very positive. We remain cautiously bullish ahead of the Fed and look for broad market indices to eventually push higher.
