ShadowTrader_08
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Good Morning, Traders. The market is at a vital area going into today's trading. Let's review the overall market and then discuss the management of two <i>ShadowTraderPro Advisory</i> trades that were sent out yesterday.
<img border=5 width=560 height=650 src="http://assets.shadowtrader.net/charts/090108Dan.GIF">
Above is a daily chart of the S&P 500 Index ETF (<b>SPY</b>). Because we closed above the orange trend line, the rally that has taken place since November 21, 2008 is still alive. You can see that we have been making higher highs and higher lows during the course of this rise, but we continue to stress the fact that this price action has taken place with the backing of limited volume. Although volume has improved over the last two days, this rally will only stay "alive" if larger traders begin to participate.
If the orange trend line is broken, we would look for a retracement to the next level of support at 87.33 (black line). If price continued lower from there and penetrated the last higher low (HL) at 85.49, then we would know the overall rally is broken.<br><BR><img border=5 width=560 height=650 src="http://assets.shadowtrader.net/charts/090108Dan2.GIF">
Above is the chart of JP Morgan Chase (<b>JPM</b>). The stock has been on our watch list as a possible short after the higher high failure (HHF) on December 17, 2008. From there it made a low and then a lower high and today a new lower low (LL) closing a hair below the previous higher low on December 12, 2008. <b>JPM's</b> rally from the low on December 21, 2008 is broken and we think the stock is heading lower.
Yesterday we issued a <i>ShadowTraderPro Advisory</i> setting a sell stop at 28.60 which was 5 cents below the low on December 24, 2008 (white dashed line). Our target on this trade is 26.15, just above the low of December 1, 2008 (magenta line). The volume yesterday was above average during the first part of the day. This emboldened our "shot" to the downside, but by the end of the day total volume was near average. We need to keep a close eye on this trade and tighten our stop, or exit the trade entirely, if the market tells us that our analysis was wrong. We are optimistic, but we will not marry ourselves to any position.<BR><BR><BR><BR><img border=5 width=560 height=650 src="http://assets.shadowtrader.net/charts/090108Dan3.GIF">
The last chart is of Computer Sciences Corp. (<b>CSC</b>). We entered the trade after the previous days low had been taken out. Our thinking is that traders who initiated their long position during the steep run up over the past <b>8 consecutive days</b> would be easily persuaded to sell to either take profits or cut losses once price started to come back down. We took the huge volume and large red body that developed yesterday as a signal that the process had begun. The black line on the chart represents our short trade entry point.<BR><BR>The green area on the chart represents our target. Today we had it set at 35.09, just above the high on December 19, 2008 (blue line), a point where support starts to come into play. What we want to illustrate here is the target price will reise as we move through time. If several days go by and the rising orange trend line is above 35.09, then the level on the orange trend line will become our new target in lieu of the original target of 35.09.
The overall market will have a very large influence on the direction of these two stocks today so we will be need to be on our toes ready to execute our plans whatever direction it decides to go.
Good Morning, Traders. The market is at a vital area going into today's trading. Let's review the overall market and then discuss the management of two <i>ShadowTraderPro Advisory</i> trades that were sent out yesterday.
<img border=5 width=560 height=650 src="http://assets.shadowtrader.net/charts/090108Dan.GIF">
Above is a daily chart of the S&P 500 Index ETF (<b>SPY</b>). Because we closed above the orange trend line, the rally that has taken place since November 21, 2008 is still alive. You can see that we have been making higher highs and higher lows during the course of this rise, but we continue to stress the fact that this price action has taken place with the backing of limited volume. Although volume has improved over the last two days, this rally will only stay "alive" if larger traders begin to participate.
If the orange trend line is broken, we would look for a retracement to the next level of support at 87.33 (black line). If price continued lower from there and penetrated the last higher low (HL) at 85.49, then we would know the overall rally is broken.<br><BR><img border=5 width=560 height=650 src="http://assets.shadowtrader.net/charts/090108Dan2.GIF">
Above is the chart of JP Morgan Chase (<b>JPM</b>). The stock has been on our watch list as a possible short after the higher high failure (HHF) on December 17, 2008. From there it made a low and then a lower high and today a new lower low (LL) closing a hair below the previous higher low on December 12, 2008. <b>JPM's</b> rally from the low on December 21, 2008 is broken and we think the stock is heading lower.
Yesterday we issued a <i>ShadowTraderPro Advisory</i> setting a sell stop at 28.60 which was 5 cents below the low on December 24, 2008 (white dashed line). Our target on this trade is 26.15, just above the low of December 1, 2008 (magenta line). The volume yesterday was above average during the first part of the day. This emboldened our "shot" to the downside, but by the end of the day total volume was near average. We need to keep a close eye on this trade and tighten our stop, or exit the trade entirely, if the market tells us that our analysis was wrong. We are optimistic, but we will not marry ourselves to any position.<BR><BR><BR><BR><img border=5 width=560 height=650 src="http://assets.shadowtrader.net/charts/090108Dan3.GIF">
The last chart is of Computer Sciences Corp. (<b>CSC</b>). We entered the trade after the previous days low had been taken out. Our thinking is that traders who initiated their long position during the steep run up over the past <b>8 consecutive days</b> would be easily persuaded to sell to either take profits or cut losses once price started to come back down. We took the huge volume and large red body that developed yesterday as a signal that the process had begun. The black line on the chart represents our short trade entry point.<BR><BR>The green area on the chart represents our target. Today we had it set at 35.09, just above the high on December 19, 2008 (blue line), a point where support starts to come into play. What we want to illustrate here is the target price will reise as we move through time. If several days go by and the rising orange trend line is above 35.09, then the level on the orange trend line will become our new target in lieu of the original target of 35.09.
The overall market will have a very large influence on the direction of these two stocks today so we will be need to be on our toes ready to execute our plans whatever direction it decides to go.