ShadowTrader_08
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Good morning, Traders. Today is a "fed day" and as such there's probably going to be a big move in the afternoon. As much as we wanted to be clear of at least the 1260 area (and moving onwards to the 1290 resistance) in the S&P yesterday, it didn't happen as the mid-day recovery was eviscerated in the final hour. So we are back at the trendline which created yesterday's intraday bounce. If we are to get it going to the upside its either going to happen today or not. Let's take one last look down the rabbit hole....
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805SPX.gif">
Here's the plan if everything doesn't fall apart. Since we've been saying that the technical picture points to a short term upswing here to about 1305, the plan is a bullish one. The S&P will need to move above 1260 in early trade today for this to set itself up. The hourly chart below shows why this area is important.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805SPX60.gif">
So above you have the technical picture, now what to do with it. If we can get at least consolidation (but preferably strength) into the Fed, we'll be looking to scatter longs into four areas. Railroads, Banks, the broad market, and 1-2 "wild cards" which will be "big beta movers" as we like to call them. These are the highly fundamentally rated stocks that are showing good relative strength and pack a good deal of bang for the buck when the market decides to lurch forward. Below is a partial "wish-list" of some things we would like to put in our shopping cart.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805NSC.gif">
<b>NSC</b> is in the railroads sector ($DJUSRR) which is showing a lot of relative strength recently.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805IYF.gif">
<BR><BR>
You can use <b>IYF</b> as a proxy for banking sector. You'll note that charts of <b>BAC, C, MTB</b>, etc. all look similar.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805SSO.gif">
This is an "Ultra" etf for the S&P. Note that in this tight range there is only about $1.30 difference between yesterday's high and low. A move over yesterday's high would be an excellent entry with a stop below the low as shown above.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805TDY.gif">
<b>TDY</b> is an example of a "big beta mover" we would be interested in. <b>HUBG</b> is another one that has glowing fundamentals and a strong pattern.
As with everything we do, note that waiting for confirmation is key, <i>especially</i> on a fed day. One strategy which will probably come into play for us today is the use of the buy stop if the market is just consolidating ahead of the 2:15pm EST announcement. Our thought is that if the news pushes the market hard up over these pivot points, the technical buying should kick in and it won't come back down immediately. Certainly yesterday's late day pounding hurts the odds that the reversal will occur but as we're not long yet it really doesn't matter. If we get no upside setup, and the news (or whatever reason) pushes the market to close below 1234, then abandon hopes of a summer rally all ye who enter.
Our main thread is here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=125554
Good morning, Traders. Today is a "fed day" and as such there's probably going to be a big move in the afternoon. As much as we wanted to be clear of at least the 1260 area (and moving onwards to the 1290 resistance) in the S&P yesterday, it didn't happen as the mid-day recovery was eviscerated in the final hour. So we are back at the trendline which created yesterday's intraday bounce. If we are to get it going to the upside its either going to happen today or not. Let's take one last look down the rabbit hole....
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805SPX.gif">
Here's the plan if everything doesn't fall apart. Since we've been saying that the technical picture points to a short term upswing here to about 1305, the plan is a bullish one. The S&P will need to move above 1260 in early trade today for this to set itself up. The hourly chart below shows why this area is important.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805SPX60.gif">
So above you have the technical picture, now what to do with it. If we can get at least consolidation (but preferably strength) into the Fed, we'll be looking to scatter longs into four areas. Railroads, Banks, the broad market, and 1-2 "wild cards" which will be "big beta movers" as we like to call them. These are the highly fundamentally rated stocks that are showing good relative strength and pack a good deal of bang for the buck when the market decides to lurch forward. Below is a partial "wish-list" of some things we would like to put in our shopping cart.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805NSC.gif">
<b>NSC</b> is in the railroads sector ($DJUSRR) which is showing a lot of relative strength recently.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805IYF.gif">
<BR><BR>
You can use <b>IYF</b> as a proxy for banking sector. You'll note that charts of <b>BAC, C, MTB</b>, etc. all look similar.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805SSO.gif">
This is an "Ultra" etf for the S&P. Note that in this tight range there is only about $1.30 difference between yesterday's high and low. A move over yesterday's high would be an excellent entry with a stop below the low as shown above.
<img border=5 width=560 height=650 src="http://www.shadowtrader.net/focus_report_charts2008/080805TDY.gif">
<b>TDY</b> is an example of a "big beta mover" we would be interested in. <b>HUBG</b> is another one that has glowing fundamentals and a strong pattern.
As with everything we do, note that waiting for confirmation is key, <i>especially</i> on a fed day. One strategy which will probably come into play for us today is the use of the buy stop if the market is just consolidating ahead of the 2:15pm EST announcement. Our thought is that if the news pushes the market hard up over these pivot points, the technical buying should kick in and it won't come back down immediately. Certainly yesterday's late day pounding hurts the odds that the reversal will occur but as we're not long yet it really doesn't matter. If we get no upside setup, and the news (or whatever reason) pushes the market to close below 1234, then abandon hopes of a summer rally all ye who enter.
Our main thread is here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=125554
