Market Commentary: Tension on the Tape

Transcription

1 Page 1 Page 3 Page 4 Page 7 Page 12 Market Commentary: Tension on the Tape Pivot Points The DayTrading Report: ANF, LUFK and Observations The Swing Report: FORM, CAT, OII, BTU, Observations and Trailing Stops Notes and Guidelines Market Commentary: Tension on the Tape Editor s note: Jeff Cooper will be on vacation beginning July 10. He is scheduled to return Monday evening, July 24. Friday morning, we will get the employment data that have been a significant market-mover in the past. Given the acceleration in volatility since early May, Friday's jobs report looks to live up to the numbers reputation. In fact, we may get a real gonzo Friday because the tension on the tape is clear -- we are coiled to test the 200-day moving average on the S&P at 1260ish or explode to test 1290/1291. The S&P is taut, ready to move either way sharply, I believe. In addition, the roughly 15-point count to test (from Thursday's close) either 1260ish on the downside or 1290 on the upside is symmetrical. It is interesting that on Thursday, the S&P closed right on the fulcrum -- in the mid-1270s on the S&P, which is the midpoint between the May 1327 S&P swing high and the 1219 June S&P low. Looking back, the S&P exploded as it broke out over 1260 and the triangle above the June lows, which issued a Triangle Pendulum Buy Signal (as shown here). A hot jobs number, which is the rumor, could see the S&P pull back to test that level. Because there are many traders loaded for bear with shorts at the current resistance level (1280 is the prior breakdown point from the April low and the 50-day moving average), a tame number could see the index spike to 1290/1291. In fact, anything less than a red-hot number may cause that kind of spike on Friday. Remember, the 1290/1291 level is important, because trade at that level will turn the Monthly Swing Chart up -- on trade above the June high. (Continued on the next page) PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE

2 Conclusion: Any move above 1280 and the 50-DMA that holds could easily see the S&P reach for This is because a convincing move over the 50-DMA on the fourth attempt this week would be enough of a catalyst to cause shorts to cover -- especially on a Friday. However, if the 1290/1291 S&P level is hit -- especially early in the session -- I believe it would be a decent time to trade shots with the shorts and put out some short positions of your own. At the very least, I would sell into such a spike and see what the market's got from that point next week. S&P Daily 2

3 Pivot Points S&P Minute Pattern: Power Surge (3 rd higher low). 3

4 THE DAYTRADING REPORT Chart 1 Abercrombie & Fitch (ANF:NYSE) Long Entry: Stop: Pattern: Gilligan / LROD Pattern: Power Surge (3 rd higher low). 4

5 Chart 2 Lufkin Industries (LUFK:Nasdaq) Short Entry: Stop: Pattern: *180 / Power Surge (third lower high) 5

6 OBSERVATIONS -- Monster Worldwide (MNST:Nasdaq) still looks like an interesting short. 6

7 ay s Close: [Up.86] THE SWING REPORT Chart 1 FormFactor (FORM:Nasdaq) Long Entry: officially, but look to use an ORB since the stock closed at Stop: 2 points from entry Initial Target: 2 points from entry (trade toward) Pattern: +1-2 Setup 7

8 Chart 2 Caterpillar (CAT:NYSE) Short Entry: Stop: Initial Target: (trade toward) Pattern: Signal Day +1 8

9 Chart 3 Oceaneering (OII:NYSE) Long Entry: 46.00, but only go long on an ORB (Opening Range Breakout -- a breakout over the first three 10-minute bars) since the stock closed at Stop: 2 points from entry Initial Target: 2 points from entry (trade toward) Pattern: +1-2 Setup 9

10 Chart 4 Peabody Energy (BTU:NYSE) Long Entry: officially, but only go long on an ORB since the stock closed at Stop: 2 points from entry Initial Target: 2 points from entry (trade toward) Pattern: Expansion Pivot 10

11 OBSERVATIONS AND TRAILING STOPS -- Caterpillar (CAT:NYSE) (short) did not trigger and can be used again. -- Friday is day two in Marathon Oil (MRO:NYSE) (long). You are long from Raise the stop to and maintain the initial target on trade toward As of Thursday's close, you are up 72 cents. -- Friday is day seven in Advanced Medical Optics (EYE:NYSE) (long). You are long from on an ORB. You sold your first piece last Thursday, locking in a gain of Maintain the adjusted stop on the second piece at As of Thursday's close, you are up 1.67 on the second piece. -- Friday is day 11 in Getty Images (GYI:NYSE) (short). You are short from On Thursday, as per instructions, you covered your first piece, locking in a gain of Lower the stop to for the second piece. As of Thursday's close, you are up 4.96 on the second piece. 11

12 Notes and Guidelines DayTrading Report: Trades marked indicate stocks that are considered small-cap, trading 500K shares or less. As you know, thin stocks are generally more volatile and trade with a wider spread. Trades marked * indicate patterns that don t conform to the original rules of the pattern but are defined as in the spirit of their namesakes. The 1-Point Gap Rule: Any stock recommendation that opens 1 or more points above the listed entry price (for longs) or 1 or more points below the listed entry price (for shorts) should be ignored for the day. Please note that history suggests that entering a stock on a gap open increases your potential for a loss. Reminders: A signal is not valid unless the stock trades at or above the listed entry price for longs and at or below the listed entry price for shorts. If a position moves 1 point in your favor in this choppy environment, it is a good idea to sell half the position and move your stop on the remaining position to break even. Charts: The green line is a simple 10-day moving average, the blue line is a simple 20-day moving average, and the red line is a simple 50-day moving average. The Swing Report: Trades marked indicate stocks that are considered small-cap, trading 500K shares or less. As you know, thin stocks are generally more volatile and trade with a wider spread. Trades marked * indicate patterns that don t conform to the original rules of the pattern but are defined as in the spirit of their namesakes. The 2-Point Gap Rule: Any stock recommendation that opens 2 or more points above the listed entry price (for longs) or 2 or more points below the listed entry price (for shorts) should be ignored for the day. Please note that history suggests that entering a stock on a gap open increases your potential for a loss. Initial Target: Target price at which you should look to sell/cover half your position. Reminders: A signal is not valid unless the stock trades at or above the listed entry price for longs and at or below the listed entry price for shorts. If a position moves 2 points or more in your favor in this choppy environment, it is a good idea to sell half the position and move your stop on the remaining position to break even. Charts: The green line is a simple 10-day moving average, the blue line is a simple 20-day moving average, and the red line is a simple 50-day moving average. 12

13 Contact Info Customer Service: Please or call TSCM (8726) Mon. Fri. 8 a.m. to 6 p.m. ET; or outside the U.S. and in Canada, call Reader Feedback and Questions: Please send an directly to Jeff. Again, please direct all account-related inquiries to customer service. Legal Information This information is confidential and is intended only for the authorized Subscriber. Please notify us if you have received this document in error by telephoning TSCM (8726). Jeff Cooper, writer of The Trading Reports, is a financial markets author and trader who contributes regularly to TheStreet.com's RealMoney premium subscription web site. TheStreet.com is a publisher and has registered as an investment adviser with the U.S. Securities and Exchange Commission. Certain of TheStreet.com's affiliates may, from time to time, have long or short positions in, buy or sell the securities or derivatives thereof, of companies mentioned in The Trading Reports, and may take positions inconsistent with the views expressed by Mr. Cooper in The Trading Reports. Mr. Cooper will be restricted from transacting for his own benefit in securities discussed in The Trading Reports. Specifically, at the time of publication of The Trading Reports, Mr. Cooper may not hold for his own account any security that he discusses in that issue. However, Mr. Cooper may enter orders to purchase or sell securities mentioned in The Trading Reports after 10:30 a.m. on the trading day that begins after the publication of the issue of The Trading Reports in which the security is mentioned. IF YOU ENTER ORDERS TO BUY OR SELL SECURITIES AFTER 10:30 A.M., IT IS POSSIBLE THAT MR. COOPER MAY HAVE PURCHASED OR SOLD THE SECURITY AT A PRICE MORE ADVANTAGEOUS THAN THE PRICE YOU WILL OBTAIN. The Trading Reports contains Mr. Cooper's own opinions, and none of the information contained therein constitutes a recommendation by Mr. Cooper or TheStreet.com that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. To the extent any of the information contained therein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Mr. Cooper's past results are not necessarily indicative of future performance. 13