Free Swing Trading and Day Trading Picks & Education

Swing Trades from the Nets

2007-12-20T05:57:00.001-08:00

These articles describe the statistical probabilities of long positions on these equities, based on neural net projections, for the next 5-15 trading days. These are not holy grail methodologies, the road to easy street, or anything else. These projections are the result of screening for technically significant retracement and momentum patterns that have been further screened for value and bullish sector performance. In other words, the projections are for long positions.

For 12/20/2007:

                                   $INDU            $SPX             $COMPQ
Monthly Momentum    Negative        Negative         Negative
Weekly Momentum     Positive         Positive         Negative
Daily Momentum        Negative        Negative         Negative

Note: (OS) means oversold and (OB) means overbought. The value to price estimate (it is not a guarantee, only a cash flow based estimate) can be defined loosely as a multiplier of price. A number higher than one means the stock is undervalued using this model and a number less than one means the stock is overvalued.

Index and ETF I-shares Bullish Reversals

None

U.S. equity indexes did not quite catch fire like the ceremonial Vice Presidential office yesterday. Traders and institutions are still perplexed at all the conflicting economic information, particularly with insurance companies (which, on the basis of my screening, are still trying to find a solid price support). We are also beginning to see the first bailout rescues of brokerages (Morgan Stanley) from sovereign funds (from China). This new development also has some institutions frightened as they were in 1997 and later when the problems with LTC rippled through international markets.

Significant reversals were scant and negated what appeared to be a significant bullish shift in breadth from the day before yesterday. Retail drugs (CVS),pawn retailers (EZPW), REITs (BXP), oil exploration (CRK), metal fabrication (BOOM), internet networking (IIG),property and casualty insurance (MTG), mobile RVs (WGO), and healthcare related software (CPSI) made the reversals list.

The retail drug stock made the final cut (and it too is involved in prescription fulfillment services in which companies like CPSI are also involved.

Here’s what the nets saw today:

Value/Price est. 7 day ATR %( 7 day ATR)/Close
Note (O): optionable

(O) CVS 2.54/1 58.8% 1.44 0.61 1.55

That’s it for now. We are seeing small indications once again of healthcare related issues trying to find a bottom. The indexes, given their nearly "doji-like" finishes (except for the $COMPQ) seem to be setting up as C buy points on bearish XABCD patterns. Note that I said buy points on BEARISH patterns. We could be seeing a set up for a Santa Claus rally, but quite frankly, unless there is massive enthusiasm brought onto the trading floor in the next two weeks, we are likely to see “a whole lot of nothing”, leading us with an interesting place to start the trading year 2008.

But that is the fun and the mystery of trading. Somewhere, out of the blue, opportunity will appear. Our job is to keep our trading equity out of the market until those opportunities arrive.

Take care,

DBB

OEX Option Results: +$60 per contact +8%

2007-12-20T05:46:00.001-08:00

eMini Futures Results:
Russell ER2 -$200
S&P ES +$212.50

It was another interesting day. We captured the early weakness with Put options and quickly moved to the sidelines. Well, at least with options that is. Being prepared is always better than trying to predict what the market may or may not do. In other words, instead of focusing on what is going to happen next, try to uncover what could occur and see if a low risk opportunity exists. That's exactly what I do each and every day.
The ES futures did quite well today, especially considering it's 100% mechanical and all the trade parameters were available within the first 5-minutes of trading. In review, I mentioned earlier that sometimes an experienced trader is able to intervene and get a better result than a static trading system can. Today's 3rd ES signal was a good example of such.
The mechanical system, whose parameters were 'written in stone' several hours ago, has no way of knowing that a buy program is fueling the market. But you can easily identify these situations by watching the charts. I wouldn't normally suggest changing the static parameters of the signal. However, on a signal that's targeting over 6 points, and comes within ½ point of the target, you can certainly be proactive and not let those profits evaporate.
For example, we saw the S&P futures explode to the upside. On paper, that trade had profits of 6.25 points before the buy program kicked in. That trade was also stopped out for 6.75 points. That means the S&P bounced 13 points from that low. That's the kind of situation that an experienced trader can, and should, recognize and by being proactive you preserve much of those gains or at least reduce the risk but considering a move of the stop to breakeven.
Overall, we still netted 4.25 points for the day because the official system result doesn't include any subjective moves of targets or stops but you can certainly increase your reward with a little extra work from time to time.
Have a good evening and see you tomorrow morning.

posted by OEX : 2:58 PM

Update
Nice buy program kicked in about 45-minutes ago. You can tell it was a buy program because it was accross the board and it was large as measured by the distance the S&P futures traveled in just a few minutes.
For those of you who trade the ES CTS. The 3rd trade today came within 2 ticks of the target before the buy program kicked in. Normally I say it's best to not change your parameters when trading a mechanical system. But, when you've already locked in 11 points from the prior 2 trades and you see such a bounce taking place it is wise to intervene at times. I have my software programmed to move the stop to lock in about 3 or 4 ticks of profits once the system reaches 90% of the target. This way, you avoid these type of moves. That's just something for you to consider.
Stay tune
posted by OEX : 1:33 PM

OEX Profits Reached
OEX Profits Reached!!
http://www.oexstreet.com/secure/archives/uploaded_images/4th-748618-748731.png
It plowed through the entire target range on one swift drop so no need to trail a position there :-)
That didn't take long did it?
Please save this message:
I don't try to predict what the market is going to do. Rather, I make preparations for what it may do. If a move does occur then we are prepared and know exactly what to do and we know the odds are in our favor.
This Put trade was text book.
Stay tuned.
posted by OEX : 10:26 AM

Hurry Up and Wait for GDP Numbers

2007-12-20T05:43:00.001-08:00

SuperSwing Long Picks

2007-12-20T03:55:00.001-08:00

Here are some long swings to be watching over the next few days...

MrSwing SuperSwing Longs

Swing Trades from the Nets

2007-12-19T06:08:00.001-08:00

For 12/19/2007

                                   $INDU           $SPX             $COMPQ
Monthly Momentum    Negative        Negative         Negative
Weekly Momentum     Positive         Positive         Negative
Daily Momentum        Negative        Negative         Negative

Index and ETF I-shares Bullish Reversals

$DJUSCY
EWO
XLY

U.S. equity indexes managed to stave off three straight losing days by apparently responding to news regarding the raising of liquidity by banks (both U.S. and European) to stave off any lingering effects of the mortgage mess. Though Goldman Sach’s (GS) earnings were above forecast, the firm probably hedged (pardon the pun) its bets on the first quarter 2008, amid perhaps another government investigation looming over hedge fund activity. That did not help financials, brokers, or the markets in general.

There were over 1400 raw bullish reversals yesterday, meaning breadth temporarily turned bullish. There were so many individual names that it would take too long to list them all today, but retail (BBBY, BWS, FL, PLCE, SYX), mining (AU, GOLD, NEM), healthcare(CERN,HS, KND, PSYS), drugs (ALO, CAH, PFE), and general business services (CCRN, DAKT,DLLR, HMSY, SGK) led the list. Telecom (TRMB, TSU) and petroleum services (NTG, RES) also turned up. Banking (AMFI, HBHC), building construction and maintenance (BHS, EME) also made the list.

What is notable about retail is that many specialty retailers like BBBY are trying to put in double bottoms after a fairly lengthy decline. It is probably a bit too early to chase these, but as earnings news begins to filter out shortly, some of these stocks could produce buy patterns shortly.

In the end, the gold mining stock GOLD and the drug stock, made the final cut.

Here’s what the nets saw today:

Value/Price est. 7 day ATR %( 7 day ATR)/Close
Note (O): optionable

(O) GOLD 2.60/1 60.4% 0.58 1.42 4.19

(O) CAH 1.72/1 62.6% 1.51 0.92 1.56

That is it for now. GOLD is a short-term swing play that may only last while the sector turns up. Watch your stops at all time, but particularly with GOLD. I still do not think we are out of the woods in terms of the selloff. We will have to wait and see how markets respond the economic whims of the Fed, oil inventories, and just general year end craziness for signs of bullish breadth holding. Yesterday was a modestly positive sign, but there are a lot of forces at work on market sentiment, and that leads to what traders love, volatility.

Take care,

DBB

Chartpattern Report

2007-12-19T00:46:00.001-08:00

The market is finding support at lower trend lines that need to hold, as when these lines are breached the market is sure to see much lower prices near term. Let's see the Russell 2000 (RUT), and the NASDAQ composite (OTC).

My short term trading oscillator turned up today and closed the day at minus nineteen which is not close to oversold any longer. The closer this tool gets to the neutral line or back to zero the more likely the market could run into trouble again.

Now on to what few stocks are hanging tough in this tough market environment. Again I feel cash is best at this time unless you're trading just one or two stocks in real time.

COTs Predict Santa Coming, Dollar to Sink

2007-12-18T06:37:00.001-08:00

My COTs U.S. Equity Index is giving its fourth straight renewed bullish signal, based on the latest Commitments of Traders data issued Friday. This index is based on my trading setups for the S&P 500, NASDAQ 100, Dow Jones industrials and Russell 2000 - all built around the COTs reports, which report how major traders are positioned in the markets.

My U.S. equity index has been on a bullish signal since last March. It now stands at a super-bullish 0.97, up from last week's reading of 0.88. Regular readers will recall that a "1" reading means all four setups are effectively giving a bullish signal on average, for execution on next week's open of trading. So I'd say this is happy news for equity bulls. (See the table on my "Latest Signals" page for all the signals from my setups based on the COTs reports.)

In other developments, the latest data portends still more horrors for the greenback. The commercials are dumping their U.S. dollars faster than you can say "Gisela Bundchen." It's been 12 straight weeks of steadily lower net long futures positions for the "smart money" crowd. My U.S. dollar index setup is now giving its third straight renewed bearish signal. Oh-oh.The other interesting developments are taking place in the ag sector. My COTs Agriculture Index, based on my setups for wheat, corn, soybeans and sugar, has fallen to -0.44, down substantially from last week's 0.12. This setup provides me signals for the DBA Agriculture ETF. The index now stands not far from flipping to bearish for DBA.

Looking at some of the specific sectors, corn small traders have lowered their net short position in futures and options to a bullish extreme, flipping my setup for corn to bearish. The small traders are now 180 percent above the signal line I use for this setup. (See the explanatory links in the navigation bar to learn more about how my COTs Timer trading system works.) Note that the trade delay for this setup is three weeks.

As well, the sugar commercial traders have suddenly put on a huge net short position. After only a two-week bullish signal, this setup has now flipped back to bearish. Note that my setup for sugar is a little special. It works by going long on the bullish signals and going to cash on bearish signals (not going short).

Live Day Trade Pivot Play Example on Monday

2007-12-18T06:15:00.001-08:00

OEX Option Results: +$160 per contract +24%

2007-12-18T06:09:00.001-08:00

For the most part it was a fantastic day of trading. The S&P emini got caught in a whipsaw but the Russell emini was superb. The OEX Put trade was just phenomenal. I saw an opportunity for a greater profit today and this was the reason we targeted 3 points vs. our "usual" 2 points. That increased our initial profits and then with a combination from options expiration this Friday and a larger target range and we had an environment that saw our Put option premiums inflate quickly.
When your assumptions are correct and you're close to expiration, trading options offers the best leverage out there. This was a great way to start the week!
Have a good evening and see you tomorrow morning.

posted by OEX : 3:18 PM

OEX
OEX through the final target range level of 677.75. So, anyone still trailing a position should now be on the sidelines.
Just another miserable session for the bulls. And to think all of these could have been avoided by a 50 basis point rate cut instead of 25 basis. Who would have thought such a minor cut would make such a huge difference.
Now that the OEX is at the calculated intraday low we'd normally expect prices to stabilize. Also, the 60-minute OEX chart is getting extremely oversold as measured by the RSI indicator. But we could go out much lower before the close. I have a suspicion we'll see a bounce tomorrow. Talk about going out on a limb :-)
Stay tuned.
posted by OEX : 2:10 PM

Update
We're now into the final 2 hours of trading. I expect volatility to remain high. It wouldn't be a surprise to see the bulls try to come in and stage a rally. I seriously doubt they will be successful. Again, least path of resistance is to the downside. But we have awesome profits in front of us (assuming you're holding Put options) and letting those profits slip away is never a wise decision. Don't find yourself being greedy holding out for a few more ticks because you will probably find the risk won't be worth the reward. Remember, selling into weakness while holding Put options is logical and I said earlier that being logical is a key ingredient of success.
Stay tuned.
posted by OEX : 1:11 PM

OEX Profits Reached
OEX Profits Reached !!
That was an agonizing 25-minutes :-) But the patience paid off. Very nice profits considering our target was a little larger than normal and we're trading the front month December options that are moving extremely fast.
For those of you trailing a few contracts, we've lowered the trail stop to 682.

Stay tuned.

Swing Trades from the Nets

2007-12-18T05:45:00.001-08:00

For 12/18/2007:

                                $INDU             $SPX               $COMPQ
Monthly Momentum   Negative        Negative         Negative
Weekly Momentum    Positive         Positive           Negative
Daily Momentum        Negative        Negative         Negative

Index and ETF I-shares Bullish Reversals

None

U.S. equities sold off with accelerated trading volume as institutions decided to cap of some gains on certain stocks and sell their technology holdings despite decent earnings news from companies like ADBE on Monday. The $COMPQ, formerly the strongest of the indexes in terms of bullish momentum, is now the weakest of the three indexes. It is hard to know, other than from a profit-taking perspective, what has set up this reversal of fortune. As traders we should not care and simply notice that conditions are not viable from the long side in the $COMPQ at least in the short-run. There was some limited strength in basic chemicals (SMG), electronics (JBL), insurance (CNA), retail (JCP), home healthcare (DVA), investment banking (BNS), beverage bottlers (PBG) and payment services (HPY).

In the end, the patterns were not strong enough to register on the neural net screens again today.

Here’s what the nets saw today:

Value/Price est. 7 day ATR %( 7 day ATR)/Close

Note (O): optionable

That is it for now. At present, stocks are clearly in the midst of a selloff, though there are interesting bottoming patterns occurring in some insurance names. If the indexes retest and hold their previous support lows, then there will likely be some pattern set-ups that we can exploit. Until that time, discretion is the better part of trading valor. Keep your capital parked until it is time to take action.

Take care,

DBB

Chartpattern Report

2007-12-17T05:55:00.001-08:00

On a more positive note my long-term slow moving oscillator is down near areas associated with market bottoms yet so far only a few stocks are responding.

Let's start off with the Standard and Poors Depositary receipts (SPY), which track the S&P-500 as it paints a clear picture of what's happening.

Solar stocks are about the only group of stocks that are still holding up with positive looking charts right now. Let's start off with stocks in this group and then on to a few others.

Swing Trades from the Nets

2007-12-17T05:51:00.001-08:00

For 12/17/2007:

            $INDU           $SPX             $COMPQ
Monthly Momentum    Negative        Negative         Negative
Weekly Momentum     Positive         Positive         Positive
Daily Momentum        Negative        Negative         Negative

Index and ETF I-shares Bullish Reversals

None

U.S. equities fell on lighter than normal volume Friday as traders basically walked away from buying as CPI numbers were slightly worse than pundits and analysts had feared. That increased the likelihood of no rate cut early next year, and bonds and stocks both sold off in unison.

Generic drugs (MYL, ALTU), software (CTXS), retail (BJ), internet service providers and networks (SINA, AKAM), financial services (FNM), renewable energy (AVR), semiconductor equipment (WFR), and aerospace and defense (DCO) all made the list today.

Sadly, only AKAM and DCO got to the final cut, but neither model made the cut on the win-loss ratio.

Here’s what the nets saw today:

Value/Price est. 7 day ATR %( 7 day ATR)/Close
Note (O): optionable

That is it for now. We are seemingly trading in a sideways channel in the indexes currently. We are still seeing set-ups in drug stocks, healthcare, defense, and software. We will have to wait for some better set-ups before putting new capital at risk. The best thing to do now is to wait patiently for better opportunities.

Take care,

DBB

PHH Corp. (PHH)

2007-12-17T00:26:00.001-08:00

Stock Recommendation for 17th December

Swing Trades with Exact Buy and Sell Signals