JOBS IN THE SWEET SPOT!

Good morning traders! The jobs number on Friday came right in the sweet spot of our predicted range, giving traders encouragement about the health of the economy without spooking any new inflation fears. The markets hesitated a bit early on, but as the day wore on the bulls became more and more confident. The result was a new all time high for the S&P 500. The current run in the markets does remind us of the nice breakout move we saw in early July...which, of course, ended in disaster. But the different in this run is that now the smallcaps are pariticpating (see IWM). While the Russell2k is not yet at a new high, it is in breakout mode with the highest relative strength reading since late April. This is a good sign for continuance.

PLAY OF THE DAY: tba

OTHER STOCKS TO CONSIDER: (longs): AMZN, ATI, BEBE, CRZ, BTU (shorts): are you kidding me???

Good morning traders! My goodness, what a market! Yeah, I know, it is not yet what we saw in the late-90's...but it sure is a lot easier to trade than that heady mess! And yes, I know we are overbought and starting to correct...but still, wow! Trading our hedge fund yesterday: had the highest 1 day gain ever (on a $$ basis) on a down market day!! This market is just too easy to read right now...it's kind of scary!

I've given a long look at all my watch lists this morning and see nothing, NOTHING, but buy signals. Recent choppy action in the indices (at least the S&P) has created a huge number of bullish uptrend consolidation patterns that are just itching to breakout. Volume analysis, usually a leading and confirming indicator, says nothing, NOTHING, bearish here. Yes, we are entering into (and are in) a period of seasonal weakness...but I believe with so much focus on an expected pullback, chances are we may just not get one at all. I do expect some choppiness and a down day or two here and there over the next 2 weeks; but in short we will continue to remain on the LONG side of this market and let our stops take us out. Once we start to see signifcant stoppage, then we can begin to think about a trend reversal. But until the, enjoy the ride!

CCOI: there was 1 lot traded at our entry price after the open which means that some of you on stop-market entries would have been filled. I missed it myself (DOGGONE IT!) but will mark the trade for those subscribers who are long the stock. Off to a great start there on possible buyout rumors (funny how T.A. often portends news events...)

CIEN: analyst day yesterday was so HOT HOT HOT that our shares got taken out at our modest target price. We should have been more bold.

CROX: coiling up at new ATH's here and should bring our shares much higher in the next up leg.

Other stocks to consider: (longs): SOHU, FTK, GERN, VCLK, CRZ, BTU, DECK (shorts): ARE YOU KIDDING ME???

Good morning traders! Look for EOQ window dressing to carry us bullishly into the weekend. The DJIA should print 14k and the S&P may also test the magical 1550 level. But once those are achieved we should get a healthy consolidation, setting us up, then, for the "mother of all rallies" into the EOY, starting last next month. China stocks are just HUGE right now but also overextended. We've set up a new "China screen" and will be positioning ourselves there over the next few weeks. JASO is in that space.

GDP final just came out, just a tick below consensus, which is modestly supportive of a rally. Jobless claims too came in light, lowest number since May. Futures are up on both numbers. The party continues!!

Other stocks to consider: (longs): CY, NVDA, CHU, OMTR, TNE, VIP, GIGM (shorts): none

Chart of the Day: NNI (breakout pending)

EXPECT CHOP CHOP AHEAD...

Futures are off this morning on some early profit taking and weakness in Europe. The indices are over-extended and due a multi-day breather before we move higher. We are headed into op-ex tomorrow with some bearish divergence in the index charts so again, we can expect some chop chop ahead. But the good news is that the past 2 days have worked through a number of resistance levels and the way is mostly clear now to challenge the summer highs within the next couple of weeks. Market profits will be difficult to come by for swingers while things settle down, but they will return soon enough.

Other stocks to consider: (longs): ALVR, RIG, ACH (shorts): ATI

CHIEF BEN TO THE RESCUE!

Good morning traders! I won't rehash what you have probably heard a dozen times by now regarding yesterday's Fed action, except to say it was unexpected...and glorious! You gotta think that the guy who wrote the book, that is "books", on macroeconomics and credit crisis (namely, Chief Ben), knows what he's doing with the rates. No one policy can stave off all the economic dangers lurking out there, but it is probably best to err on the side of stimulus than withdrawal at this point. Smallcaps look ready to take over leadership in any new leg up to test the summer highs...but since yesterday's rally in the broader market stopped right at resistance, we may have a bit of chop chop consolidation to wade through first. Worst case scenario would be a gap up and reversal which would signal to the markets a trend change and likely trigger a multi-day profit-taking spree. Still, we should be heading higher soon enough.

Other stocks to consider: (longs): AKS, AVCT, ESRX, X, NUAN (shorts): none

ALL EYES ON THE FED...

Last week closed on a fairly positive note after yet another credit crisis (this time a British bank) sent premarket futures plunging: the bulls smelled blood in the streets and swooped in to pick up cheap shares. The indices managed to close the day slightly in the green, with the S&P and DJIA posting minor breakouts. We should see muted action on Monday, however, as money stays on the sidelines until Tuesday at 2:15 pm, EST, when the Fed makes its highly anticipated announcement. Our prediction: the Fed lowers 25 bps, but then eliminates any wording about being "ready to step in" if inflation is noted...in other words, the Fed takes a doveish stance. The knee-jerk reaction is likely then to be to the downside, but only briefly as confidence in the overall economy returns to the markets and we get a healthy bullish ramp test the recent highs.

The chart above shows the S&P proxy (SPY) ready to breakout of an IH&S pattern, with a healthy OBV confirmation; which is to say, the volume for the right shoulder is higher than that for the left shoulder...which is precisely what we want to see in this pattern. I'd look for a confirmed breakout by the end of the week. But is the lower trendline of the right shoulder is violated on any close, then all bets are off.

We recommend going lightly into Tuesday and managing any open positions with hard stop-losses.

CHOP CHOP, BACK AND FILL...

Good morning traders! The bulls stepped up yesterday and wrested the power of control away from the bears to print a strong engulfing candle...but on rather poor volume. It really seems like the big money has been on the sidelines since late-August, too content to trade commodities and forex. But that is likely to change next Tuesday when the Fed announces their decision on rates. Futures are pointing to a 75% chance for a 50 bps cut...which would and should send the markets into a feeding frenzy! But I think we rally even on a more modest cut as it would indicate the economy is not as bad as everyone fears...though it may take a couple days to get that going. If the Fed sits pat, then look out below!!

See the chart below of the Q's (NDX 100 proxy): we are looking at a very nice and bullish IH&S pattern develop that should complete by crossing the neckline over 50 next week. Until then, I think we will get some "back and fill" chop chop today and tomorrow as that right shoulder gets filled out a bit more. I put on a hedge in our fund into yesterday's close (using QID) but will likely take it off sometime today or tomorrow. Any dip today shouldn't go too far, and there is not much news on the horizon to move things one way or another. In short, let's bask in the warm glow of yesterday's AWESOME GAINS (wow!! every long but one outperformed by 50% to 300%!!), reign in our stops a bit, and wait for what should be very good things to come.

Other stocks to consider: (longs) FWLT, GSF, GRMN, RADS, RIG

BEAR TRAP IN THE MAKING

Good morning traders! Just as the bulls got trapped last Friday, so the bears will likely get trapped today in this "push-me, pull-you" market (see yesterday's post). We have an overhead gap to fill on the indices and that is likely to happen today as shorts get squeezed into submission. Our internal readings tell us that we are near a major bullish pivot point for the market going forward into the 4th Quarter, but not much is likely to happen until we get past next week's Fed announcement. Until then look for more chop chop...

Blessings and happy trading to all, TC

Stocks to consider:

(longs) GRMN, GSF, RADS, RIG (shorts): BEAV, ASML, GLBL

THE PUSH-ME, PULL-YOU MARKET

The surprisingly weak jobs number on Friday really spooked the bulls and rallied the bears from their slumbers. The markets gapped down and printed a trend-down day...until the last hour of trading when it seemed like the bears decided to get an early start on the weekend, allowing the bulls to scoop up bargain shares. We can expect more of this bull-bear battle in the days ahead as the markets look for a local low to consolidate the recent sharp run up off the August capitulation low.

Alan Farley on his website, hardrightedge.com (Farley wrote the foreward to our forthcoming book, by the way), said this about the current market condition: "Market players don't know whether to bet on a slowing economy, or the benefits of lower interest rates. This conflict is creating a manic-depressive environment, in which bull and bears pass around the leadership mantle like a hot potato."

We agree: in short, look for more volatility ahead....but there is some good news ahead for trend traders like us! The internal indicators we use to measure the overall health of markets (NASI, Adv/Decl, TRIN, etc.) hit multi-year lows last week. Over the past 10 years, anyone shorting the indices at these levels has lost money every time. Thus our plan is to sit tight on our open longs with stops in place (just in case the bears get a little too headstrong), and continue to look for the best charts with upside room. As it looks now, if we can get past the next week or two's volatility, we should be nicely poised to catch the next bullish leg up into the end of the year.

IT'S ALL ABUOT THE JOBS...

Good morning traders! We need to sit pat today and let our winners ride out what will likely be a strong storm today. We get the all-important new jobs number out this morning. Consensus is for a higher reading than last month and anything in that range or lower should be welcomed by traders concerned about an inflating economy...but any higher and we may see the markets do a steep dive. The charts are poised to go either way here with a slight technical leaning to the long side. Futures are down ahead of the number but that may all change by 8:30 am, EST.
Yesterday's modest rally was built on gold, oil and biotech...but again volume was below average making it 14 days in a row with light trading. That should all change today as professional money steps up to position itself either for the next leg up, or another leg down. We should know which by the close of trading today. If down, it may not be a bad idea to use one of the new "ultra" ETF's to put on a hedge position against our open longs (QID is a good one to use).
Other stocks to consider: (longs) FWLT, FCX, RIG; (shorts) ATHR

Sept. 6th, 2007: Good morning traders!

Futures have been up most of the morning, slightly, but now trading a bit below fair value. There are a lot of SSS's numbers to digest this morning (WMT among them, which came in strong), and unemployment rolls out in a few minutes. Yesterday turned out to be a trend down day after showing some early headfakes. The indices traded precisely as we predicted (gap down, gap fill, rollover) but I still got whipped out of my hedge short position in the Q's for a minimal gain. Also made a mistake in jumping on CROX early only to get stopped out when some bad news hit the airwaves. Otherwise we would have been strongly green on the day (have a real nice winner in the MTT letter: SCUR) with our longs continuing to outperform the markets and our short finally hitting some profit. Can't beat seeing the Swing Trade Newsletter trades up on a day when the markets were down over 1%% How sweet is that??

Today I expect some minor chop chop early as the indices look for support, and then the beginnings of a recovery rally this afternoon into tomorrow. I don't expect that to get very far however. We should trade within a tight range until we hear from the FOMC later in the month.

Stocks to watch: (longs) GRMN, RIG; (shorts) HON, ICE, MICC, BEAV

Market Notes: 08/31/07

08/31/07: Good morning traders! Despite this being traditionally one of the lightest trading weeks of the year, the bulls put on an impressive show yesterday, rescuing the markets from an early drawdown. We were able to cover our Q's short hedge for a nifty gain early, and re-shorted later in the day (twice) for further gains on the late-day slump. But the last 20 minutes were something else...as if the overnight news about Bush's "suprime rescue" speech had been leaked to the street...hmmmm. Today Bernanke gives his speech (not yesterday as I had reported) and with Bush outlining a rescue plan for subprime loans, and reform measures, traders are ramping the futures to the highest levels I've seen in many months in anticipation of good news coming from the two chiefs. Are we being set up for a "gap and crap"? In all likelihood yes because volume should be light going into the holiday weekend and without sustained buying pressure there will be a dropoff. I myself plan to fade the opening gap on the first sell signal for a quick turn trade.

Other stocks I like (but not risk worthy for our newsletters), all long: ELON, SPWR, GRMN, ESRX, BOOM, FWLT, MTOX, BIDU.

A reminder that US Markets are closed on Monday.