The Nightly Newsletter

For October 20, 2003

(Provided to you in advance of the Trading Session)

 

Summary:  Declines to longer term support levels seem likely over time...maybe soon



Technical Analysis

Accuracy Rating for the last trading session:  1 = accurate (The Market broke stated support to trigger short sales and therefore the trading parameters worked perfectly on Friday.)

Near Term Outlook The near term charts tell us to expect the Market to begin the day with a bias to increase initially on Monday.  However, they all tell us that the Markets are in near term down-channels at this time so overall declines appear likely near term.
Mid Term Outlook The mid term charts all tell us that the Markets have broken below the support lines of the up-channels that had been in place prior to Friday, and this has nullified those recent up-channels.  The next level of clear support in these mid term charts are neutral support levels, which on average in each Market, equates to a 1.5 % Market decline over the next few days.
Long Term Outlook The longer term charts are telling us that the Markets have recently tested longer term resistance levels and they now appear to be declining after those tests.  These longer term charts therefore tell us to expect declines to longer term support levels over time.  The declines on average if longer term support levels are tested is 4.6% for all Markets.  The SP 500 also shows us a doji which, if confirmed by a down day on Monday, would tell us to expect rather quick tests of these support levels.

Click below to review the Technical Analysis for each Market.

NASDAQ, QQQ

SP 500, SPY

DOW JONES, DIA


Market Commentary

The Market appears to be beginning to decline to longer term support levels after having tested longer term resistance levels recently.  If Monday is a down day we would expect to see these longer term support levels relatively quickly.

 


Traders Psychology

  • Traders are wondering if the growth rate of the economy in the 4th quarter will be anything close to that of the 3rd.
  • Traders are beginning to wonder if the Market may continue to decline
  • Traders are wondering, for the first time in a while, if they should buy the small dips, or wait for larger ones.

Trading Approach

We are expecting the market to begin the day on Monday with a bias to increase.  However, we are also expecting any bounce to be short lived, and we would expect selling momentum to accelerate on any break of initial near term support levels.  Economic news is light this week, and we believe that sentiment in the Market is shifting towards expectations of Market declines after longer term resistance levels have held in place.

Initial trading parameters for the NASDAQ exist between 1910-1945

If 1910 breaks lower expect 1880

If 1945 breaks higher expect 1990

Otherwise expect 1910-1945 to hold.

 


Trading Ideas

Watch for ideas in the Morning Report.


After-Market News

1. AP ALERT: (CAIRO, Egypt) Voice purported to be Osama bin Laden in audiotape aired on Al-Jazeera TV urges youth in neighboring nations to wage holy war in Iraq.
Market Reaction: Corporate news was very light over the weekend.
 

NASDAQ Futures:  NQ03Z

Futures were flat at the time of this newsletter and this suggests a flat open on Monday.


Economic Reports

Economic Data:
Date ET Release Consensus
Oct 20 10:00 Leading Indicators 0.0%
Oct 20 14:00 Treasury Budget $20.8B
Oct 23 08:30 Initial Claims NA
Anticipated Reaction This will be a very light weak for economic data.  We are not expecting eny surprises on Monday.

Consensus Earnings Expectations

Before The Open  
 
3M Company MMM 0.79
Anadigics ANAD -0.37
Arch Coal ACI 0.01
Check Point Sftwr CHKP 0.23
Citigroup C 0.85
DSP Group DSPG 0.30
Hasbro HAS 0.42
Helix Tech HELX -0.02
IDEXX Labs IDXX 0.41
Lexmark LXK 0.70
M-Systems FLSH -0.00
Southwest Air LUV 0.13
During the Market
 

 
Wrigley WWY 0.50
After the Close
 

 
Altera ALTR 0.11
Ametek AME 0.64
Cendant CD 0.45
CNF Inc CNF 0.48
E.piphany EPNY -0.09
Eclipsys ECLP -0.21
Edwards Lifesci EW 0.35
Everest Re RE 2.05
FindWhat.com FWHT 0.12
j2 Global JCOM 0.26
JDA Software JDAS 0.07
KEMET KEM -0.09
Lincare Holdings LNCR 0.55
Plum Creek PCL 0.27
Silicon Graphics SGI -0.11
Silicon Labs SLAB 0.24
Technitrol TNL 0.17
Texas Instruments TXN 0.09
THQ Inc THQI 0.01
Universal Health UHS 0.76
Verisity VRST 0.11

 

 

We are not expecting any substantial Market moves due to Monday's earnings releases.


Potential Market Moving Events

1. The SEMI Book-to-Bill Report will be released after the Market closes.
Market Reaction: This data may affect Tuesday's trading.
 

 




The Last Trading Session

The Market began the day with a neutral bias but the sentiment turned negative after longer term resistance levels in the SP and the DOW held firm.  The Markets began to decline and at times the declines were quite aggressive.  The Markets fell aggressively in the first hour of trading, and then gradually thereafter.  They closed at the lows of the day, and sentiment at the close suggested that Traders were beginning to question the sustainability of the recent Market increases.


Lesson from the session:

RESPECT LONGER TERM SUPPORT AND RESISTANCE LEVELS ALWAYS.


Performance

Day Trades:  

Because day trades are realistically impossible for any group to follow, we have established a system that will allow you to have multiple day trading ideas every time the Market tests one of our critical support or resistance parameters.  We are in the process of automating this system, but until it is automated this is what you should do to find day trading ideas:

  1. Pay attention to our stated trading Parameters because they give you long and short signals during the day..

  2. Make sure that you read and understand the way that we use Technical Analysis.  Click Here to Learn

  3. Follow the Rules of Trading using Technical Analysis specifically.

  4. When you are searching for a stock to day trade refer to the focus list for ideas and find stocks that are trading near their respective support or resistance levels.

  5. Remember that buy signals exist only on tests of stated support, or upon breaks of stated resistance.

  6. Remember that short signals exist only on tests of stated resistance or upon breaks of stated support.

  7. Look first at the stocks that have been pinpointed by us for you because they are near inflection points already.

  8. If you want to buy a stock look for strong stocks that are near inflection because going with the flow is preferable.

  9. If you want to short a stock look for weak stocks that are near inflection because going with the flow is preferable.

  10. It is ok to use a strong stock for a short just understand that it may be more difficult to short a strong stock than it is to short a weak stock, just like it is likely to be more difficult to buy a weak stock.

  11. Be prepared to enter a trade well before a trading parameter is tested so that you do not have to do the research on ideas when the stated parameter is being tested; thus we are in position to make timely trades..

  12. Follow all of the rules of day trading on every trade:  Day Trading Rules

 


Swing Trades (The focus 4 list)

We are expecting Market declines to longer term support levels over time, and if Monday is a down ay we are expecting those declines to occur rather quickly.

We scalped MERQ and SYMC and replaced them with QLGC and FNM on Friday.

STOCK Short Entry Target Approx. Entry Current Price Net Gain: Target Price: Entry Date Exit Date Stop Limit: Status Re-entry strategy if stopped:
AMZN Short 53.65 53.9 -.25 48 10/6/03 10/6/03 53.9 stopped  
AMZN Short 54 54.25 -.25 48 10/7/03 10/7/03 54.25 stopped  
MXIM Short 43 43.25 -.25 38 10/7/03 10/7/03 43.25 stopped  
MXIM Short 43 43.25 -.25 38 10/7/03 10/7/03 43.25 stopped  
MXIM Short 43 43.25 -.25 38 10/7/03 10/7/03 43.25 stopped  
MXIM Short 43.5 43.75 -.25 38 10/7/03 10/8/03 43.75 stopped  
MXIM Short 43.5 43.75 -.25 38 10/8/03 10/8/03 43.75 stopped  
MXIM Short 43.5 43.75 -.25 38 10/9/03 10/9/03 43.75 stopped  
MXIM Short 43.5 43.75 -.25 38 10/9/03 10/9/03 43.75 stopped  
ERTS Short 99.75 100 -.25 91 10/7/03 10/7/03 100 stopped  
ERTS Short 99.75 100 -.25 91 10/7/03 10/7/03 100 stopped  
ERTS Short 100 100.25 -.25 91 10/7/03 10/7/03 100.25 stopped  
ERTS Short 100 100.25 -.25 91 10/7/03 10/8/03 100.25 stopped  
ERTS Short 100 101.25 -1.25 91 10/8/03 10/9/03 101.25 stopped  
ERTS Short 101 101.25 -.25 91 10/9/03 10/9/03 101.25 stopped  
ERTS Short 101 101.25 -.25 91 10/9/03 10/10/03 101.25 stopped  
ADI Short 43.2 43.45 -.25 38 10/13/03 10/13/03 43.45 stopped n/a
AIG Short 61.3 61.55 -.25 57 10/13/03 10/13/03 61.5 stopped  
AIG Short 61.5 61.75 -.25 57 10/13/03 10/14/03 61.5 stopped n/a
SYMC Short 66.5 66.75 -.25 55 10/6/03 10/9/03 66.75 stopped  
SYMC Short 66.5 65 1.5 55 10/6/03 10/17/03 66.75 CLOSED n/a
MERQ Short 50 50.5 .5 45 10/7/03 10/8/03 50.25 stopped  
MERQ Short 52.2 49 3.2 45 10/8/03 10/17/03 52.45 CLOSED n/a
YHOO Short 42.85 42.17 .68 36.4 10/13/03   43.1 OPEN 42.85
NVLS Short 39 39.25 -.25 33 10/15/03 10/15/03 39.25 stopped  
NVLS Short 39 39.25 -.25 33 10/17/03 10/17/03 39.25 stopped  
NVLS Short 39 37.55 1.45 33 10/17/03   39.25 OPEN 39
FNM Short 73.5 73.28 .22 63 10/17/03   73.75 OPEN 73.5
QLGC 54 53.75 53 1.75 48 10/17/03   54.25 OPEN 54
Total       1.8            
 

 

Click on the link below to review our Swing Trading results.

Swing Trades Performance page


Long Term Holds:

When we initiate a long term portfolio like this we will find ourselves very happy when the Market is moving higher, but rather upset when it moves lower.  The purpose of this strategy though is to disregard the fluctuations in the Market in favor of longer term gains.  Please do not get excited by the increases in this portfolio, and do not let the declines worry you.  We have stops in place to prevent losses in case we are wrong on our timing.

IMCL:  This is a long term hold

TYC:  this is a long term hold.

AMAT:  We missed our re-entry on AMAT.

CSCO:  this is a long term hold.

GE:  this is a long term hold.

AMGN:  this is a long term hold.

DELL:  this is a long term hold.

MSFT:  this is a long term hold.

INTC:  this is a long term hold.

STOCK Long or Short Entry Target Approx. Entry Current Price Net Gain: Target Price: Stop Limit: Status Re-entry strategy:
TYC Stops # stops: 6   -1.5        
TYC Long 12 12 22.26 10.26 long term 1.75 OPEN
IMCL Long #stops 3   -.75   9.75    
IMCL Long 10 10 33.38 23.38 long term 9.75 OPEN  
AMAT stops # stops: 9 -2.75    
AMAT Long 11.1          
GE Stops # stops: 14 -4    
GE Long 23 23 28.55 5.55 long term 22.75 OPEN  
AMGN Stops # stops: 10 -2.5    
AMGN Long 36 36 63.01 27.01 long term 35.75 OPEN  
DELL Stops # stops: 6 -1.5    
DELL Long 23 23 36.41 13.41 long term 22.75 OPEN  
MSFT Stops # stops: 15 -3.75    
MSFT Long 23.4 23.5 28.93 5.43 long term 24 OPEN  
INTC Stops # stops: 15 -3.75    
INTC Long 16 16 31.66 15.66 long term 15.75 OPEN  
CSCO Stops #stops 2 -0.5
CSCO Long 12.5 12.5 20.64 8.14 long term 13.75 OPEN
Totals: 87.84

Click on the link below to review our Special Situation trading results.

Special Situation Performance page


The Dividend Portfolio

This portfolio of stocks is designed to be an alternative to the bond funds that you may have in place at this time.  It is designed to provide diversified long term income and growth in high dividend paying stocks.  Please read more about this strategy before you decide to invest by clicking here:  More Information

All Trades have triggered.

Stock Long Entry Target Approx Entry Current Price Net gain Target Price Stop Limit Status Re-entry Strategy
HON Long 24 24.05 23.75 -.25 Long Term 23.75 stopped  
HON Long 24 24 29.01 5.01 Long Term 23.75 OPEN 24
BMY Long 26 26 25.5 .5 Long Term 25.75 stopped  
BMY Long 24 24 24.97 .97 Long Term 23.75 OPEN 24
JPM Long 31 31 30.75 .25 Long Term 30.75 stopped  
JPM Long 31 31 36.34 5.34 Long Term 30.75 OPEN 31
DOW Long 31 31.05 30.75 .3 Long Term 30.75 stopped  
DOW Long 31 31 30.75 1 Long Term 30.75 stopped  
DOW Long 31 31 35.2 4.2 Long Term 30.75 OPEN 31
SLE Long 17.2 17.2 18.98 1.78 Long Term 16.95 OPEN 17.2
SBC Long 25 25 24.75 1.75 Long Term 24.75 stopped  
SBC Long 23.4 Long Term 23.15 23.4
GM Long 37 37 36.75 1 Long Term 36.75 stopped  
GM Long 37 37 43.14 6.14 Long Term 36.75 OPEN 37
Net Gain        

18.39

       

 

 

Good Trading,

BM.