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FOR THIS WEEK'S POSITION TRADE NEWSLETTER
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Daily
Editorial: |
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Market Resumes Gradual Daily Correction
Good morning! The 60
minute 2B reversal pattern we have been following in the S&P500
held well going into Thursday morning as the market gapped higher into
the open. As shown on the daily charts though, it was really the Dow
Jones Ind. Average that finally dared to peek its head out after last
weeks strong decline. Caterpillar (CAT) and Honeywell International
(HON) both posted strong fourth-quarter earnings results and these Dow
components helped that index serve as the relative strength leader
throughout the session.
Although the premarket jobless claims and
durable goods orders came in slightly better than expected, the index
futures actually began to fall off premarket highs well before that
data was released. This correction continued into the open. A base at
opening levels in the NASDAQ was followed by a continuation of the
premarket correction off highs as the weakest of the three main indices
fell rapidly into the prior day's close.
The closure of the gap served as strong support for the NASDAQ, hitting
at the same time as the Dow ran into its 5 minute 200 sma on the all
sessions charts and price support from Tuesday and Wednesday's highs.
The S&P 500 also found support from prior 15 minute highs and the 5
minute 20 sma. All of these levels converging at once facilitated a
decent pivot, which eventually led to new highs on the day and a retest
of the upper trend channel on the 60 minute charts in the S&P500
and NASDAQ Composite. This rally came in the form of a 5 minute cup
with handle on the NASDAQ, a triangle on the S&P500 and a 5 minute
range breakout in the Dow.
The remainder of the day was pretty similar
to the action from the first half of the week. The 12:00 ET reversal
period held perfectly with a strong doji reversal on the 5 minute
charts and shooting star reversal pattern on the 15 minute charts. This
was right off the premarket and prior daily highs on the NASDAQ.
The selling was about as strong as the rally had been and that meant
higher odds of a range holding on the 15 minute charts into the close.
Three small waves of selling on the 5 minute charts were followed a
pivot off the S&P500 and Dow's 15 minute 20 sma support. A shallow
Phoenix along the 5 minute 20 sma followed. The stronger Dow was able
to bump back into the mid-day highs, but the S&P and NASDAQ fell a
bit short by the time the last reversal period of the day hit at 15:30
ET.
Concerns expressed in yesterday's column remain valid heading into
Friday. The risk remains that this is a temporary correction ahead of a
better test of 100 day sma support in the indices. As things stand
right now though, the 2B on the 60 minute charts from Wednesday
afternoon is looking to hold into Friday morning.
Sector Highlights from Thursday:
Gainers included semiconductors ($SOX +2.9%), internet stocks ($GIN
+1.8%), banks ($BKX), brokers ($XBD +2.5%) and computer software ($GSO
+1.3%). Networkers lost their favor ($NQX -1.3%), while utilities
continued to show weakness ($UTIL -0.9%). Airlines ($XAL) also had a
difficult day.
Remember: As this earnings season progresses, be sure to pay closer
attention to when earnings are due for any open positions you may have.
While there are exceptions, it can be quite dangerous holding a shorter
term position into an earnings announcement.
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Economic
Reports and
Events:
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Jan 27:
Chain Deflator-Adv. For Q4 (8:30 am), GDP-Adv. For Q4 (8:30 am), New
Home Sales for Dec (10:00 am)
Jan 30: Personal Income
for Dec (8:30 am), Personal Spending for Dec (8:30 am)
Jan 31: Employment
Cost index for Q4 (8:30 am), Chicago PMI for Jan (10:00 am), Consumer
Confidence for Jan (10:00 am), FOMC policy statement (2:15 pm)
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Earnings
Announcements of Interest: |
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Only stocks with an
average daily volume of 500K+ are
listed. List may not be complete so be sure to always check your
stock's earnings date before holding a position overnight. (A) =
Earnings after the close, (B) = Earnings before the open,
(?) = Earnings time not specified at the time of this writing
Jan 27: BDK
(B), CVX (B), CX (B), FPL (?), GCI (B), ITT (B), MAN (B), NTY (B), NUE
(?), PG (B), TROW (B), UCBH (?)
Jan 30:
ATHR (4:00 pm ET), CHKP (B), CMI (B), EK (B), XOM (?), FISV (A), KFT
(A), MAT (B), RSAS (A), SGP (B), SII (B), SYY (?), TSN (B), UNM (A),
ZMH (A)
Jan 31: ACE
(A), ADPT (?), ASD (B), ARTG (?), CCJ (?), CB (A), CIN (?), CEG (?),
CAM (B), COCO (B), CFC (B), CYMI (A), ELN (B), ETR (B), FLEX (A), GOOG
(?), HLT (B), ITW (08:00 am ET), RX (B), ISSX (A), JBLU (B), K (B), MRK
(B), SEPR (B), SIE (A), SGTL (A), STN (?), SYMC (?), TE (B), ERICY
(01:30 am ET), ALL (A), X (?), VLO (?), WYE (?), ZHNE (A)
Note: All economic numbers
and earnings reports are in lines with those compiled by Yahoo Finance.
Occasionally changes will occur that are made after the posting of this
column.
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