ShadowTrader Focus Report_2008

Discussion in 'Trading' started by ShadowTrader_08, Apr 23, 2008.

  1. ShadowTrader_08

    ShadowTrader_08 ET Sponsor

    The full version of this report with daily stock picks and real-time email alerts is available here for $20 per month

    Good Morning, Traders. The market isn't showing any signs of doing anything except going up. Friday's trading gave us no reason to adjust our short term bias from bullish as market breadth, advancing versus declining issues, and price were strong all day. To be sure, traders were buying at the close on Friday as well. This tells us that either the bears did not want to carry their positions into the weekend or bulls wanted to increase their long positions ahead of the weekend (or both). In either scenario, the implications are bullish for trading going into this week.

    Therefore, <I>ShadowTraders</i> who are long should stay long, and for those carrying short positions, manage them with tighter stops as our view that the S&P 500 will touch the 870-875 level gives it approximately 2.8 % more room to move higher. Based on Friday's closing strength, a move higher could happen sooner than later. We are following our own advice in the <I>ShadowTraderPro Model Portfolio</i> by holding our two long positions (<B>LO</b> and <B>MMC</B>) as we look for follow through of Friday's bullish close early this week.

    One sector that we have now put on our radar for a possible short play is Gold. Let's "mine" the chart of the SPDR Gold Shares (<B>GLD</b>) below for technical indications and how we would approach a short trade in the future.
    <br><br><img src="http://assets.shadowtrader.net/charts/090406GLD.gif" width="560" border="5" height="650"><br><br>
    <B>GLD</b> broke it's 3.5 month rally by closing below the ascending orange trendline on March 24, 2009 and by it's failed attempt to recapture the top side of the orange trendline on March 26, 2009 (sequence within green oval). Since then, a new downtrend may be developing. If this is the case, the price of <b>GLD</b> should, at some point in the near future, return to test the face of the blue descending trendline in it's development of a bearish swing pattern. We would be interested in taking a short position when price rises back into the pocket near the face of the descending blue trendline (magenta triangle). Initiating a short position from this level, rather than the current price level, </b> would provide a trade that has a higher probability of success and a definite place to establish our initial stop, behind the blue descending trendline.

    We will continue to monitor <b>GLD</b> and look for its price pattern to give us the signal to go short.
     
    #271     Apr 5, 2009