November 14, 2011 H

An online version of this newsletter is available at http://www.tonihansen.com/Newsletters/current.html.

Filtering Gaps to Locate High Probability Momentum Trades Friday, November 18 1:15 pm 2:15 pm PST

Gap trading represents a unique opportunity for traders looking to take advantage of large price moves in a relatively short period of time, but filtering out the stocks with the greatest probability for such moves can be daunting. In this session, veteran trader Toni Hansen will share with you the tools she uses to identify securities with higher-than-average odds for trend day and multi-trend days moves following what she refers to as momentum gaps, as well as some of her favorite techniques for trading these types of opening gaps.

Daily Commentary

Bulls Face Another Challenge (Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.) FRIDAY’S MARKET WRAP-UP Market Snapshot for November 13, 2011 (7:22 a.m. ET): Closing Prices: DOW 12,153.68 (+259.89, +2.19%), SandP 500 1,263.85 (+24.16, +1.95%), NASDAQ 2,678.75 (+53.60, +2.04%), Nikkei 225 8,514.47 (+13.67, +0.16%), DAX 6,057.03 (+189.22, +3.22%), FTSE 5,545.38 (+100.56, +1.85%) OIL 98.99, GOLD 1,788.10, SILVER 34.682 EURO 1.3746, YEN 77.10, BRITISH POUND 1.6077, U.S. DOLLAR INDEX 77.13

Congestion Continues into Weekend

The market has been dealing with resistance on the daily time frame over the past couple of weeks while earnings season reached its peak and the EU attempted to sort out the most recent developments in Greece and Italy where the prime ministers in both countries have since announced their resignations. A shift in upside momentum mid-week last week held back the bulls that had led the way heading into the month and strong selling hit on Wednesday that took the indices back to the lower end of the 30-minute trading range. A Momentum Reversal buy triggered early Thursday morning in premarket trade as the European markets opened, but the indices struggled to find direction intraday. Dow Jones Industrial Average (Figure 1) The market’s intraday struggles continued on Friday. Congestion in premarket trade created a strong breakout early in the day, but volume was light due to the Veteran’s Day holiday and the momentum slowed by mid-morning. Trade after the 10:45 ET correction period was fairly choppy with a lot of overlap on the five minute time frame as well as the 15 minute one. Technical patterns and support and resistance levels still continued to hold extremely well, but the greater degree of price overlap and tighter range of the congestion limited follow-through and diminished reward potential compared to traditional stop zones.

Consumer Sentiment Improves Unexpectedly

Economic data was on the light side this past week, but the week ended with a welcome upside surprise in the form of an unexpected improvement in consumer sentiment for November. The Reuters/University of Michigan Consumer Sentiment Index climbed from 60.9 in October to 64.2 in its preliminary reading posted on Friday. Economists had been expecting it to inch higher to 61.3. This will be another relatively light week for data, but keep an eye out for October’s Producer Price Index on Tuesday and the Consumer Price Index on Wednesday. Retail sales for October are also due out on Tuesday morning. A small gain in overall sales is expected. Even though earnings season starts to wind down this week, some name to watch for are the retailers. JC Penny (JCP) and Urban Outfitters (URBN) report on Monday, while Saks (SKS) reported on Tuesday. Abercrombie *and Fitch (ANF) reports Wednesday and Gap (GPS) reports Thursday. Ann (Taylor) (ANN) reports on Friday. Home improvement giants Home Depot (HD) (Tuesday) and Lowe’s (LOW) (Monday) also report this week. So far this season about 70% of earnings reported in the SandP 500 have topped expectations. Less than 10% are left to report. SandP 500 (Figure 2) Index Wrap-up The Dow Jones Industrial Average ($DJI) ended the day on Friday with a gain of 258.89 points, or 2.19%, and closed at 12,153.68. All of the Dow’s index’s thirty components posted a gain. The top performers were Disney (DIS) (+5.95%), Caterpillar (CAT) (+4.26%), Alcoa(AA) (+3.41%), and Intel (INTC) (+3.8%). The weakest were the telecoms: Verizon (VZ) (+0.51%) and ATandT (T) (+0.89%). The Dow ended the week higher by 1.42%. It is currently up 4.98% year-to-date. The SandP 500 ($SPX) finished the session with a gain of 24.16 points, or 1.95%, and closed at 1,263.85. The strongest individual percentage performers in the index were Staples (SPLS) (+6.12%), Genworth Finl. (GNW) (+6.11%), Disney (DIS) (+5.95%), and Ryder Sys. (R) (+5.86%). Only thirteen of the index’s components posted a loss. The weakest were E Trade Financial Corp. (ETFC) (-4.11%) and Valero Energy Corp. (VLO) (-3.28%).

The Nasdaq Composite ($COMPX) ended the session higher by 53.60 points, or 2.04%, on Friday and it closed at 2,678.75. The top index components in the Nasdaq-100 ($NDX) were Green Mountain Coffee (GMCR) (+6.90%), Staples (SPLS) (+6.12%), Lam Research (LRCX) (+6.02%), and Research In Motion (RIMM) (+5.18%). Only six posted a loss. The weakest were Activision Blizzard (ATVI) (-2.08%) and Vertex Pharmaceuticals (VRTX) (-1.84%). Nasdaq Composite (Figure 3) OUTLOOK Getting Technical The index futures have risen once again on Sunday evening, breaking out of Friday’s afternoon congestion. The strong pace of Friday morning’s rally, however, leaves the trend facing exhaustion on the 15 minute time frame and last month’s highs remain a substantial hurdle. There is room for slightly higher highs again as we roll over into Monday, but sustaining that buying will be difficult without a longer period of correction than seen within this current upswing over the past couple of days.

ECONOMIC REPORTS AND EVENTS THIS WEEK

Nov 15 8:30 AM PPI Oct Nov 15 8:30 AM Core PPI Oct Nov 15 8:30 AM Retail Sales Oct Nov 15 8:30 AM Retail Sales ex-auto Oct Nov 15 8:30 AM Empire Manufacturing Nov Nov 15 10:00 AM Business Inventories Sep Nov 16 7:00 AM MBA Mortgage Index 11/12 Nov 16 8:30 AM CPI Oct Nov 16 8:30 AM Core CPI Oct Nov 16 9:00 AM Net Long-Term TIC Flows Sep Nov 16 9:15 AM Industrial Production Oct Nov 16 9:15 AM Capacity Utilization Oct Nov 16 10:00 AM NAHB Housing Market Index Nov Nov 16 10:30 AM Crude Inventories 11/12 Nov 17 8:30 AM Initial Claims 11/12 Nov 17 8:30 AM Continuing Claims 11/05 Nov 17 8:30 AM Housing Starts Oct Nov 17 8:30 AM Building Permits Oct Nov 17 10:00 AM Philadelphia Fed Nov Nov 18 10:00 AM Leading Indicators Oct International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Nov 13 CNY New Yuan Loans (OCT)*** Nov 13 16:45 NZD Retail Sales Ex Inflation (3Q) Nov 13 18:50 JPY Nominal Gross Domestic Product (3Q P)*** Nov 13 18:50 JPY Gross Domestic Product Annualized (3Q P)*** Nov 13 18:50 JPY Gross Domestic Product (3Q P)*** Nov 13 23:30 JPY Industrial Production (SEP F) Nov 14 CNY Actual FDI (OCT) Nov 14 05:00 EUR Euro-Zone Industrial Production w.d.a. (SEP) Nov 14 19:30 AUD Reserve Bank’s Board November Minutes*** Nov 15 GBP Nationwide Consumer Confidence (OCT) Nov 15 02:00 EUR German Gross Domestic Product n.s.a. (3Q P)*** Nov 15 04:30 GBP Consumer Price Index (OCT)*** Nov 15 04:30 GBP Core Consumer Price Index (OCT)*** Nov 15 05:00 EUR Euro-Zone Gross Domestic Product s.a. (3Q A)*** Nov 15 05:00 EUR German ZEW Survey (Current Situation) (NOV) Nov 15 05:00 EUR Euro-Zone ZEW Survey (Economic Sentiment) (NOV)*** Nov 15 05:00 EUR German ZEW Survey (Economic Sentiment) (NOV)*** Nov 15 08:30 USD Producer Price Index (OCT) Nov 15 08:30 USD Producer Price Index Ex Food and Energy (OCT) Nov 15 08:30 USD Advance Retail Sales (OCT)*** Nov 15 08:30 USD Retail Sales Less Autos (OCT) Nov 15 08:30 USD Retail Sales Ex Auto and Gas (OCT) Nov 15 10:00 USD Business Inventories (SEP) Nov 16 JPY Bank of Japan Rate Decision (NOV 16)*** Nov 16 04:30 GBP Claimant Count Rate (OCT) Nov 16 04:30 GBP Jobless Claims Change (OCT)*** Nov 16 04:30 GBP Average Weekly Earnings (SEP) Nov 16 04:30 GBP ILO Unemployment Rate (SEP) Nov 16 05:00 EUR Euro-Zone Consumer Price Index – Core (OCT)*** Nov 16 05:00 EUR Euro-Zone Consumer Price Index (OCT)*** Nov 16 08:30 USD Consumer Price Index (OCT)*** Nov 16 08:30 USD Consumer Price Index Ex Food and Energy (OCT)*** Nov 16 09:00 USD Net Long-term TIC Flows (SEP) Nov 16 09:15 USD Industrial Production (OCT) Nov 16 19:30 AUD Average Weekly Wages (AUG) Nov 17 01:00 JPY Machine Tool Orders (OCT F) Nov 17 04:30 GBP Retail Sales (OCT) Nov 17 04:30 GBP Retail Sales w/Auto Fuel (OCT) Nov 17 05:00 CHF ZEW Survey (Expectations) (NOV) Nov 17 08:30 USD Housing Starts (OCT) Nov 17 08:30 USD Building Permits (OCT) Nov 18 EUR Euro-Zone Consumer Confidence (NOV A) Nov 18 02:00 EUR German Producer Prices (OCT) Nov 18 02:00 EUR German Producer Prices (OCT)*** Nov 18 07:00 CAD Consumer Price Index (OCT)*** Nov 18 07:00 CAD Bank Canada Consumer Price Index Core (OCT)*** Nov 18 07:00 CAD Consumer Price Index (OCT) Nov 18 08:30 CAD Leading Indicators (OCT) Nov 18 10:00 USD Leading Indicators (OCT) *** Highly influential Notice: The Bastiat Group, Inc. has attempted to verify the information contained in this calendar, however, any aspect of such info may change without notice. Foreign economic reports included in this list are only those deemed “medium to high impact”.

KEY EARNINGS ANNOUNCEMENTS THIS WEEK

Monday, Nov 14, 2011 Before: CTFO, CVV, DYN, GAXC, GSL, HSKA, ISS, JCP, OW, BRD, NOOF, SVA, SORL, SNSS, TPI, URRE During: ATEA, CALI, GPRC, HWBK, NSU After: VNET, API, AGO, ATHX, CXM, ERP, CIG, CYCC, CMXI, DRJ, EFUT, EFOI, EDS, FSI, GGR, GLAD, GLPW, HSFT, HOLI, IOC, JNGW, MOTR, PCYG, RMKR, SUTR, TPCS, TNGN, URBN, VISN, ZAGG Tuesday, Nov 15, 2011 Before: BZH, CVVT, CXDC, CLNT, CRRC, GILT, HD, JEC, LRN, MTOR, MIL, CEL, PTX, SKS, SPLS, TJX, TSEM, VIT, WMT During: – After: A, ASYS, CNQR, DWCH, DELL, GBG, JADE, UNTK Wednesday, Nov 16, 2011 Before: IMOS, CRWS, EDAP, HRG, ITRN, MAG, SPB, TYC, ZLTQ During: – After: AMAT, DL, LTD, NTAP, TFSL Thursday, Nov 17, 2011 Before: AMAP, BONT, CMRG, PLCE, DEST, DLTR, DCI, SJM, SSI, BKE During: – After: ARUN, ATW, DLB, FMCN, GPS, GIGM, INTU, JHX, MENT, NWY, NED, SCVL, WTSLA Friday, Nov 18, 2011 Before: ANN, BRC, CMED, CPWM, CYBX, KIRK During: CRMT After: –

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! () = Not yet confirmed at the time the list was compiled.

DISCLAIMER

There is a very high degree of risk involved in trading securities. Past results are not indicative of future returns. Prior to the execution of any securities trade, you should always consult with your broker or other financial advisor. The positions given and described by the Bastiat Group, Inc. and its employees and affiliates are for educational purposes only. The Bastiat Group, Inc. and its members, employees, agents, consultants, analysts, representatives, content and/or service providers, affiliates, subsidiaries, successors and assigns (hereinafter collectively, “The Bastiat Indemnities”) assume no responsibility or liability for your trading and investment results. Go to http://www.tonihansen.com/disclaimer.html for a complete disclaimer. (c) 1998-2011 All information presented is property of TradingFromMainStreet.com and Bastiat Group, Inc. PO Box 330 Roland, IA 50236 , USA To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/LEwsrOzMtCxMnBwcTCzstEa0jIwMjAyMzJw=