September 21, 2011 HOME EDUCATIONAL PRODUCTS CONTACT TONI An online version of this newsletter is available at http://www.tonihansen.com/Newsletters/current.html.
FREE TRADING COURSE Good day! I’d like to invite you to check out a free trading course put together by former floor trader Adam Hewison. In it he covers: (1) The importance of psychology in price movement (2) How to spot mega trends (3) Understanding of technical price objectives (4) How to picture price objectives (5) How to trade with moving averages (6) How to use point and figure trading techniques (7) How to use the RSI indicator (8) How to correctly use stochastics in your trading (9) How to use the ADX indicator to capture trends (10) How to capitalize on natural market cycles. Plus, you will you will learn all about fibonacci retracements, MACD, Bollinger Bands and much more. To access your copy right away, go to: http://www.ino.com/info/447/CD3633/anddp=0andl=0andcampaignid=6
Daily Commentary
Market Pauses Ahead of Wednesday’s Fed (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.) TUESDAY’S MARKET WRAP-UP Market Snapshot for September 20, 2011 (5:05 pm ET): Closing Prices: DOW 11,408.66 (+7.65, +0.07%),SandP 500 1,202.09 (-2.00, -0.17%), NASDAQ 2,590.24 (-22.59, -0.86%), Nikkei 225 8,721.24 (-142.92, -1.61), DAX 5,571.68 (+155.77, +2.88%), FTSE 5,363.71 (+104.15, +1.98%) OIL 85.50, GOLD 1,806.30, SILVER 39.83 EURO 1.3703, YEN 76.40, BRITISH POUND 1.5744, U.S. DOLLAR INDEX 77.505 UPDATE Good day! I’m back! Well, sort of! I’m proud to announce the arrival a very healthy little market apprentice to our family: Sean Aslan Sever was born on August 22, 2011 and we’re settling into our new home in Illinois quite well (albeit not looking forward to the winters). I’ve already introduced him to the ins and outs of candlestick charting. I’m pretty certain that he’s in awe (or it could just be the really bright colors, but I think my original interpretation is more likely)! I’m currently recovering from a nasty virus picked up at the little guy’s three-week check-up, but I’ll be back to writing my daily market commentary full-time starting next Monday. Until then, I have an abbreviated update and outlook that I’ll be sending your way and in October I’ll be kicking off a new weekend letter containing a lesson and trade for the upcoming week. Have a wonderful trading day! All my best, Toni
Price Resistance Puts a Cap on Market Gains The past two months have been some very exciting ones for market participants, and not necessarily in a good way in the case of longer-term investors. After the sharp collapse the indices experienced into early August, the major indices have been in corrective mode. This has consisted primarily of a wide trading channel occupying the lower half of the correction off this year’s highs. For the most part, volume has been dropping off throughout this period, suggesting that the correction will continue to struggle as the month wears on. Tuesday was particularly difficult for the bulls, which had been making another comeback attempt throughout last week. The indices were dealing with strong daily resistance, however, which proved difficult to break. The Nasdaq was the strongest of the three indices and had the most obvious resistance. It struck the upper end of its daily trading channel following a second push off August’s double bottom. This high was also approximately an equal move this month when compared to the end of last. Another example of this type of resistance can be seen in premarket trade in the Dow index futures (shown in blue on the 15 minute YM – Figure 1).
Dow Jones Industrial Average (Figure 1) Tuesday kicked off with a strong run throughout most of the morning, but by afternoon this rally was beginning to fade. The price action we saw develop intraday on the 15 minute charts was almost identical to the daily pattern that developed into the end of July and the outcome was equally as powerful, albeit on a smaller scale (comparison shown in blue on the ES – Figure 2). Afterhours we are now seeing the same type of trading range or congestion play out in the index futures as we have seen on the daily charts over the past six weeks. Wednesday’s focus will be upon the afternoon Fed announcement for interest rates and the corresponding statement. Typically the morning of a Fed announcement is decent for trading and more often favors the bulls. It becomes more difficult mid-day as volume dries up. Right now there is a strong technical bias in favor of a move lower following the announcement if the market holds up into the news release. A trend day is unlikely. Use caution trading the immediate aftermath of the event, however, since volatility will be high. Waiting several minutes for price action to begin to normalize can be well-worth it. The Fed news hasn’t yielded the extreme post-announcement moves over the past year that we used to see before the Fed went into holding pattern, but the best moves to play after the announcement tend to be the secondary and tertiary reactions intraday on the 2-5 minute time frame. Last month the FOMC agreed to keep rates low until at least March of 2013.
SandP 500 (Figure 2) Index Results
The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a gain of 7.65 points, or 0.07%, and closed at 11,408.66. The top gainers in the Dow were Home Depot (HD) (+1.34%), Intel (INTC) (+1.23%), American Express (AXP) (+1.21%), and Travelers (TRV) (+1.04%). The weakest were Alcoa (AA) (-2.85%), Hewlett Packard (HPQ) (-1.92%), Bank of America (BAC) (-1.29%), and Caterpillar (CAT) (-1.11%). The SandP 500 ($SPX) loss of 2.00 points, or 0.17%, and closed at 1,202.09. The top percentage performers in the index were Interpublic Group (IPG) (+8.26%), Celgene Corp. (CELG) (+7.14%), Newmont Mining Corp. (NEM) (+5.48%), and Carnival Corp. (CCL) (+5.05%). The weakest performers were Netflix (NFLX) (-9.54%), Coventry Health Care (CVH) (-6.83%), CH Inds. Holdings (CF) (-6.52%), Cliffs Natural Resources (CLF) (-6.44%), and Alpha Natural Resources (ANR) (-5.71%). The Nasdaq Composite ($COMPX) ended the session lower by 22.59 points, or 0.86%, on Tuesday and it closed at 2,590.24. The strongest percentage gainers in the Nasdaq-100 ($NDX) were Celgene Corp. (CELG) (+7.14%), Cerner Corp. (CERN) (+4.32%), Vertex Pharmaceuticals (VRTX) (+3.73%), and Alexion Pharmaceuticals (ALXN) (+3.68%). The top decliners were Netflix (NFLX) (-9.54%), F5 Networks (FFIV) (-5.69%), First Solar (FSLR) (-5.60%), Illumina Inc. (ILMN) (-5.17%), and Joy Global (JOYG) (-5.17%). Nasdaq Composite (Figure 3) ECONOMIC REPORTS AND EVENTS THIS WEEK U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto) Sep 19 10:00 AM NAHB Housing Market Index Sep Sep 20 8:30 AM Housing Starts Aug Sep 20 8:30 AM Building Permits Aug Sep 20 2:15 PM FOMC Rate Decision Sep Sep 21 7:00 AM MBA Mortgage Index 09/17 Sep 21 10:00 AM Existing Home Sales Aug Sep 21 10:30 AM Crude Inventories 09/17 Sep 21 2:15 PM FOMC Rate Decision Sep Sep 22 8:30 AM Initial Claims 09/17 Sep 22 8:30 AM Continuing Claims 09/10 Sep 22 10:00 AM FHFA Housing Price Index Jul Sep 22 10:00 AM Leading Indicators Aug International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Sep 20 01:00 JPY Leading Index (JUL F) Sep 20 01:45 CHF SECO September 2011 Economic Forecasts Sep 20 02:00 EUR German Producer Prices (AUG)*** Sep 20 02:00 CHF Trade Balance (AUG) Sep 20 02:00 EUR German Producer Prices (AUG) Sep 20 05:00 EUR German ZEW Survey (Economic Sentiment) (SEP)*** Sep 20 05:00 EUR German ZEW Survey (Current Situation) (SEP) Sep 20 08:30 CAD Leading Indicators (AUG) Sep 20 08:30 USD Building Permits (AUG) Sep 20 08:30 USD Housing Starts (AUG) Sep 20 18:45 NZD Current Account Balance (2Q) Sep 20 19:50 JPY Merchandise Trade Balance Total (AUG) Sep 20 23:00 NZD Credit Card Spending (AUG) Sep 20 23:00 NZD Credit Card Spending s.a. (AUG) Sep 21 00:30 JPY All Industry Activity Index (JUL) Sep 21 04:30 GBP Bank of England Minutes*** Sep 21 04:30 GBP PSNB ex Interventions (AUG) Sep 21 04:30 GBP Public Finances (PSNCR) (AUG) Sep 21 04:30 GBP Public Sector Net Borrowing (AUG) Sep 21 07:00 CAD Consumer Price Index (AUG)*** Sep 21 07:00 CAD Bank Canada Consumer Price Index Core (AUG) Sep 21 10:00 USD Existing Home Sales (AUG) Sep 21 14:15 USD Federal Open Market Committee Rate Decision (SEP 21)*** Sep 21 18:45 NZD Gross Domestic Product (2Q)*** Sep 22 05:00 CHF ZEW Survey (Expectations) (SEP) Sep 22 05:00 EUR Euro-Zone Industrial New Orders (JUL) Sep 22 08:30 CAD Retail Sales (JUL) Sep 22 10:00 EUR Euro-Zone Consumer Confidence (SEP A) Sep 22 10:00 USD House Price Index (JUL) Sep 22 10:00 USD Leading Indicators (AUG) Sep 22 20:00 AUD Conference Board Leading Index (JUL) Sep 23 EUR Euro-Zone Purchasing Manager Index Composite (SEP A) Sep 23 EUR Euro-Zone Purchasing Manager Index Manufacturing (SEP A) Sep 23 EUR Euro-Zone Purchasing Manager Index Services (SEP A) Sep 23 EUR German Purchasing Manager Index Manufacturing (SEP A) Sep 23 EUR German Purchasing Manager Index Services (SEP A) Sep 23 04:30 GBP BBA Loans for House Purchase (AUG) *** Highly influentialNotice: 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 ANNOUNCMENTS THIS WEEK Monday, Sep 19, 2011 Before: LEN During: – After: ARAY Tuesday, Sep 20, 2011 Before: AZO, CAG, FDS, GFN, GENT, JEF, VSR During: – After: ADBE, ALOG, ORCL Wednesday, Sep 21, 2011 Before: IHS During: – After: BBBY, FUL, MLHR, RHT, SCS Thursday, Sep 22, 2011 Before: FDX, RAD, SYMX During: – After: NKE, TIBX Friday, Sep 23, 2011 Before: – During: – 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. © 1998-2011 All information presented is property of TradingFromMainStreet.com and Bastiat Group, Inc.
