Free Swing Trading and Day Trading Picks & Education

These articles describe the statistical probabilities of long positions on these equities, based on neural net projections, for the next 5-15 trading days. These are not holy grail methodologies, the road to easy street, or anything else. These projections are the result of screening for technically significant retracement and momentum patterns that have been further screened for value and bullish sector performance. In other words, the projections are for long positions. 

For 12/18/2007:

                                $INDU             $SPX               $COMPQ
Monthly Momentum   Negative        Negative         Negative
Weekly Momentum    Positive         Positive           Negative
Daily Momentum        Negative        Negative         Negative

Note: (OS) means oversold and (OB) means overbought. The value to price estimate (it is not a guarantee, only a cash flow based estimate) can be defined loosely as a multiplier of price. A number higher than one means the stock is undervalued using this model and a number less than one means the stock is overvalued.

Index and ETF I-shares Bullish Reversals

None

U.S. equities sold off with accelerated trading volume as institutions decided to cap of some gains on certain stocks and sell their technology holdings despite decent earnings news from companies like ADBE on Monday. The $COMPQ, formerly the strongest of the indexes in terms of bullish momentum, is now the weakest of the three indexes. It is hard to know, other than from a profit-taking perspective, what has set up this reversal of fortune.  As traders we should not care and simply notice that conditions are not viable from the long side in the $COMPQ at least in the short-run. There was some limited strength in basic chemicals (SMG), electronics (JBL), insurance (CNA), retail (JCP), home healthcare (DVA), investment banking (BNS), beverage bottlers (PBG) and payment services (HPY). 

In the end, the patterns were not strong enough to register on the neural net screens again today.

Here’s what the nets saw today:

                                     Value/Price est.   7 day ATR   %( 7 day ATR)/Close

Note (O): optionable

That is it for now. At present, stocks are clearly in the midst of a selloff, though there are interesting bottoming patterns occurring in some insurance names. If the indexes retest and hold their previous support lows, then there will likely be some pattern set-ups that we can exploit. Until that time, discretion is the better part of trading valor. Keep your capital parked until it is time to take action.

Take care,

DBB