Thursday, December 20, 2007
Swing Trades from the Nets
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 12/20/2007:
$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. equity indexes did not quite catch fire like the ceremonial Vice Presidential office yesterday. Traders and institutions are still perplexed at all the conflicting economic information, particularly with insurance companies (which, on the basis of my screening, are still trying to find a solid price support). We are also beginning to see the first bailout rescues of brokerages (Morgan Stanley) from sovereign funds (from China). This new development also has some institutions frightened as they were in 1997 and later when the problems with LTC rippled through international markets.
Significant reversals were scant and negated what appeared to be a significant bullish shift in breadth from the day before yesterday. Retail drugs (CVS),pawn retailers (EZPW), REITs (BXP), oil exploration (CRK), metal fabrication (BOOM), internet networking (IIG),property and casualty insurance (MTG), mobile RVs (WGO), and healthcare related software (CPSI) made the reversals list.
The retail drug stock made the final cut (and it too is involved in prescription fulfillment services in which companies like CPSI are also involved.
Here’s what the nets saw today:
Value/Price est. 7 day ATR %( 7 day ATR)/Close
Note (O): optionable
(O) CVS 2.54/1 58.8% 1.44 0.61 1.55
That’s it for now. We are seeing small indications once again of healthcare related issues trying to find a bottom. The indexes, given their nearly "doji-like" finishes (except for the $COMPQ) seem to be setting up as C buy points on bearish XABCD patterns. Note that I said buy points on BEARISH patterns. We could be seeing a set up for a Santa Claus rally, but quite frankly, unless there is massive enthusiasm brought onto the trading floor in the next two weeks, we are likely to see “a whole lot of nothing”, leading us with an interesting place to start the trading year 2008.
But that is the fun and the mystery of trading. Somewhere, out of the blue, opportunity will appear. Our job is to keep our trading equity out of the market until those opportunities arrive.
Take care,
DBB
