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 07/01/2010:

                                     $INDU      $SPX         $COMPQ    $RUT

Monthly Momentum   Neg            Neg              Neg             Neg

Weekly Momentum     Pos            Pos               Pos              Pos

Daily Momentum        Neg (OS)   Neg (OS)     Neg (OS)     Neg (OS)

N means neutral, Neg means negative, Pos means positive (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 (Note: to look up quotes for the Dow Indexes (starting with DJ or DW, add a dollar sign. No dollar sign is required for the ETFs beginning with other letters.) Today’s list includes only those ETFs with a 50-day moving average of daily volume greater than 100,000 shares:

The stocks listed below are ranked by pattern bullish reversals based on a momentum indicator. Each stock by sector is listed with the cheapest stocks on a near-free-cash-flow value/price basis at the top, and more expensive stocks on that basis farther down each sector list (they are listed alphabetically):

Stocks that almost passed the neural net screens but just missed: None

Fears over world economic slowdown continue and as such, buyers are absent and the market is falling on its own weight. Futures are down on concerns over China growth, and the downward price cycle seems to continue. Even though transports (airlines in particular), electronic components and utilities seem to be attempting a bottom, once again, the statistics on the patterns do not merit buy signals, and for that reason, I am still on the sidelines. Nothing passed the net screens again today. We are challenging and will likely breach the May lows with symmetry targets pretty close to those I mentioned two weekends ago. I will review them once again this weekend in blog.

Here is what passed the neural net screens:

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

None

Note (O): optionable*

Beta greater than 1.5, Volume greater than 1 million shares on a 50-day simple moving average.

I hate to be so repetitive, but I cannot express any better what I continue to see in this market, discussed below:

The dynamics of longer term momentum are rather bearish, with monthly momentum still negative. Daily momentum could be bottoming temporarily on the downside, but only time will tell. Weekly momentum data suggests that it might be possible for another rally to occur before any extended downside price action could occur, but the jury is still out on that prospect.

Any positions, short or long, should be limited in size to what your risk tolerance and trading capital limits allow.  Use proper money management skills to scale into and out of positions as profits occur. Low overall volume could also still be an issue as the summer ends. These are tough market conditions in which to trade. Journal mistakes you make and the conditions in which you make them and learn from them. These are times that will hone you as a better trader and investor if you do so.

One needs to stick with one’s trading strategies and not roll the dice. Manage your stops and targets well. It will help make AND save you money. We still do not know from day to day what will push this market.

Take care,

DBB