Swing Trading Strategies & Stock Picks Since 2003

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 05/06/2010:

                                             $INDU       $SPX         $COMPQ    $RUT

Monthly Momentum   Neg (OB)   Neg (OB)    Neg (OB)   Neg (OB)

Weekly Momentum     Neg           Neg              Neg            Neg

Daily Momentum         Neg            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.

Equity Bullish Reversals

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

U.S. equity markets seemed ready to recover early in session on Wednesday, but continued to sell off toward the end of the session. There were only a smattering of bullish reversals, and none passed the nets. It appears that the $INDU will likely test 10700 and that the $SPX will likely test 1150 before this sell off ends. If those levels are broken, we are likely going lower, and I will comment on future targets in blog. As one can see, all momentum indicators are pointing south. Any true confirmation of a broader turn down in momentum will hit by month’s end as the data for the month is incomplete. Regardless of that, seasonality, with summer coming, might indicate more sideways movement (like in 2004 and 2005). With all the cross currents associated with the EU debt contagion and potential interconnection between manufacturing (Asia) and consumption (EU and US), the road will become a lot more complex going forward. That is why one should trade with well formulated strategies and know when to take profits or exit positions. This is not the typical buy and hold environment in which your dad or granddad existed. Profits will be hard won.

Here is what passed the neural net screens:

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

Nothing Today

Note (O): optionable*

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

Sorry for the repetitiveness below, but the story is the same. We are likely putting in a top here, which is to be determined is how much of a bottom will come after. There is so much price congestion in the indexes above and below this level (which is the level that preceded the 2008 meltdown), anything other than a fast market projection if another meltdown happened, in this analyst’s view, is simply conjecture. That is why I trade PATTERNS.

MOMENTUM INDICATORS on a monthly basis flicker between positive and negative. Today, the daily momentum indicators are pointing DOWN. Again, we could be seeing longer term momentum beginning to show divergence to the downside, so we need to be particularly careful at this juncture. We could get a confirmation of a negative turn for monthly momentum, so we need to be aware of that now.