ShadowTraderPro Swing Trader

The ShadowTraderPro Swing Trader is your every morning dose of market reality brought to you from the resident geniuses at ShadowTrader. Each issue contains a full report on the prior day's action, including market internals, technicals, and what sectors were hot and cold. Each issue also includes the ShadowTraderPro Model Portfolio, which updates members on what stock plays STPro is currently engaged in officially, as well as provide a daily list of long and short setups for more self-directed traders and investors.

Good morning traders. One of the short trade ideas listed in today's Bulls and Bears section is Eastman Chemical Co. (EMN). Let's take a look at the setup on the chart below.

After breaking above the eight week descending trendline (orange) on the chart above, EMN has closed higher for the past five consecutive weeks. The two most recent weekly price bars each include a gap higher which can be seen on a daily chart.

It is unlikely EMN can continue to move higher at this pace. In fact, we see a short entry on a reversal off the prior high as a lower risk trade. .

We have marked the 50.0% level between the prior break out level (lower blue line) and the entry range (magenta line) as a potential price target for the trade. Interestingly, this level ties in with the bottom of the lowest gap the stock made during the recent run higher.

On another note, ShadowTrader Chief Equity Strategist, Peter Reznicek has posted an excellent video on the broken wing butterfly in the ShadowTrader Weekend Update. It is definitely worth the view.

When we say "under the hood" we mean market internals, ie: what was really happening behind the scenes. ShadowTraders who listen to our daily broadcast every day live on the thinkorswim platform know that all closing figures on the major averages should only be interpreted in the context of market internals. Look for convergences and divergences in the breadth, a/d line, and trin figures below to either confirm or cast doubt on what all those talking heads on TV are telling you.

The ShadowTrader Sector Trend Score matrix is a proprietary method of assigning values to twenty five sectors that are a representative cross-section of the market as a whole. The heat map in the trend score column defines the current strength or weakness of that sector using a proprietary weighting formula. Sectors bolded in green and red are the two sectors that experienced the largest absolute gain and loss in trend score over the prior day. We strongly urge subscribers to read the full explanation of the meaning and calculation of the trend scores in the Swing Trader User's Guide.

By our measure, the broad market is overbought at this point. XAL closed higher on Friday for the ninth consecutive day while BTK has closed higher for six straight days. Seven sectors have closed higher for the last four days including XBD, $DJUSNS, XOI, BKX, $DJUSRE, and SOX.

Up and coming economic and corporate data that may move markets this week:

This section is for self-directed traders and investors who like to "do it themselves". Every trading day, Bulls and Bears will list long and short equity setups with defined entries and stops. Note: A listing in this section does NOT necessarily mean that the stock will end up as a part of the ShadowTraderPro Model Portfolio. Plays listed here change daily and are not managed or tracked by ShadowTrader unless traded via MyTrade posting.

Long Ideas

Short Ideas

The matrix below shows all current ShadowTrader Pro plays in the Model Portfolio. The Model Portfolio contains only those plays that are sent out in real-time via posting to MyTrade or text message to your phone. Bulls and Bears plays above are not actively managed or tracked. Current open positions are on top, with positions that were closed in the current calendar week on the bottom. Closed positions are moved out of the matrix on Monday mornings and posted in our performance page here.

To get the most out of your subscription and for detailed instructions on how to structure your own portfolio, read our Swing Trader User's Guide

OPEN POSITIONS - week of 02/06/12 - 02/10/12
sym	dir	size	date entered	entry price	date closed	exit price	target	stop	status	mark to market	p&l points	p&l capital	capital commit
DELL	short	600	02/01	17.41	n/a	n/a	16.50	18.10	open	17.66	(0.25)	($150)	$10,446
	Reversal play off prior high
HLF	long	150	02/03	58.50	n/a	n/a	62.00	55.45	open	58.88	0.38	$57	$8,775
	Breakout from consolidation