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. Let's go right to the chart and commentary below.

As Danno from the swing trading desk stated in the video posted yesterday on the shadowtrader.net homepage, the Sector Trend Score Matrix is giving a signal that the market may be getting tired here. Above is a picture of the /ES market profile that has been developing over the last few days.

As written in the annotations on the chart, the market keeps moving higher and higher but there are structural cracks under the surface that should be noted. In the earlier stages of a rally the value moves higher but it has periods where it doesn't touch the value area below it. It's clear that this no longer the case. Value (in the black bracketed sections) is clearly moving higher, but it also has higher rate of overlap. This is generally a sign of a rally in later stages. Makes sense since we are continuing to advance but getting very close to the resistance in the S&P cash.

A symmetrical (or normal, primary day) profile should look like a nice bell curve with fatness only in the middle and tails on either end. When it fails to make the tails on one end, like yesterday, there is often a move that is called "repair" where the market trades through where the tail should have been and "completes the picture". So, there could be a bullish move early Friday that may be short lived. Use information like what is presented here to create a "narrative" and go through some different scenarios before the market opens. Plan accordingly for every type of action.

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.

The short term bearish signal derived from our statistical tracking of the ShadowTrader Sector Trend Scores is active until Monday's close.

With the sideways price action of the broad market this week, only XNG is stretched to the upside with 7 higher consecutive closes. Meanwhile $DJUSIT, $DJUSRE, and $DJUSRR have all traded lower each of the last four days.

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
HLF	long	75	02/03	58.50	n/a	n/a	62.00	59.00	open	59.64	1.14	$86.00	$4,388
	Bottoming tail price bar on the daily chart
LMT	short	150	02/03	87.50	n/a	n/a	83.00	90.50	open	88.01	(0.51)	($77.00)	$13,125
	Shorted at 10 month highs

CLOSED 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	02/07	17.90	16.50	17.90	closed	n/a	(0.49)	($294)	$10,446
	Exited trade as broad market persisted to the upside
HLF	long	75	02/03	58.50	02/08	59.90	62.00	59.00	closed	n/a	1.40	$105	$4,388
	Sold half position for 1.40 gain
CRR	long	75	02/08	90.30	02/08	91.00	120.00	83.60	closed	n/a	0.70	$53	$6,773
	Scratched trade on negative news release shortly after entry
TOTALS:	225	open shares (open capital committed doesn't include closed trades)											$17,513