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. If there was ever a doubt as to how much bearing the stock of Apple, Inc. (AAPL) currently has on the NASDAQ 100 (NDX) the following test should dispel it. Within 5 seconds, decide which of the two charts below is AAPL and which is NDX. The answer is not stated anywhere on this page. The similarity in price pattern makes it understandable why some will need to consult their own charts to double check their answer.

Perhaps an even more shocking demonstration of AAPL's weight on the NDX is illustrated below.

The four most heavily weighted NDX components are AAPL, QCOM, MSFT, and GOOG (in order of weighting). The chart on the left combines all four. This chart is very similar in price pattern to the first two charts above.

However, the price pattern of the chart on the right looks different than the one on the left and the two charts above. The only difference though, between this chart and the one to the left, is that it does not include AAPL. Only QCOM, MSFT and QCOM) are included.

This should illustrate why it is so important to know what AAPL is doing while trading any form of the NASDAQ 100.

There is chatter that NASDAQ will reduce the weighting of AAPL soon. This won't be the first time this step has been taken and we doubt it will forever eliminate the dramatic effect the stock has on the index in the future.

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.

ShadowTrader Sector breadth ended relatively mixed yesterday with 9 closing higher and 16 ending lower. The only sector approaching an extreme number of consecutive days higher or lower is GOX which has closed lower for 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

CLOSED POSITIONS - week of 02/13/12 - 02/17/12
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
LMT	short	150	02/03	87.50	02/13	87.95	83.00	90.50	closed	n/a	(0.45)	($68)	$13,125
	Exited trade as stock showed no signs of following through lower
SCCO	long	425	02/14	32.66	02/14	31.91	37.27	31.50	closed	n/a	(0.75)	($319)	$13,881
	Cut trade on follow through below ascending trendline
TOTALS:	0	open shares (open capital committed doesn't include closed trades)											$0.00