What Turtle Soup Can Do For You
Although they do not occur frequently, Turtle Soup setups
can alert you to reversals. Today we had Turtle Soup Plus One Buy setups in the
major market averages and have watched the indexes trade mostly in the green
after an explosive late-session rally yesterday.
The Nasdaq is down 7.44 at 2462.51, the Dow is up 26 at
10,974, and the S&P 500 is down 2.48 at 1253.37.
Larry Connors and Linda Raschke in their book Street
Smarts revealed a strategy that looks to fade 20-day
breakouts, levels that the famous Turtles trading group were alleged to key off
in initiating trades. For a Turtle Soup Plus One Buy, the strategy goes long
after a market makes a new 20-day low but has not made a low in the prior four
sessions. The entry signal is at the prior 20-day low and the stop goes at the
previous day’s low. Turtle Soup Sell Plus One Sell setups are reversed. For
agile traders there are the Turtle Soup setups. Turtle Soups occur in the same
day rather than on the following day.
While any one Turtle Soup pattern can be a good
indication of a market reversal and swing trade, three signals from market
indices taken together provide a stronger-than-normal chance that the broad
market will move in the direction of the Turtle Soup setup. Turtle Soup Plus One
Buy setups are apparent today in the Nasdaq, S&P 500 and Dow and were also
picked up on TradingMarkets Futures Indicators Page in the cash indices’
closely-related stock index futures contracts.
Retail sales rose by a figure that was less than expected
by economists but the market reaction is muted pending release of a busier slate
of economic reports due out Thursday and Friday. Thursday traders will look at
the Producer Prices Index report while Friday’s we have Consumer Prices and
industrial production.
Biotech
(
BTK |
Quote |
Chart |
News |
PowerRating) is coming back after a five-day
pullback and is the leading sector, up 1.67%. MedImmune
(
MEDI |
Quote |
Chart |
News |
PowerRating), +1.42 to
42.00 and IDEC Pharmaceuticals
(
IDPH |
Quote |
Chart |
News |
PowerRating), +1.31 to 69.34 are the leading
stocks from the BTK.
Oil services
(
OSX |
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News |
PowerRating) are also a leading market sector.
Top stocks in this category include Varco International
(
VRC |
Quote |
Chart |
News |
PowerRating) and Baker
Hughes
(
BHI |
Quote |
Chart |
News |
PowerRating), up 3.07% and 2.0%, respectively.
Stocks in the construction area are setting up. Jacobs
Engineering
(
JEC |
Quote |
Chart |
News |
PowerRating) rallied 36% in three months before consolidating and
pulling back for the past six days. Although the stock sold off hard on large
volume on June 5, it has found consistent support at its 50-day line and held at
its 38.2% Fib retracement level. Today’s move up on higher volume triggers a
Pullback From Highs setup. This stock is in one of the top industry groups,
providing services in the heavy construction area. JEC is up 3.12 at 69.90.
Vulcan Materials
(
VMN |
Quote |
Chart |
News |
PowerRating) is rallying out of a second base. The stock
has rallied 22% in just over one month. Lower interest rates could keep the
demand for the basic materials that this company makes humming. VMN is pivoting
out of a one-month consolidation-on-high and is up 1.39 at 55.21.