Saturday, October 14, 2006

Weekly Calls Oct 16-20, 2006

Another record setting week for the bulls. On the weekly charts, all major indices are poised for further upside move. Judging from the overall volume, both DOW and SP500 show volume decreasing past 3 weeks. On the daily charts, NASDAQ is the strongest, and while still lagging, it is approaching the early high near 2375.5, at 2357, or just over 1% away. The market is extending further into overbought conditions, but so far, any pullback is met with more buying. There are signs of increasing short-covering, which is often the sign of last bullish movement.

Next week is the key in two fronts. First, the PPI and CPI data which will either justify or oppose the the current discount of underlying inflation pressure by most of the market participants (PPI--Tue AM, fall 0.7%, core rise 0.2%, CPI--Weds AM, CPI 3%, core rise 0.2%).

Second, big tech names (IBM, AAPL, MOT, YHOO, INTC, AMD, GOOG, EBAY) are set to report latest Q earning, my guess is that if they overall disappoints, the NASDAQ will make the triple top here and could have some dramatic pullback, on the other hand, if they are overall good, especially their outlook for the year-end quater, then, it is conceivable that NASDAQ will make a new high here and by doing so could drive the overall market even higher, in which case, shorting may really become a bad strategy for the near and intermediate term.

As for my trading plan for the next week, I will keep a neutral bias until I get a clear picture of the tech sector earning outlook. Also, I will use small size (100 share for most stocks), especially in short-on-top setups, and will execute each trade based on pre-set plan and technicals, rather being mostly driven by problematic trading psychology. This is the fundemental problem that I have to solve if I want to be a consistant winner.

A note for any speculative Short-on-top play, besides the setup based on technical signals as well as intuitions, the key is risk/reward ratio, it has to be more than 1:5 to be worthy.

1. AAPL: CTT between 72.5 and 77 until its Q4 report. Try not to trade the mid range. MA50=71.3, MA200=65.2. Will report Q4 on Weds AH. Estimates: 4.67B, 50 cents, Mac sale 6% increase. Outlook for Q1: 6.46B and 77 cents. Key levels: 65.2, 68.8, 69.6, 71.3, 73, 75, 76, 77.8

2. AEOS: Speculative S3 on top, entry zone 47.8-49.8, stop just above 50, IT=42. Several downgrades did not dent the share price for much or for long, if it breaks the hight at 46.8, short covering (shorts at 9 month high) could drive it further up, at which point a speculative short-on-top could be rewarding, especially if the market tanks.

3. AKAM: S2 on top, entry zone 50.9-52, stop just above 52 OR S1 when it breaks/closes below 49, with IT=45.5. MA50=44.6. It clearly under-performed NASDAQ in the past week, charts show bearish reversal signs.

4. AKS: speculative S3 on top, entry zone 15-15.7, stop just above 16, IT=13. I suspect the recent rapid rises on so-so volume won't really last. Be aware of its 1yr high of short interests (13.2%).

5. AMD: will report Q3 on Wed AH. Estimates: 1.31 B, 23 cents, Whisper 27 cents. Key levels: 21, 22.87, 24.7 (MA50), 26.4 (MA200), 27.9 (recent high), 30.

6. BIDU: CTT between 82 and 90, don't trade mid range, MA50=83.1, if breaks 82, it may quickly test support around 79.

7. CEPH: speculative S3 on top, entry zone 69-70, stop just above 70, IT=66. Weekly chart shows bearish price/volume divergence, daily chart shows diminishing up momentum and signs of bearish top reversal.

8. CHRW: S1 on top, entry zone 45 (MA50) - 46, stop just above 46, IT=42. MA200=43.9. In clear and persistance slow motion downtrend for hte past 2 months, is it ready to break down?

9. COH: speculative S3 on top, entry zone 36.8-37.4, stop at 37.5, IT=34.

10. COST: S3 on top, entry zone 53.5-54.3, stop just above 54.4, IT=MA200=51.3. Judging the 6 mo chart, a one-day jump probably cannot quickly change the primary down trend.

11. CTRP: L3 on bottom, entry zone 42.4-43.7 (MA200), stop around 42., IT=48.

12. CVS: S2 on top, entry zone 32-32.4 (MA50), stop just above 32.5., IT=MA200=30.8.

13. DVN: CTT between 62.7 (MA50) and 67.5. Don't trade mid ranges.

14. EBAY: Will report Q3 on Wed. Oct. 18 AH. Estimates: 1.43B, 24 cents. KEy levels: MA50=27.9, 30, MA200=31.8, around 34.

15. ESRX: CTT between 72.5/75 and 64. Don't trade mid range.

16. GOOG: Will report on Thurs Oct 19 AH, Estimates: 1.82B, $2.42. Key levels: 383 (MA200), 401 (MA50), 420, 428, 438, 451.

17. MOT: Will report Q3 on Tuesday AH. Company forcast: rev: 10.9-11.1B, street estimates: 11.07B, 34 cents; 56M phone shipment. Key levels: 22.4 (MA200), 24.1 (MA50), 25.5,

18. NCTY: Speculative S3 on top, entry zone 26.3-27, stop just above 27, IT=MA200=23.5. The short squeeze (15.4) is going on.

19. NTRI: Speculative S3 on top, entry zone 68-70, stop just above 70, IT=61.

20. OS: Speculative S3 on top, entry zone 54.3-55.5, stop just above 56, IT=MA50=48.7. I really doubt this new record move on low volumes.

21. PEIX: S2 on top, entry zone 17.5 - 18.5, stop around MA200=18.6, IT=13. Short squeez (18%) is going on.

22. QCOM: S3 on top when it gets really close to MA200=41, stop just above 41, IT=36

23. SNDK: will report Q3 on Wed Oct 19 AH, Estimates: 733M, 55 cents. Key levels: 52, MA200=53, MA50=54.7, 55, 59.9, 61, 66.2

24. BRCM: will report Q3 on Wed Oct 19, AH, Estimates: 900M, 30 cents. Key levels: around 25, 28, 30, MA200=31.6, 33.

25. SONS: L1 on pullback, entry zone 5-5.11, stop just below 4.95. IT=5.5.

26. STP: CTT-watch, S2 on top, entry zone 27-27.5, stop just above 27.5/28, IT=24.

27. TIE: CTT-watch, S3 on top, entry zone 28-29, stop just above 29.2, IT=26, MA50=26.4.

28. UNH: speculative L3 on bottom, entry zone 47.4-48.2, stop just below 47.2, IT=52. I suspect that the possible resign of the current CEO may rally the stock.

29. WFMI: S3 on top when it approaches 65.5 with stop just above 65.5, IT=60.

30. X: S3 on top, entry zone 66.5-67.7, stop around 68, IT=MA50=60.3,

31. YHOO: Will report Q3 on Tue Oct. 18, AH, Estimates: 1.13B, 15 cents.

32. XLNX: will report on Thurs Oct 19 AH, estimates: 465M, 23 cents. Key levels: 21, 22, MA50=22.6, 23, MA200=24.1, 25-25.5.

watch out the metal sector: Nucor (NUE)--Oct 19., X--Oct. 31 4.2B, $3.18

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