Saturday, October 21, 2006

Weekly Calls Oct. 23 - 27, 2006

Evaluation of my weekly calls:

For the past 7 weeks, the cumulative winning/losing calls stands at 1.5. Except for the week of Sept. 11-15 where the ratio is less than 0.5, the W/L ratio is around 2 for the other 6 weeks. What I feel excited about is that for the past 3 weeks, the ratio of Grade A calls (excellent setup with gains around 5% or more) vs. Grade F calls (wrong direction, stop-out with a loss of around 1% or less) is 3:1. This is striking considering that the majority calls were short-on-top ones while the major market indices marched steadily and significantly higher during the same time frame. I want to make further improvement on my weekly calls, and hope to achieve a consistent overall W/L ratio above 2:1 and A/F ratio above 3:1.

Evaluation of my daily calls:

The cumulative overall winning/losing call during the same 7 week period is at 2.5, much better than that of the weekly calls. On the other hand, the cumulative A/F call is 1.1, or 1 for the past 3 weeks, significantly lower than those of the weekly calls. The results are not unexpected since a single-day movement in your favor over 5% or more is infrequent to say the least. I want to further improve my daily calls, bring the overall W/L call ratio to above 3:1.

Thoughts on the trading strategy

I have been making conscious effort to shift from day-trading towards short swing-trading (3-10 days), and so far, the weekly A/F call ratio is promising for such strategic move.

On the major indices:

The weekly charts show diminishing bullishness for all major indices, NASDAQ is clearly the weakest one as it stalled around the high of spring 2006. Judging from the slopes and candle formation, unless there is some dramatic news, I expect major indices to go sideways in the coming days.

On earning season:

The earning reports from the some major tech names were mixed last week, however, I see a much severe punishment on those who missed target than rewards on those who beat. In case of AMD and SDNK, they only missed the profit margin and handily beat the other estimates, but their shares lose 15-20% in one session on very heavy volume; in case of AAPL and GOOG, both had a blow out report, but shares rose only 7-8% on relatively light volume. This tells me that at current price levels, many stocks are vulnerable for any negative news. I highly suspect that this earning season as a whole can provide enough fuel to drive the market significantly higher.

On next week's trading:

I will try to follow some of my weekly calls by using 100 share size. Once the position is established, I will try to stick with the plan and resist the temptation of small profits. All positions should be closed ahead of the Weds PM FOMC decision.

A. Weekly Calls:

1. AAPL: No swing-shorts; but swing L2 only on pullbacks, entry zone 75.1-76.1, stop just below 75, IT=80; day-trading S2 when it breaks 78, with IT=76/77, stop above 78.5.

2. AEOS: No swing-shorts; swing L2 only on pullbacks, entry zone 42-43, stop just below 41.8. Might consider day-trading S3 on top if it spikes above 46.2, use 47 as stop.

3. ANF: No swing-shorts; swing L3 only on pullbacks, entry zone 1=73.2-74.1, stop at 73; entry zone2=72 --72.5, stop at 71.8; entry zone3=69 -- 69.5,
stop just below MA50=68.7. In all case, IT=76.7

4. BIDU: day-trading CTT between 82/83.4(MA50) and 90/92 use tight stops.

5. BRCM: No swing long or short; day trading CTT between 26 and 29.2 use tight stops.

6. COST: No swing long or short, day trading L3 on bottom, entry point just above 50/51 with tight stops, IT=53.

7. CVS: no long trades, day trading or swing S2 on top, entry zone 31.5-32, stop just above MA50=32.2.

8. ENER: Swing L2, entry zone around 35- 35.5, stop just below 35, IT=38. MA50=36.3, MA200=37.2.

9. JNPR: Swing S2 on top, entry zone 18.1-18.5, stop 18.81, IT=17. Last Friday's bearish engulfing candle coupled with other bearish indicators suggest an imminent pullback.

10. MOT: Swing S1 on any rebound, entry zone 23.98-24.5, stop just above 24.7, IT=22. Judging from the weekly candle, such an enormous bearish candle on the top will lead a multi-week down trend.

11. PEIX: Swing S2 on top, entry zone 17-18.35, stop just above MA200=18.6. IT=14.

12. SNDK: Swing S1 on top, entry zone 51.8 - 53.4, stop just above 53.4 (MA200). On the downside, I expect some support between 45.2-47.

13. SONS: Swing L3 on bottom, entry zone 4.95-5.03, CS=4.94, IDS=4.89. Be patient with it, don't trade mid-range.

14. UNH: Swing L2 on bottom, entry zone 48.5-49.6 (MA50), stop just below 48, IT=52.

15. URBN: Swing S2 on rebound, entry zone 19-19.75, stop just above MA200=19.9, IT=17.

16. VRTX: Swing L3 on bottom, entry zone 32-32.4 (MA200), CS=31, IDS just below 31.4, IT=37.

17. X: Swing CTT ready, entry zone 67-68, stop just above 68, IT=61. If it closes above 68, may consider next CTT around 70.6.

18. LRCX: Swing S2 on top, entry zone 50-5-52, just above above 52.5, IT=47. MA50=45.1.

19. EZPW: Swing L2 on pullback, entry zone 39-40.1, stop just below MA50=38.9, IT=45.

Earning Watch:

1. AKAM: Will report Q3 on Thurs Oct. 26. Right now the weekly chart showing a clear top-reversal pattern. No swing trade before the Q3 report, during which time, day trading CTT between 42/43.9 and 49.3/52 use tight stops, don't trade mid of the range.

2. AMZN: Will report Q3 on Tue Oct. 24. Key levels: 27.5, 28.9, 29.7, 31.8 (MA50), 33.75 (recent high), 34.4 (MA200).

3. CHRW: will report Q3 on Tues. Oct. 24. Key levels: 39.88 (recent low), 41.7-43, MA200=43.8, MA50=44.6, 45.5-46, 48.7, 50, 52.

4. COH: will report Q3 on Tues Oct.24 before open. Key levels: 30.1, 31, 32.1 (MA200), 33.5 (MA50), 35, 36.91 (recent high), 37.4 (all time high).

5. ESRX: will report Q3 on Oct. 24 AH, Key levels: 63.83(6 month low), 67.5 (recent low), 68.4, 72.5, 75.9(MA50), 76 (MA200), around 79.5, 81, 85.

6. NTRI: Will report Q3 on Oct. 24 AH. Key levels: 55, 58, 60.3 (MA50), 63, 66, 70, 72-72.6, 76.33 (all time high).

7. TXN: Will report Q3 on Oct. 23 AH. Key levels: Key levels: 28.5, 30.5, 32.7-33.4, 34, 35.63, 36.4 (52 wk high).

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