Weekly Calls: Oct 9-13, 2006

What a week it has been for the bulls: both DOW and SP500 made 3 consecutive new highs while NASDAQ closing within 3% of its May high. The weekly charts of all major indices clearly show the rising bullish momentum and further upside move. The daily charts, on the other hand, suggest exteneded overbought conditions and some signs of top-reversal.

For the coming week, it seems natural to expect some kind of pullback given the fact that the market has risen significantly in the past 12 weeks without any meaningful pullback. However, considering the the signficant bearish sentiment (the short interests in NASDAQ stocks hit new high in Sept.), any pullback could be shallow just like those in the past 2 weeks. The wild card is the kick-off of the Q3 earning season. So far, there have been several pre-Q3 earing warning for some big tech names (MRVL, MU), and I have a feeling that the market is in for a rough Q3 report season. At this stage, it is very risky to be a swing long bulls, on the other hand, a swing bear is evenly if not more risky. But I favor short over long, but will be patient and wait for good setup where the stop is close, also use small size (100-300 share for overnight or longer swing). Finally, I am determined to act on earning plays using my tested system for the Q3 report season.

1. AAPL: CTT between 70 and 76 using tight stops, MA50=70.7, don't trade the mid-range.

2. AEOS: CTT between 40 and 46.8 with tight stops, don't trade the mid range, especially when short-on-top, keep eye on key support around 42 and resistance around 44.5. Overall, the retail sector is a buy-on-pullback case, until the signs of recession become abundant.

3. AMD: S1 on top, entry zone 24.8 (MA50) to 25.5 with MA200=26.5 as stop reference, IT=21.

4. BIDU: CTT between 80/82 and 88/92 use tight stop and small position. watch for key support around MA50=82.4.

5. BRCM: CTT between MA50=28.8 and MA200=31.7 with tight stop, don't trade mid-range.

6. CEPH: L1 on pullback, entry zone 63.8-64.5, CS=63.5, IDS=62.48. IT=67.25 (6 month high and key resistance).

7. COH: CTT-ready, S1 on top but be patient, entry zone 36-37, stop around 37.4, IT=34.

8. COST: watch for Q3 report on Thur Oct.12 before open, the charts favor a short-on-top approach using 52.6 as stop, however, if it breaks 52.6 with volume, should go long use 52.4 as stop ,with IT around 54.

9. CVS: S1 on top, entry zone 30.8 (MA200)-32, stop around MA50=32.8, IT=27.5.

10. DVN: CTT between 58.3 and 63.5/65 use tight stops.

11. ESRX: S1 on top, entry zone 77.5-80, stop 80.5, IT= 69. watch key support around 72 and resistance around 75.

12. MU: S1 on top, entry zone 16 -- 16.75, stop just above 17, IT=14.

13. NTES: S2 on top, entry zone 17.25-18, stop just above 18, IT=15.5, MA50=17.4, MA200=18.6

14. NTRI: speculative short entry 65.5-68, with stop just above 68, IT=58.

13. NVDA: L1 on pullback, entry zone 27.6 (MA50) to 28.2, watch key resistance around 31.3 and then the all time high around 31.8. Is INTC really going to buy it?

14. QCOM: S2 on top, entry zone 37-37.5, CS=37.5, IDS=39.5. MA50=37.3, IT=35

15. RHAT: S1 on top, entry zone 22.8-23.5 (MA50), use MA200=24.3 as stop references, IT=20.

16. SNDK: CTT between 52 and 59.7 using tight stop, don't trade the mid-range.

17. SONS: L1 on pullback, entry zone 4.7 (MA200) to 4.9 (MA50), stop just below 4.7, IT=5.5.

18. STP: CTT between 21.5 and 27, watch for reversal candles when it approaches either boundaries, use tight stop.

19. TIF: CTT-ready, S2 on top use 35.3 as stop, IT=MA50=33; or be more patient, entry zone around 36.5-37, with a stop just above 37.

20. VRTX: watch if it can close above the key 37 level, feel like to place a speculative short here, IDS=40, CS=37.5, IT=33.

21. WFMI: may consider S3 on top, entry zone 64-65.5, with a stop just above 65.5, IT=58.

23. WLT: feel like to take a speculative long postion here around 42, with a stop just below 41, IT=MA50=48.2. It has a good long term support zone between 39-41.

24. WMT: S2 either when it breaks 48 or when it approaches 50, stop just above 50, IT between MA200=46.7 to MA50=47.1

25. X: S1 on top, entry zone 62.5-64.2, stop at 65, IT=56.