Daily Calls Nov. 28, Tuesday 2006

The party for the bulls was interrupted violently today as the major indices fell hard led by NASDAQ with around 2% loss. The market breath was unmistakably bearish as winning issues beat losing issue by over 4:1, and the volume ratio was much worse. However, the overall volume for both NASDAQ and DOW was a bit light, especially consider the size of the decline. This suggests that the big boys are not in the hurry to sell (are they holding until the month-end window dressing is over?). Huge, bearish-engulfing black candles are almost everywhere, highlight the ubiquitous top-reversal formation. However, the bulls are unlikely to disappear after one rough session, as a matter of a fact, I suspect that the market may rebound if there is no follow-through of today's big drop.

I decided not to initiate any over night short positions near the end of the session despite of overwhelming bearish signals. For a market of this bullish for so long, there will be some rebound and re-test of the top before the ultimate reversal.

For tomorrow, I may consider some DT-long plays if (1). the market gaps down at the open and (2). the stocks being considered spike down towards their critical support level (stop just below those levels). However, I will be nimble when taking profits. On the other hand, if market rebounds tomorrow, I will actively search for short-on-top setups.

1. AAPL: DT-L1 on bottom if it spikes towards 87 using a tight stop, IT=90

2. ADBE: DT-L1 on bottom if it spikes towards 38.8, stop just below MA50=38.5.

3. AKAM: DT-L2 on bottom, entry zone 45-46.1, stop just below 45. It closed around MA50 today.

4. BIDU: DT-L2 on bottom if it spikes towards 100, stop just below 99.5, IT=109.

5. CHAP: DT-L2 on bottom, entry zone 42.8-43.2, stop just below 42.8.

6. DVN: DT-L2 on bottom, entry zone 67.3-68.1, stop just below 67. MA50=67.2.

7. ERTS: DT-L3 on bottom if it spikes towards 55, stop just below 55, MA50=55.8, good support around 55.4.

8. FFIV: DT-L1 on bottom if it spikes towards 71, stop just below 70.5.

9. FMCN: DT-L1 on bottom if it spikes towards 64.5, stop just below 64.5, IT=67.

10. LRCX: DT-L1 on bottom if it spikes towards 50/51.7, use tight stops. MA50=49.7.

11. RACK: DT-L1 on bottom if it spikes towards MA50=32.1, stop just below 32.

12. SONS: DT-L1 on bottom if it spikes towards 6/6.1 use very tight stops.

13. X: DT-L2 on bottom if it spikes towards 70.4, stop just below 70.