Monday, November 27, 2006

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.

2 comments:

shortswings said...

Hi Man,

Yesterday was a bears show. Today bulls are tried to countattack, but not effective. Next few days will tell who is in control of this market. I am a bit favour of bull in this brutal battle. I tried to long on URBN before the market close, again hesitation kept me from pulling the trigger. I will definitely get in if it pulls back to 22. What you think?

Have a good trading day!

shortswings

flyingwabbit said...

Technical speaking it is right to go long with URBN, but I am a bit iffy about the risk/reward ratio here, also, a bunch of retailers (not sure if URBN included) will report their sales this Thursday, so be careful here. Also, my feeling is that the retail sector is overall topped out, AEOS broke down today......

FW