Saturday, November 18, 2006

Weekly Calls Nov. 20-24, 2006

On last week's trading calls and executions:

The W/L ratio of last week's daily trading calls was a wopping 11:1, while the weekly calls was 4:5. Once again, the daily calls were much better than the weekly calls, reflecting the fact that my assessment on short-term market trend has mostly been incorrect. My execution on the first two days were terrible, as I failed to take quick/small profits of short trades and allowed them to turn into losses as market jumped. However, I was able to quickly put a stop to the losing streak, surpressed usual post-big-loss aggressiveness, and stayed calm and disciplined. The week ended with a big-gain on the Friday and put the week back into the W column.

The lessons I learnt this weeks are: (1) I should make serious effort to trade along the overall trend of the market, follow the technicals not some kind of ahead-of-its-time ideas; (2) if I have to trade against the market trend, I got to be very patient for the safest setup (excellent risk/reward ratio), and I got to be quick when taking profits.

On the market:

All major indices scored a big winning week and closed solidly above the 5-week trading range. On the weekly charts, the candle formation is very bullish for all indices, while there are a few technical indicators showing mild bearish divergences. The same thing can be said about the daily charts.

On next week:

The market continues to rise and every dip has been bought strongly. I expect this primary trend will continue next week. The trading volume is likely to decrease significantly due to the Thanksgiving holiday, the light volume normally favors primary trend and key S/R levels. Considering these facts, the overall guidelines for next week's trading are: (1) try to avoid short trades (2) buy dips of strong up trend stock near key support levels; (3) avoid swing trades.

Weekly Calls:

1. AAPL: L1 on pullback if it approaches 82.6/84 use tight stop. No shorting!

2. ADSK: S2 on top if it spikes towards 42, stop just above 42. L2 on pullback, entry zone 38.3-39, stop at 37.3.

3. AEOS: S1 on top, entry zone 47.8-48.4, stop just above 48.5. If it breaks 46.9, consider L2 when it approaches MA50=44.5.

4. AKAM: CTT between 47.8 and 52, MA50=47. another key support around 45.5 and resistance around 50. Don't trade mid-range.

5. AKS: S1 on top if it spikes towards 15.5, stop just above 15.5, IT=14.

6. ANF: S1 on top, entry zone 73.5-74.5, stop just above 75. support around 65 and 69. It looks toped out.

5. ANN: S1 on any rebound, entry zone 37-38.6 (MA200), stop just above 39. It suffered a technical breaking-down following the Q3 report, first support zone 34.5-35.5.

6. BIDU: L1 if it spikes down towards 100, stop just below 99, however, consider a speculative S3 if it spikes towards 120 with a IT=106.

7. CHAP: consider a speculative S3 (strictly DT) in range 46-50, IT=42.8. The steel sector has been very volatile and lately driven by those buy-out rumors, which I think will fade for most of them. Similar situation for AKS, OS, X.

8. COH: CTT between 40 and 42.7 use very tight stops. It has bucked the retail sector down trend of late so far, but I wonder how long can it swim against the tide, it seems to me that a speculative short just below 43 offers a pretty good risk/reward ratio. Be very patient about the setup.

9. DITC: S1 on rebound, entry zone 7.48-7.6, CS=7.72, IDS=7.8. The latest earing report drove it to fresh 52 wk low, if the market turns sour, this thing could test $6 soon.

10. DVN: DT-CTT between 65.5 and 71.4 use tight stops, MA50=66.5. Bias is on the long side.

11. ENER: L1 on bottom if it spikes towards 37, stop just below 37, IT=40. MA50=37.1, MA200=37.2

12. ESRX: CTT between 63.5 and 74 (MA200) use tight stops.

13. FNM: SW-S1 on top, entry zone 58.6-60.5, stop just above 62.4, IT=55. Strong support around MA50=57.2. The 3-month up trend seems topped out, but how much downside is there?

14. LRCX: L1 on bottom if it spikes down towards 52, stop just below 51.6.

13. NVDA: L1 on bottom if it spikes down towards 34.5, MA50=32.

14. OS: consider a speculative S3 on top in the range of 60-62, IT=55.

15. SHLD: S2 on top, entry zone 173.5-176.5, stop just above 180, IT=MA50=167.8.

16. SNDK: L3 on bottom if it spikes down towards 45.5, stop just below 45., IT=50.

17. X: keep a close eye on its movement, be extremely careful about intra-day speculative short-on-top action, L1 on bottom if it spikes towards 68, stop just below 68.

1 comment:

shortswings said...

Hi Man,

All major index got a nice gain last week. In fact, two weeks in a roll. In last two weeks Nasdaq was up 4.8%, Dow was up 3%, and S&P was up 2.9%. All closed with a bullish candle. The bull is roaring, no question about it. However, the daily charts showed the bulls were a bit tired after these two straight week's victory, specially for NASDAQ (overbought). I think there might be a micro pullback in next week, expecting them to pullback to near MA(10). The strategy to trade in next week could be short-on-top for day-trade, and buy dip for swing-trade. Below is my views on some of your weekly calls. I agree the rest of your calls.

1. Adsk Stock broke out the main resistance around 37. I would only short it if it approaches to 44 or buy it when it approahes to 38.

2. AEOS Stock looks like making the top. Enter a short position as high as possible or long around MA(50).

3. ENER Stock failed to make a new three month high. Enter a long position only if you see a bullish candle, which confirms the the recent down trend is about to end.

Good luck!