Saturday, November 04, 2006

Weekly Calls, Nov. 6-10, 2006

On last week's trading calls and executions:

For the second straight week, there is no F calls for both daily and weekly calls, and there are only 3 E calls. The W/L ratios continue to improve, especially the weekly calls where the A and B calls accounted for 30 and 20 % of total calls respectively. If such trend continues, I should seriously implement short swing trades based on weekly calls.

My executions, while still seriously lagging, have been improved in the past week. I feel especially positive that I was able to curtain fears and allowed some winning positions to run a bit more that I normally would allow. However, there were several cases where my setups came to me in the opening moments but I failed to pull the triggers and missed those very profitable opportunities. More work needs to be done to overcome fears and follow well prepared trading plan.


On the market:

All major indices logged in a losing week. On the weekly charts, candle formations and other tech indicators show the early stage of a top-reveral motion, however, the volumes and the degree of bearishness of the candles suggest that the market may stay choppy in the current trading range before a possible sizeable movement to the downside. On the daily charts, while the bearishness is evident, the major indices seem a bit over-sold in the near-term.


On the next week:

The Q3 report season will be winding down, and based on what I have seen so far, I doubt that the remaining Q3 reports can significantly drive the market to the upside. There are reports that the bullish sentiment among stock newsletter and ordinary investors reached multi-year high in the past week, and this is usually an excellent contrarian’s signal that the market top is near or done. Another notable development is that several economic reports in the past week suggest that the assumed soft-landing of economy may not be such a certain thing, and the consumer spending may not be as strong as expected. All above mentioned facts should really concern the bulls.

For next week, while the day-trading or very short swing may be the most safe strategy in the expected choppy and volatile market, I should start to actively seek for the swing trade setups based on short-on-top approaches. Swing long trades should be avoided for most stocks.

A. Weekly Calls:

1. AAPL: SW-CTT between 75 (MA50) and 81.7 using tight stops. DT-S2 on top when it approaches resistance levels around 80, 81.7 using tight stops.

2. AEOS: SW-CTT between 41.8 and 46.8 using tight stops. DT-S2 on top, entry zone 45.8-46.5, stop at 46.81, IT=44. MA50=43.3.

3. AKAM: SW-CTT between 40 and 50. DT-CTT between 45.2 and 47.7 use tight stops, and trade along the break-out if the range is breached. It has so far held just around MA50=45.9, I expect its short-term movement to be dictated by NASDAQ trend.

4. AMZN: SW-L1 on bottom if it approaches 36, with a stop just below 36, IT=38.5.

5. ANF: SW-DT-S1 on top, entry range 73.8-75, stop just above 75, IT=69. MA50=71.3.

6. BIDU: DT-CTT between 83 and 90 use tight stops. MA50=84.7, MA200=78.2.

7. BRCM: DT-CTT between 26.8 and MA200=31.2 use tight stops.

8. COH: DT-S2 on top, entry zone 39.5-40, stop just above 40.2, IT=37. Not really a good short candidate, but the weekly chart shows a perfect tweezer's top formation.

9. COST: DT-CTT between 54 and 50 use tight stop. MA50=MA200=51.5.

10. CRM: may consider DT-S3 on top, entry zone 41.2-42, stop just above 42.3, IT=37.

11. DVN: DT-SW-L1 on pullback, entry zone 65-66, stop just below MA50=64.8.

12. ENER: DT between 34.9 and 38 use tight stops; consider SW-L3 on bottom if it spikes down towards 32, IDS=31.5, CS=32.

13. ERTS: SW-L1 on pullback, entry zone=56.5-58.1, stop just below 56.5, IT=61

14. FFIV: SW-L1 on pullback if it spikes down towards 60, stop just below 60; DT-S2 on top, entry zone 66.8-67.3, stop just above 67.5.

15. LRCX: DT-CTT between 46.5 (MA50) and 50.75/51.4.

16. UNH: DT-L3 on bottom, entry zone 46.61-47.2, stop just below 46.5, IT=MA50=49.4, MA200=50.3

17. VRTX: SW-L1 on bottom, entry zone 36.5-38.1, IDS=36.3,CS=36.75 , IT=41.

18. X: SW-S1 on top, entry zone 67.5-70, stop just above 70, IT=60. B.


Earning Plays:

1. CTRP: will report Q3 on Weds. Nov. 8, AMC. Key levels: 40, 42, 43, 44.3 (MA200), 47.8 (MA50), 50, 51, 52.9, 56.5.

2. SONS: Will report Q3 on Mon Nov. 6, AMC. Key levels: 4.2, 4.5, 4.8 (MA200), 5.2, 5.3, 5.5, 5.7, 5.75, 6.

3. URBN: Will report Q3 on Thurs Nov.9, BMO, Key levels: 13.65, 15, 16, 17, 17.7 (MA50), 19.7 (MA200), 22

8 comments:

george said...

Can you explain the abbreviation you use to explain your trades.

Thanks

shortswings said...

Hi Man,

I totally agree with your analysis on broad market. Some of stocks in our list shows they are in 10m platform and ready for a nose-down dive. The below is my comments on your weekly calls.
1. AAPL weekly candle formation looked like a evening star, but the last week's black body didnt penetrate the big white body much. So it was not a standard evening star. However it did indicate some bearishness. Buy at MA(50) or short on the top, and restrain trading in the middle.
2. AEOS Obviously its up-momentum is weakening, but the up inertia is still there. Stock has been in a range between 42-48 for a month. trade in the direction of break-out.
3. AKAM Stock is in critical stage now. the main support level is around 44.77 and the resistance is around 48.80(connect tops with a line). I would like to trade only if it breaks down 44.77.
4. AMZN Long if it breaks the previous high 38.84.
5. ANF Last week's big black candle show the bearishness. Agree with your plan.
6. BRCM Agree. For swing, long if it closes above MA(200).
7. COH Agree.
8. CRM Agree.
9. Ener Agree. It may test 29.
10. FFIV Totally agree.
11. VRTX Agree.
12. X Agree.

flyingwabbit said...

Hi, Man:

I am glad to know that you agree with me analysis, let's try to act on the plan if the anticipated setups emerge.

FW.

flyingwabbit said...

Hi, George:

Thanks for reading my blog. Below are explanation of some common abbreviations I use in my calls:

A. Trading strategies:
** SW: swing trading, 2-5 days holding with small sizes
**DT: day trading, use bigger sizes
**CTT: counter-trend-trading-- trade against the movement when a stock approaches its key support/resistance level if multiple indicators suggest that the ongoing movement is losing momentum or shows reversal signs.

B: Trading actions:

**S: short, 1 for strong short and 3 for weak short.
**L: long, 1 for strong long and 3 for weak long.

C: Execution setup:
** IT: initial profit target
** IDS: intra-day stop loss point
** CS: closing stop loss point

I hope I have explained well. Let me know if you have other questions, and I would love to hear your feedback or comments on my trading calls.

Best luck,

FW

george said...

fw,

Thanks for the explanation.

I am short CRM, AMZN from your list on SW (u c I am fast learner :-)

Short on RHAT too.

Keep up the good work!

george

flyingwabbit said...

George:

Thanks for the encouraging words. Some thoughts on your positions:

1. CRM: I shorted too today (at 41.89), however, it is probably premature as it steadily climb into the end of the session. If it climbs slowly above 42.3 tomorrow, I will cover it.

2. AMZN: IMHO, it is not a good SW short candidate (could be a DT setup when it approaches 38.5).

3. RHAT: judging from the volumes after the big drop, I feel that the gap might be filled before it goes down more.

Good luck to your trading.

FW

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