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