Saturday, December 09, 2006

Weekly Calls Dec. 11 - 15, 2006

On last week's trading calls and executions:

The W/L ratio of both daily and weekly calls came in just above 2:1. I continued to be trigger-shy when anticipated setups came along, I realize it is because of the "fear" of losing. Fear is on psychological issue that has long plagued my trading, and I think it is time to really force myself to address the issue. Starting next week, I will force myself to act on the setups that come to reality, but I will use small size (100-200 shares) initially so I will breathe easy and focus more on the technicals rather than P/L. I have to say that day after day, week after week, I have missed so many good trades that were perfectly analyzed and predicted that it started to feel not only frustrated but also discouraging. I just have to do something now.

On the market:

All major indices bounced back from previous week of loss. The market becomes increasingly choppy as the trading volume on the light side. Among the major indices, SP500 continues to be the strongest one as it made/closed at new highs (weekly), while both DOW and NASDAQ failed to break the late Nov. high, with the relative weakness especially clear for NASDAQ. On the weekly chart, while all indices show a clear and strong up trend, multiple indicators suggest diminishing upward momentum. The major indices appear weaker on the daily charts, especially NASDAQ which is yet to fully recover from the free-fall on Nov. 27.

On next week:

The market is entering the final three weeks of the year. Both the strong multi-month up trend and the seasonality favor the bulls, which means that dips of strong stocks near key support levels should be bought. On the other hand, the market starts to show some vulnerability here as seen in the latest charts of NASDAQ. Also, some market leaders, notably AAPL, RIMM, ADBE; have not only stalled but started to go down. I think the key is on NASDAQ: as long as NASDAQ can maintain above 2390, the overall strategy should be buy-on-dips and be very careful on any short-the-top set-ups. On the other hand, if NASDAQ can break its high around 2368.5, the party for bulls may get wilder before it is over.

For next week, again DT-CTT between key S/R levels should be remained as primary strategy. Because the market is becoming very choppy, be nimble when taking profits, and try to avoid holding position more than 2-3 days.

1. AAPL: DT-CTT when it approaches key S/R around 84, 86.3, 87, 89.5, 90,91, 92.4; use tight stops. Weekly chart show intact strong up trend, but candle formation and other indicators flash possible top-reversal signals. Daily chart is more bearish. A close below MA50=83.1 will likely change the trend.

2. ADBE: L1 on bottom, entry zone 37.3-37.8, stop just below 37; also consider S2 on top if it spikes towards 40, stop just above 40.2. MA50=38.7.

3. AEOS: S3 on top if it spikes towards 49/49.5, stop just above 50., IT=MA50=45.7.

4. AKAM: L1 on bottom if it spikes towards 50/52 use tight stops. The intra-day support is around 53, 52.8 and 53.3.

5. AMZN: L3 on bottom if it spikew towards MA50=37.7 use a very tight stop; also consider S2 on top if it spikes towards 39.75 use 40 as stop. Its weekly chart shows an evening-star formation, possibly signal the reversal of the trend.

6. ANF: S1 on top, entry zone 68.3-70, stop just above MA50=70.5, IT=MA200=64.9.

7. BIDU: L1 when it approaches key S around 111, 115, 116, 118 use tight stops. Its short-term R is around 123.

8. BRCM: CTT between 31.8 (MA200) and 35.2 use very tight stops, don't trade the mid-range.

9. CEPH: CTT between 71.1 (MA50) and 75 use very tight stops.

10. DVN: L1 on bottom, entry zone1=71.5-72.2, stop just below 71.4; entry zone 2=68.8-69.5, stop just below 68.8. IT=74.

11. ENER: S1 on top, entry zone 37.2 (MA200) to 38, stop just above 38, IT=35.

12. ERTS: S1 on top, entry zone 54-55.6 (MA50) or near 57, IT=50. Weekly chart suggests it is on the verge of trend-reversal.

13. ESRX: L1 on bottom, entry zone 68 - 69.5 (MA50), IT=MA200=73.3.

14. FFIV: L1 on bottom if it spikes towards 72/74, use tight stops,

15. FMCN: L1 on bottom if it spikes towards 65.6/67.5/69, use tight stops.

16. LRCX: L2 on bottom if it spikes towards 51, IDS=50.5, CS=MA50=50.7, IT=54.5

17. MRVL: L2 on bottom, entry zone 19.5-20.1, stop just below MA50=19.4, IT=22.

18. NTRI: tentative S3 on top, entry zone 74-76, stop just above 76.2.

19. QCOM: S1 on top only when it spikes towards 41, stop just above 41.

20. RACK: S1 on top, entry points around 33, 34.25, and 36, use tight stops, IT=MA200=30.7. Its short-term trend is changing as it closes below MA50=32.5.

21. RBAK: L1 on pullbacks, entry zone 17-17.5, stop just below 16.9, IT=19.5,

22. RIMM: S3 on top when it approaches 130.6 and 134.6 use tight stops, IT=MA50=120.8; also consider L1 on bottom if it spikes towards MA50 or 119, use tight stops. Its weekly chart shows signs of possible trend reversal.

23. SNDK: S1 on top if it spikes towards 45 or 47 use tight stops, looks like it is poised to break recent low at 43.15.

24. SONS: L1 on bottom if it spikes toward 6 or 6.2 use tight stops, IT=6.6.

25. STP: L1 on bottom, entry zone 31-32, stop just below 31, it is poised to break the key resistance around 33. IT=37.

26. TOMO: L1 if it breaks 15.8, IT=17, stop just below 15.5, MA200=15.7, watch for volume, it looks ready to break out!!.

27. WLT: speculative S3 on top if it spikes towards 51/52 use very tight stops. This stock has shown some class-book movement in the past year, let's see how it goes from here.

28. X: L1 on pullback if it spikes towards 72/74/76 use tight stops.

1 comment:

Anonymous said...

Hi Man,

I totally agree with your analysis on broad market and your trading strategies for next week. I expect that NASDAQ will be traded in a range between 2390 and 2470. The other two could be trade in their range too. As for buying dips of big names, I will do so only if their oscillators flash the buy signals.

1. ADBE It looks like ready to go up. I would buy if the opening price and net price are positive and add more position if the price is cross above previous day's high. this entry strategy may assure you that the up trend is resuming and you go with it. The drawback is that the profit becomes thin.

2. AMZN It is perfectly ready to go long. however, the pullback is extremely strong in terms of the height of Histogram, which means the bear is stronger than usual, so be prepared to take any profit whenever the oscilators show weakness.

Have a great trading week!