Monday, January 29, 2007

Will be back!

I need to take care of some business and obligations for the next 2 weeks, during which I will not be able to post my daily/weekly trading calls. Best luck to everyone! See you on the Valentine's day :)

p.s. I predict that market will stay in the range with a lot of volatility in the next two weeks, so don't be too bullish, and don't be too bearish, be sheepish is OK :)

Saturday, January 27, 2007

SMA or EMA??

After further investigation, I found that the moving averages generated in Advanced Analyzer are exponential moving averages (EMA), rather than simple moving averages (SMA), in other words, I have been using EMA for all my trading calls.

The question I have now is which one is better or more commonly used? SMA or EMA? Sometimes the difference between SMA and EMA is pretty small, sometimes, it is huge, for example, right now for AAPL, SMA50=87.93, EMA50=86.5.

I am debating if I should continue using EMA or switching to SMA. I have checked many charts, and it seems EMAs act better as key S/R than SMAs. On the same subject, since Aug. 16, 2006, NASDAQ has yet to close below EMA50, but it has closed below SMA50 for a total of 5 times now.

So, what do you folks think? SMA or EMA? Thanks!

Weekly Trading Calls -- Jan. 29 -- Feb. 1, 2007

Considering the current market conditions and many import events in next week (FOMC decision, Jan employment report, big tech name Q report, GOOD, SNDK), I will try to stick with the CTT plays at key S/R levels, and try to avoid any SW trades to minimize the impact of volatility. I will change such strategy if NASDAQ breaks its key support around 2390, which would signal the end of the multi-month up trend of the market.

Focus List:

1. AAPL: CTT between the support zone=81-82.5 and resistance zone 87.5-90, bias is on the short side. SMA50=87.83, EMA50=86.5. May also consider S2 if it breaks down from the current level on Monday, in which case use 85.5 as stop reference.

2. AMZN: will report on 2/1/07. Key S/R: 34.75 (MA200), 36, 36.79 (MA50), around 38.2, around 40.4.

3. ERTS: will report on 2/1/07. Key S/R: 43.5, 44.29, 47.96 (recent 6 mo low), 52.5 (both EMA50 and EMA200), 54.5.

4. GOOG: will report on 1/31/07. Key S/R: around 452.5, around 478.1 (EMA50), around 492, 513 (all time high, tested twice).

5. SBUX: will report on 1/31/07. Key S/R: 31.5, 32.5, 33.5, 34.9 (EMA200), 36, 37, 38.

6. SNDK: will report on 1/30. Key S/R: 37.34 (52 wk low), 40.96 (recent low), 44.6 (EMA50), 49.2 (EMA200).

7. X: will report on 1/30. Key S/R: 69, 71, 72 (EMA50), around 75, around 76.6, 80.09 (recent and 52 wk high).

The Rest:

1. ADSK: SW-L2 at bottom (100 share IE, 300 share FP), entry zone=39.8-40.31, IDS=39.5, CS=40.2, IT=42. MA50=41.25.

2. ANF: speculative S3 on top (100 IE, 200 FP), entry zone 79.5-81.5, stop just above 82, IT=74.

3. BIDU: L3 at bottom if it spikes towards MA50=117.8, CS=117.5, IDS=115.5, IT=123.

4. COH: CTT between 42 and 45.5 use very tight stops, bias is neutral.

5. COST: L3 at bottom if it spikes towards 54 with stop just below SMA50=53.98, IT=56.

6. DHI: L3 at bottom if it spikes towards 26.2 (both EMA50 and EMA200) with a stop just below 26.

7. EBAY: S2 on rebound (watch out for GOOG impact), entry zone 32.5-33.5, stop just above 33.8, IT=29. EMA200=31.61, SMA200=30.05, EMA50=30.78, SMA50=30.12.

8. FFIV: speculative L3 at bottom if it spikes towards 72, stop just below 72, IT=75. EMA50=73, SMA50=74.7.

9. LRCX: S2 on top if it spikes towards 49, with a stop just above 49, OR if it breaks EMA200=46.7, IT=43.5.

10. MEDX: speculative L2 at bottom if it spikes towards 13, stop just below 12.9, IT=14.

11. MSFT: speculative SW-S2 on top (200 IE, 400 FP), entry zone 31-31.4, stop just above 31.5, IT=EMA50=29.8.

12. NTAP: S1 on rebound, entry zone=37.6-38.1, IDS=EMA50=38.6, CS=38.2. EMA200=35.8. If NASDAQ rallies, entry just below 39 with a stop just above 39.

13. NU: speculative S3 on top, entry zone 61.9-63, stop just above 63, IT=60.

14. PALM: SW-L3 at bottom, entry zone 13.81-14.11, stop around 13.5, IT=15, EMA200=15.4.

15. TXN: L2 on pullback, entry zone 30.30-30.71, IDS=29.98, CS=EMA200=30.4, IT=33.

16. YHOO: S2 on rebound (watch for GOOG impact), entry zone 28.5=(EMA200)-29.2, stop just above 29.2, IT=27.5.

On my trading performance

For the past few months, I have been able to achieve an average of 0.6% trading gain of my account value on the weekly basis. The problem is that had I always followed my trading calls, I could have had a 2% weekly gain, if not a lot more. The reason? I am having difficulties to overcome the "fear factor": I often failed to pull the trigger when a pre-planned setup arrived because of the unwillingness to accept the calculated risk, what's even worse is that I almost always exited my winning positions prematurely because of the fear of losing profits (often only obtain 20% or less of a favorable run). I know that I will never become a true winner until I can overcome this psychological hurdle, and I am struggling to find a solution. This is getting really frustrating for me!

A note on the new charting software

As I mentioned in an earlier post, I have been using the Advanced Analyzer (Ameritrade) for most technical analysis, and I was shocked and disappointed to find that its calculation of simple moving average was incorrect. I wondered if any of you who noticed the erroneous MA50/MA200 numbers that I used in all my trading calls and laughed in disbelief--Wabbit cannot even get the MA right, and he is making trading calls, what a joke! From now on, I will use Ameritrade's StrategyDesk charting problem for the trading calls, let's see it that will notably improve my trading calls.

Weekend notes on the market -- Jan 27 ,2007

Bears trumped bulls for the second straight week that featured the most wild and volatile up and down days of 2007. NASDAQ once again led the market to the downside with a weekly loss of 0.6%, which further boosted the doubt that its recent break-out was a head-fake. Interestingly, both SP500 and DOW broke out with new highs on the Weds, but the extremely bearish actions on the Thurs raised the similar doubt on the break-out. On the weekly chart, the momentum of the multi-month uptrend virtually dissipated for all major indices. On the daily charts, NASDAQ closed below its MA50, but both SP500 and DOW are in much better shape. Candle formations for all major indices are clearly bearish, with some technical indicators point to further movement to the downside.

For the second week, the pattern of the market reactions to Q reports of the tech names remain as "finding excuses to sell". Stocks were unable to hold the initial gains in cases of YHOO, EBAY and MSFT. With more NASDAQ mega names (GOOG, SNDK,AMZN) on tap next week, I will see if the pattern can be confirmed. So far, it is fair to say that for a lot of tech names, their earning reports hurt their share prices overall. One more week like this, and we may conclude with some confidence that this Q report season is shaping up as a downer for NASDAQ, and may pressure the index for the next 2-3 months.

Technically, the multi-month up trend remains intact for all the major indices as long as NASDAQ closes above the key support around 2390. With NASDAQ now under its MA50, it is possible that it will test this key support this coming week. One thing I want to emphasize is that it is too far early to become really bearish about the market right now, if anything, Friday's action clearly tells you that the bulls are far from dead. On the other hand, Thursday's action says that bears are no long in hibernation. Consider all these facts, I think the best strategy right now is playing CTT setups at key S/R levels, and try to avoid any SW trades to minimize the impact of volatility.

One wild card that could really affect the market for the coming weeks is the movement of Chinese market. It has been up dramatically in last couple of years, and the upside movement accelerated recently. However, in the past couple of weeks, its major indices have had several huge one-day drops: just last week, it had a back-to-back 4% or more loss sessions. If the Chinese market experiences 10% or more pullback, the fear could spread to other markets, and trigger a sizable correction around the world. Keep an eye on this!

Will post the weekly calls on Sunday.

Thursday, January 25, 2007

What's the MA50 for NASDAQ now?

Folks, I need your help here. I have just noticed a big discrepancy of NASDAQ MA50 (simple 50 day moving average) between my chart and the one used by CBSmarketwatch. I have been using Ameritrade's Advance Analyzer for most of chart analysis, and right now, it shows that the MA50=2423.9, in other words, today's close (2434.2) is well above the MA50, but others say that NASDAQ closed below its MA50 today? Really? Please tell me what's the MA50 for NASDAQ on our charts right now. Thanks a lot!

Daily Calls -- Friday Jan. 26, 2007

Wow! Just when you think that bulls were in cruise control, the bears came out today and smacked down bulls pretty hard. Today's action erased all yesterday's gains of SP and DOW and then some, and NASDAQ was slightly better. Bearish engulfing candles formed on all major indices and lots of stocks, and just like that, things don't look bright for the near-future as far as bulls are concerned. The AH reaction to MSFT's Q4 report was favorable, but if MSFT cannot rescue the NASDAQ bulls tomorrow, things could become dire for bulls. I will only play key S/R with an overall neutral bias, unless NASDAQ breaks 2422 tomorrow on high volumes.

1. AAPL: CTT between 85.5 and 87.5/89 with tight stops, I may be attempted to go short if it breaks 85.5, but given how it behaved today and the oversold conditions, I may instead buying if it spikes towards 82.

2. BIDU: L3 at bottom if it spikes towards 120 with stop just below 119.5, IT=125.

3. DVN: speculative DT-L2 at bottom if it spikes towards 67 with a stop just below 67, MA50=67.7.

4. ENER: speculative DT-L2 at bottom if it spikes towards 32 with a stop just below, IT=34.

5. FFIV: L2 at bottom, entry zone 71-72.5 (100 share IE, 300 share FP), stop just below 71.

6. NTES: L2 at bottom, entry zone 19.51-19.81, IDS=19.3, CS=19.5, IT=22.

7. MSFT: reported Q in AH, traded mostly between 30.6 and 31.6, it quickly topped out in AH then declined steadily. Key S/R: 29.8 (MA50), 30.25, 30.45 (day close), 31.48 (day and 52 wk high), 31.6 (AH high).

Wednesday, January 24, 2007

Daily Calls -- Thur Jan 25, 2007

BULLS on the NASDAQ took over control today and along the way drove both DOW and SP500 to the new highs. Daily charts clearly favor further upside move, and with very positive reaction to EBAY's AH report, I think another bullish day is in store for tomorrow, and who knows, maybe even NASDAQ will break to the new high tomorrow. I will be extremely careful about any short-on-top setups, but SW-long setups should not be aggressively pursued as I have a hard time to find bullish catalyst that will further power the market up once the earning season is over.

Focus List:

1. EBAY: L2 on pullback, entry zone 32.8-33.3, stop just below 32.5. Reported Q4 in AH, market reaction was definitely positive. Key S/R: 31.6 (MA200), around 32.5, around 33.4, around 34 (recent and AH high).

2. FFIV: Reported Q4 in AH, drop to as low as 65.7 but recovered to as high as near 71, very volatile market reaction. Key S/R: 52.2 (MA200), 65.7 (AH low), around 70, 72.9 (MA50), 74.48 (day close), around 76. Consider S3 on top if it stays below MA50 around 73.

3. QCOM: reported Q4 in AH, traded mostly between 38.5 and 40.5. KEY S/R: 38.2 (MA50), 38.62 (day close), 39.5 (MA200 and AH resistance), 40, 40.5 (AH high), 41 (recent high).

4. AAPL: CTT when approaching its key S/R levels: 85.5, 86, 87.5, 90. Bias is neutral at this price level.

The rest:

1. ADBE: SW-S3 on top, entry zone 41.5-42.5 (100 share IE, 300 FP), stop just above 43, IT=38.

2. BRCM: S2 on top if it spikes towards 32 (MA50), IDS just above 32.5, IT=30.5.

3. LRCX: SW-S3 on top (100 IE, 300 FP), entry zone 48.9-50.7 (MA50), stop just above 51.

4. NTAP: S2 on top if it spikes towards 39 with a stop just above. MA50=38.7.

5. NTES: L1 on any pullback, entry zone 19.8-21, stop just below 19.71, IT=23.

Tuesday, January 23, 2007

Daily Calls -- Weds Jan 24, 2007

Bulls and bears battled out in NASDAQ today, and it was nearly a draw by the end of session. Daily charts for all major indices suggest a halt of the sell off, and I suspect market will attempt another rebound tomorrow with the aid of favorable AH reaction to YHOO Q report. I am interested to know if big boys will sell into strength in the final hours like they did today. Trading against major S/R is probably the safest strategy right now.

1. AAPL: L3 with a stop just below 85.5, if that support is broken, look for next support zone between around 82. May also consider S3 on top if it spikes towards immediate resistance zone between 89.5 and 90.

2. AMD: CTT between 16.2 and 17.7 with tight stops. Reported Q4 in AH, traded between 16.2 and 16.86 with solid AH support around 18.5.

3. BIDU: Consider speculative S3 on top if it spikes towards 130/134 use very tight stops. Go long immediately after it breaks 127 may also considered.

4. NTAP: S2 on top if it spikes towards MA50=38.8 with a stop just above 39.

5. SNDK: L2 if it breaks 42.9 with a stop just below 42.7, IT=44.4.

6. UNH: speculative L3 at bottom (100 share IE, 300 FP) if it spikes towards MA200=50.5, stop just below 50, IT=52.

7. VRTX: L3 at bottom, entry zone 35.7-36.3 (200 IE, 400 FP), stop just below 35.6, IT=MA50=38.2.

8. WLT: L3 at bottom, entry zone 26.5-27.1, stop just below 26.5, IT=28.

9. YHOO: Consider L3 with a stop just below 28 or 28.5 if it gaps above 28.7 in AM, IT=30. Reported Q4 in AH, drop hard to 26.2 before reversing to the upside with solid AH support above 28, and resistance around MA200=28.6. key resistance around 29.5.

Monday, January 22, 2007

Daily Calls -- Tues Jan. 23, 2007

The selling in tech sector continued today, but NASDAQ bounced off its low near its MA50. A lot of charts point to more down side, but I will wait to see market reactions to the Q report from several big leaders later this week before commit myself in any direction.

1. AAPL: S2 on top if it spikes towards the resistance zone between 89-90, L2 at bottom near key support levels at 82 and 85 may also be considered. Bias is on the short side.

2. AMD: will report Jan. 23 AH, I suspect the bad news are baked in now (like MOT), and I may take a speculative long position (300 share, 0.4 stop) if it spikes down towards 17 (stop just below 16.8).

3. BIDU: L2 on pullback (100 share, $1 stop), if it spikes towards support zone between 120-121.5, IT=125.

4. COH: will report BMO on Jan 23. Consider CTT (300 share, 0.4 stop) between 42.7 (MA50) and 47 using tight stops, S3 on top if it spikes towards 50, with a stop just above 50. Speculative L3 near 40 or S3 near 50 can also be considered (100 share, $1 stop).

5. FMCN: L3 at bottom if it spikes towards support zone between 70-71, stop just below 69.9, IT=73.

6. NTAP: speculative L3 on bottom (200 share, 0.4 stop) if it spikes towards MA50=35.8 with a stop just below 35.5.

7. SHLD: SW-S3 on top (100 share, $1 stop), entry zone 180-181.5, stop just above 182, IT=173.

8. YHOO: will report Jan. 23 AH, Key S/R: 25, 26, 27.1 (MA50), 28.6 (MA200), 29.88 (recent high).

Sunday, January 21, 2007

A Saintly Sunday?

My beloved Saints have already done a lot more than I had hoped for, but it sure will make the best NFL sunday I have ever had if they win today. I don't really worried about Bears's D, but I am a bit concerned about the cold and snowy weather there. I hope Saints will overcome the adversity like they have all season long, and knock off the door to the heaven!!!

Go Saints!

Saturday, January 20, 2007

Weekly Trading Calls -- Jan. 22-26, 2007

Below are the main points of my trading strategy for next week:

  • Tech sector/NASDAQ: I will closely monitor the market reactions to the Q reports of the major tech names. I want to know if last week's pattern persists.
  • Closely monitor the semi sector. SOX closed below MA200 for the first time in 2 months, if it fails to bounce back convincingly, NASDAQ could be really in trouble.
  • Energy sector: I may consider some rebound plays IF the oil decline is bottomed out for the near term.
  • Retailer sector: IF oil is bottomed for the near-term, I will look for speculative sell-on-top setups as the sector is at new high.
  • If NASDAQ broke its MA50, avoid SW-long trades and more actively search short-on-top plays.
The Focus List:

1. AAPL: S2 on top if it spikes towards key resistance levels at 90, 92, 93 and 95. Also, consider L2 on top if it spikes towards 82, 85 and MA50=86.6. The bias is slightly on the short side. 300 share, 0.5 stop.

2. AMD: will report Jan. 23 AH, I suspect the bad news are baked in now (like MOT), and I may take a speculative long position (300 share, 0.4 stop) if it spikes down towards 17 (stop just below 16.8).

3. BIDU: L2 on pullback (100 share, $1 stop), if it spikes towards key support levels around: 113, 114.1 (MA50), 115.5, 117, 119 and 120. IT=125.

4. COH: will report BMO on Jan 23. I might look for a speculative S3 on top if it spikes towards 50, with a stop just above 50.

5. EBAY: will report Jan. 24 AH. Key S/R: 25.5, 28.6, 30.8 (MA50), 31.7 (MA200), 33.3, 34, 35.

6. YHOO: will report Jan. 23 AH, Key S/R: 25, 26, 27.1 (MA50), 28.6 (MA200), 29.88 (recent high).

7. MSFT: will report Jan 25 AH, Key S/R: 27.5 (MA200), 28.8, 29.7 (MA50), around 30.2, 31.45 (recent high).


The rest:

1. ADBE: SW-S1 on top (100 share initial entry IE , 500 share full position FP), entry zone 39.5-40.5, stop just above 40.8, IT=MA200=36.5 if it breaks key support around 37.25.

2. ADSK: L2 at the bottom (200 share, 0.7 stop), if it spikes towards MA50=40.6, IDS just below 40, CS=40.5, IT=43.

3. BRCM: S2 on top (100 share IE, 300 share FP, 0.6 stop) if it spikes towards MA200=31.9, IDS just above MA50=32.3, CS just above 32., IT=27.

4. DVN: L2 at bottom (100 share IE, 300 share FP), entry zone=64.5 (MA200)-66.33, IT=70.

5. FFIV: speculative S3 on top (50 share IE, 150 share FP), entry zone 78.5-80.5, stop just above 81, IT= MA50=72.8.

6. FMCN: L3 on pullback (100 share, $1 stop)) if it spikes towards 71 or 73, IT=78.

7. KONG: speculative L3 (500 share, 0.1 stop) if it spikes towards 8 with a stop just below 7.95, IT=MA50=8.6

8. LRCX: S1 on rebound (200 share IE, 400 FP), entry zone 48.4-48.9, stop just above 49. MA200=46.7, MA50=51.2.

9. MOT: SW-L2 on bottom (300 share IE, 600 FP), entry zone 18.81-19.01, stop just below 18.58, IT=MA50=20.6.

10. NTAP: SW-S2 on rebound (100 share IE, 300 FP), entry zone 37.5-38.8, stop just above 39, IT=35.5, MA50=39.

11. NVDA: SW-S2 on rebound (100 share IE, 300 FP), entry zone=32.5-34.9 (MA50), stop just above 35, IT=30.

12. RACK: speculative L2 at bottom (100 share IE, 200 share FP), if it spikes towards 17, stop around 15; IT=22.

13. SONS: L1 on pullback (1000 share, 0.1 stop) if it spikes towards 7 or MA50=6.5 use very tight stops).

14. STP: CTT between MA50=31.9 and 37 use very tight stops (300 share, 0.3 stop), don't trade the mid range.

15. TOMO: speculative SW-L3 at bottom (300 share IE, 500 FP) if it spikes towards 13.5 with a stop just below 13.25, IT=MA50=14.7

16. UNH: L2 on pullback (200 share IE, 400 FP), entry zone 52-52.52, stop just below 51.9, IT=54.

17. LFC: SW-S3 on top(100 share IE, 300 FP), entry zone 48.8-49.5, stop just above 50, IT=MA50=42.5.

Weekend notes on the market

Roaring bears arrived in the week featuring Q earning reports from some major tech names as INTC,AAPL, LRCX and IBM led the NASDAQ down. The over 2% loss of NASDAQ erased over 70% of its weekly gains, and in the process, raised the doubts that last ‘week’s break-put is a head-fake. On the weekly charts, a dark-cloud cover candle has formed on the NASDAQ. Both SP500 and DOW fared much better and they are nearly unchanged for the week and remain near the new high. Meantime, the up momentum for all major indices continues to dwindle.

So far, the pattern of the market reactions to Q reports of the tech names can be summed up as "finding excuses to sell". It is clear that at the current price levels, good Q4 reports are priced in, and unless the companies significantly raise the outlook for the next Q, the market will find reasons to sell. If this pattern continues next week when a lot more big tech names will report (MSFT, AMD, TXN,YHOO, EBAY) we could expect further decline in NASDAQ.

Technically, the multi-month up trend remains intact for all the major indices as long as NASDAQ closes above its MA50 (around 2421). If NASDAQ closed below MA50, the next key support is around 2390, any breach of that level will mark the reversal of the current trend. Until that happens, the buy-on-dip strategy can still be used.

Thursday, January 18, 2007

Daily Calls -- Friday Jan. 18. 2007

Considering today's market action and IBM's decline in AH, I feel that the market will likely to gap down on the open tomorrow. With NASDAQ poised to test its MA50, fading the opening gap may be too risky. I will be very careful on any long-at-bottom plays -- will need to see an intra-day bottom on NASDAQ before taking any long positions. I need to be extra careful on longs of any semis, as SOXX broke down its 2-month trading range and closed convincing below its MA200. On the other hand, I am also hesitated to chase the bears tomorrow. One other note, the volatility is likely to kick up a notch in the coming days, be very nimble, and either take quick profits or raise stops when on the long side.

Focus List:

1. AAPL: DT-CTT between MA50=86.5 and 92/93 use tight stops (300 share, 0.5 stop), the bias is on the short side. It closed almost below the key 89-90 support zone, and drop to around 88.6 in AH.

2. IBM: S1 on top (200 share) if it spikes towards 95/96.5/98.5, OR if tomorrow's BM opening confirms further downside signal. The AH reaction to its Q report has been clearly bearish as it declines steadily and now even went under its MA=94.9. AH support seen around 93.3, next support zone is 91-92.

3. MOT: will release Q4 BMO tomorrow, consider CTT between 17.9 and 19.25 (2 week trading range). May also consider speculative L2 at the bottom (initial entry 200 share, $0.6 stop, 400 share full position) if it spikes down towards 17 or lower as the immediate reaction, IT=19, I suspect all the bad news are priced in by now.


The Rest:

1. ADSK: L3 at bottom if it spikes towards 41.6/40.5 (300 share, 0.5 stop), MA50=40.5.

2. BIDU: L2 at bottom (100 share, $1 stop) if it spikes towards 115.5, 117 or 119, IT=125.

3. CHINA: L2 on pullback (300 share, 0.3 stop), entry zone 9.25-9.61, stop just below 9.25.

4. FMCN: L3 on pullback (200 share, 0.5 stop) if it spikes towards 71 with a stop just below.

5. NTAP: S2 on rebound (300 share, 0.5 stop), entry zone 38-38.5, IDS=38.8, DS=38.3, IT=MA200=35.8. MA50=39.

6. RIMM: speculative L3 at bottom (100 share, $1 stop), if it spikes towards 115/118. Consider S1 on rebound if it spikes towards 127 with stop just above 128.

7. SONS: L1 on pullback, entry zone 6.81-6.91, stop just below 6.8. MA50=6.5.

8. STP: L3 on pullback if it spikes towards 32/33.5 (300 share, 0.4 stop), MA50=31.7.

9. UNH: L3 on pullback if it spikes towards 51.4 (MA50) or 52 (300 share, 0.3 stop), IT=54.5.

10. X: speculative L2 at bottom if it spikes towards 69 with stop just below 68.8 (300 share, 0.3 stop), IT=71.

11. CHRW: speculative SW-S2 on top (100 share intial entry) around 45 with a stop just above 45.5, IT=41.5. MA50=42.9, MA200=43.3.

Thoughts on the day -- Jan. 17, 2007

The Nasdaq bulls got crushed today. With the high volumes, bearish internals and technicals, more downside is in the cards. Just saw IBM got smacked down in AH following its Q report, not sure what was the negative the market is reacting too, but whatever that was, it seems pretty clear by now that people are looking for reasons to sell/take profits, whatever you call it. With IBM down right now, it looks very likely that NASDAQ will test its MA50 around 2420 tomorrow, If it closes below MA50 on heavy volume and bearish candle formation, look out below!

Wednesday, January 17, 2007

Daily Calls -- Thur Jan. 18, 2007

Today's AH actions were overall bearish for the big tech names. I start to see a pattern: the market cares little about if a report beats estimates for the reporting Q, rather it is the outlook that really matters. Both AAPL and LRCX have a blow-out Q, they soft outlook hurt the share price in AH. It seems to me that at the current price levels, good Q reports are priced for many tech companies, unless they raise their outlook above the expectation, the risk after the Q report is likely on the downside. Let's see what happens to a few more tech leaders (IBM etc) in the coming days.

Focus List:

1. AAPL: reported a blow-out Q1 in AH, but outlook comes below estimated. Traded between 93.3 and 99.5, with solid distribution around 99, 97 and 95.8, and closed AH around 94.2. Watch the BM opening tomorrow to determine the direction of trading. As of now, consider L2 at bottom if it spikes towards key support 89-90, 93, and S2 on top if it spikes towards resistance around 95 and 97-98. If it breaks 93, it has a good chance to test the support zone between 89-90 (consider well over 300 million shares traded above 93); on the other hand, if it can stay above 95, it may easily test the recent high around 97.8. MA50=86.4.

2. LRCX: reported a blow-out Q4 in AH, initially spiked to just above 55, but then went down hard all the way to 49.75 before closed around 50.25. Consider CTT between 48.5 and 52.5 (300 share, 0.5 stop). Key levels: 46.7 (MA200), around 48.5, around 50.3, 51.5 (MA50), around 52.5, 54.5.

3. CEPH: L2 on pullback (300 share) if it spikes down towards 71.5 use MA50=70.7 as stop reference.


The rest:

1. BIDU: L3 at bottom if it spikes towards 119, 121.5, 100 share, $1 stop.

2. CHINA: L1 on pullback(500 share, 0.3 stop), entry zone 9.71-10.21 stop just below 9.7.

3. DVN: CTT between MA200=64.4 and MA50=67.6 (300 share, 0.4 stop), don't trade the mid range.

4. MRVL: speculative L3 at the bottom (3o0 share) if it spikes towards 19.1 stop just below 19.

5. RACK: speculative L3 at the bottom (3o0 shar) if it spikes towards 18.6 with a stop just below 18.5, IT=21.

6. RIMM: Speculative L3 on bottom if it spikes towards 124 with a stop just below 123.5 (100 share, $1 stop), IT=129.

7. SONS: L1 on pullback (2000 share) if it spikes towards 7.1 with stop just below 7.

8. SNDK: speculative SW-L2 at bottom (200 share, $0.5 stop), entry zone 42-42.51, stop just below 42, IT=46.

9. VRTX: speculative SW-S3 on top (100 share initial entry, $0.5 stop, 200 share FP), entry zone 38.5-39, stop just above 39, IT=33,

Thoughts on the day -- Jan. 17, 2007

The buy-on-dip NASDAQ bulls were losing ground as the session progressed with the reaction to INTC's not-too-bad Q4 report becoming more and more bearish. I just saw AAPL's Q1 report, which blew away the estimates but the outlook is a bit weak, it will be very interesting to see what part of the report the market will focus on.

Tuesday, January 16, 2007

Daily Calls -- Weds Jan. 17, 2007

While I expect negative reaction to INTC's quarterly report, I seriously doubt that INTC can single-handly reverse recent break-out of NASDAQ (if several more tech leaders are down like this, that would be a different matter), in that sense, I may consider taking some long positions between 9:45 and 10:30 am. In other words, I expect NASDAQ to set the day's low in AM and see some recovery thereafter.

Focus List:

1. INTC: DT-L3 at the bottom (300 share, $0.3 stop) if it spikes toward 20 or 21 use tight stops, IT=21.9. Steadily decline in AH following is report and closed around 21.4, the lowest point of AH. Key levels: 20, 21 (MA50), 21.4 (AH close), 21.9 (AH turning point), 22.3 (day close), 22.5 (recent high), 22.98 (AH high).

2. AAPL: DT-L2 if there is any early weakness due to INTC (300 share, $0.4 stop), entry zone 95.5-96.3, stop just below 95. Close any position before its AH report. Watch the previous high at 97.8.

3. RACK: reported Q4 in AH, missed estimates on earnings and margin, traded heavily and down over 31%. Key levels: 18.67 (1 yr low), around 20.5, 21.7 (AH low), 22, 22.2 (AH close), around 23. It lost over 39% ($13.7) on July 28, 2006 on volume of nearly 22 million.

The rest:

1. ADBE: DT-S2 on top (500 share, $0.4 stop), entry zone 40.35-40.75, stop just above 41. SW-S3 on top (refer to the weekly calls).

2. AMD: speculative DT-L2 on bottom (500 share, 0.25 stop) if it spikes towards 17, with a stop just below 16.9.

3. BIDU: CTT between 123 and 130 (100 share, $1 stop), also consider speculative S3 on top if it spikes towards 134 with a stop just above it.

4. CHINA: L1 on pullback(500 share, 0.3 stop), entry zone 9.71-10.21 stop just below 9.7.

5. DVN: CTT between 66 and 63.7 with tight stops (300 share, 0.3 stop), don't trade the mid range.

6. LRCX: L3 on pullback if it spikes towards MA50=51.4 or 50.4 (300 share, 0.5 stop), IT=53.

7. MRVL: L2 on pullback if it spikes towards 19.10 with a stop just below 19 (500 share, 0.2 stop), IT=20.

8. RIMM: Speculative L3 on bottom if it spikes towards 124 with a stop just below 123.5 (100 share, $1 stop), IT=129.

9. SHLD: speculative SW-S3 on top (initial entry 50 share, $1.5 stop, 150 share full positions) if it spikes toward 181, stop just above 182.5, IT=169.

10. SNDK: speculative SW-L2 at bottom (initial entry 200 share, $0.5 stop, 400 share full position), entry zone 42-43.3, stop just below 42, IT=46.

11. STP: speculative S3 on top (100 share. $1 stop) around 38, stop just above 39, IT=35.

12. VRTX: speculative SW-S3 on top (100 share initial entry, $1 stop, 200 share FP), entry zone 39.5-41.5, stop just above 41.5, IT=33,

15. WLT: speculative SW-L2 on bottom (100 share initial entry, $0.5 stop, 300 share FP), entry zone 25.8-26.1, stop just below 25.8. MA200=25.1, MA50=25.

16. LFC: SW-S3 on top (100 share, $0.8 stop, hold at least 1 week and use weekly chart for exit decision) if it spikes towards 50/54 with a stop just above 50.8/54.1, IT=MA50=41.5.

Thoughts on the day -- Jan. 16, 2007

The NASDAQ bulls took a breath today, and the market was choppy and directionless overall. A lot of stocks on my list were traded in narrow range after their openning movment with little conviction or momentum.

INTC released its earning report in AH, with most numbers beating the estimates, except the gross margin. But the market chose to focus on the negative and INTC lost 4% in steady decline. I am very interested in how the market, particularly NASDAQ, reacts to INTC's earning report tomorrow. As I mentioned in my weekly assessment, I think the performance of major tech names during this earning season will siginficantly affect the direction of NASDAQ/market for the next 1-3 months.

Sunday, January 14, 2007

Weekly Calls Jan. 16-10, 2007

My weekly assessment of the market and trading guidelines were posted earlier, as well as my weekly trading call on Chinese ADRs. Below are the weekly calls on rest of the stocks on my list.

Focus List:

1. AAPL: DT-L1 at bottom (300 share, $0.6 stop) when it spikes towards key support levels at 87, 90 and 93; DT-S3 on top (200 share, $0.6 stop) if it spikes towards 97, 97.8 before its Q1 report; speculative SW-S3 on top (50-150 share, scaled entry) if it spikes towards 100 or higher on earning report. It had a 11% weekly gain on extreme volume, but its weekly chart show relatively weak up momentum. The investigation on its option scandal is likely to produce more unfavorable headlines in coming weeks, therefore, speculative SW-short-on-top (use 97 as IT) if it shoots up after its Jan. 17 AH Q1 report could potentially be very profitable.

2. LRCX: will release Q4 Jan. 17 AH, key S/R: MA200=46.6, around 48.6, 49.5, MA50=51.3, around 54.5, 57.05 (recent high).

3. MOT: will release Q4 in Jan 18 AH, may consider speculative L2 at the bottom (initial entry 200 share, $0.6 stop, 400 share full position) if it spikes down towards 17 or lower as the immediate reaction, IT=19, I suspect all the bad news are priced in by now.

4. UNH: will release Q4 Jan. 18 BMO, key support: MA50=51, 52, 54.

The rest:

1. ADBE: SW-S3 on top (100 share as initial entry, up to 300 share), entry zone 40.9-42, IDS=42.6, CS=41.65, IT=38, MA50=39.5. It significantly underperformed the NASDAQ in the past 2 weeks, weekly chart shows bearing divergence and stalling up momentum.

2. ADSK: L1 at bottom (300 share) if it spikes towards 42, IDS=41.41, CS=41.9, IT=44.

3. AFFX: S3 on top (300 share) if it spikes towards MA200=26.4, IDS=26.82, CS=26.5, IT=24.

4. ANF: speculative SW-S3 on top (100 share) if it spikes towards 79.5 with a stop just above 80, IT=74.

5. CEPH: speculative SW-L3 at bottom (100 share) if it spikes towards 69, IDS=68.7, CS=68.8, IT=72. Looks like it has bottomed out here, however, a break above 72 or below 69 may warrant a trade along the break-out direction.

6. DVN: CTT (200 share) between 63.7 and MA50=67.8 use tight stops, bias on the short side, don't trade the mid range.

7. ENER: S2 on top (300 share) if it spikes towards MA50=35.8 with a stop just above 36, IT=32.5, MA200=36.8.

8. ESRX: speculative SW-L3 at bottom (100 share initial entry, 200 share) if it spikes down towards 60, IDS=58.7, CS=59, IT=66.

9. JCG: S3 on top (300 share) if it spikes towards 39.2, IDS=39.5, CS=39, IT=37.3.

10. NVDA: CTT between 31 and 38 (400 share, $0.3 stop) use tight stops, don't trade the mide range.

11. RIMM: CTT between 125/127.8 (MA50) and 140/143 use tight stops (100 share, $1.2 stop), don't trade the mid range.

12. SHLD: speculative SW-S3 on top (initial entry 50 share, $1.5 stop, 150 share full positions) if it spikes toward 181, stop just above 182.5, IT=169.

13. SNDK: speculative SW-L2 at bottom (initial entry 200 share, $0.5 stop, 400 share full position), entry zone 42-43.3, stop just below 42, IT=46.

14. VRTX: speculative SW-S3 on top (100 share initial entry, $1 stop, 200 share FP), entry zone 39.5-41.5, stop just above 41.5, IT=33,

15. WLT: speculative SW-L2 on bottom (100 share initial entry, $0.5 stop, 300 share FP), entry zone 26-26.5, stop just below 25.8. MA200=25.1, MA50=24.8.

16. X: SW-L2 at bottom (100 share initial entry, $0.5 stop, 300 share FP, scaled exit) if it spikes towards 71 with a stop just below, IT=76.

Saturday, January 13, 2007

Who Dat?!

Today is one of the happiest day in my life as my beloved Saint came out as the winner! I was on my feet all evening, man, what a game! Eagles were playing pretty good, and Garcia almost beat us, what a game! I am just so happy!!!!!!!!!!!!!!!!!!

Go Saints!!!!!

The Saints are coming!!!

I have been a Saint fan for over 16 years now, and I have suffered enough. Just last night, I had a dream in which Saints lost to Eagles 13:31. Lord, tell me this is just a bad dream, and my Saints will finally arrive today!!!

Go Saints!

Weekly Calls on Chinese ADRs -- Jan 16- Jan 19

Because of the dramatic decline of Chinese stock market last Friday as well as the biggest weekly drop in many big-time Asia stocks, I decided to use a separate post for this week trading calls on some Chinese ADRs. I expect to post the weekly calls for the rest of the stocks on my list some time tomorrow.

I will closely monitor the Chinese market in the early part of next week to see if the steep decline on last Friday gets any follow through. Most of the Chinese ADRs on my list have been on a bullish run lately with tremendous gains, the question here is if I should buy on the weakness?

1. ASIA: L2 on pullback (500 share, $0.3 stop), entry zone 1=8-8.21, stop just below 8; Entry zone 2=7.51-7.81, stop just below 7.35. MA50=6.5.

2. BIDU: L2 on pullback (75/150 share, $2/1.2 stop) when it spikes down towards key support levels around 119.5, 116, and MA50=112.4. May also consider short on top (50/100 share, $2/1.5 stop) if it spikes towards 130/134. It closes right at the support zone from 124-125.

3. CHINA: L3 on pullback (500 share, $0.2 stop) if it spikes towards 9.25, with stop just below 9.2, IT=10, RSK/RWD around 1:3. MA50=8.5

4. CTRP: L2 on pullback (100/200 share, $1/0.6 stop), entry zone 1=61.6-62, stop just below 61.3; entry zone2=59-60.1, IDS just below 59, CS just below MA50=59.2.

5. FMCN: L2 on pullback (100 share, $1 stop), entry zone1= just above 71, stop just below 70, entry zone 2=67.5-68.5, use MA50=67.2 as stop reference.

6. KONG: speculative L3 (300 share, $0.3 stop), entry zone 7.71-8.01, stop just below 6.68, IT around MA200=8.9.

7. LFC: SW-S3 on top (100 share, $0.8 stop, hold at least 1 week and use weekly chart for exit decision) if it spikes towards 50/54 with a stop just above 50.8/54.1, IT=MA50=41.5. Volumes spiked in the past 3 weeks, and the candle formation indicates the possibility that the long up trend is coming to the end.

8. LTON: SW-L1 on bottom (600 share, $0.5 stop, prepare for multi-week hold), entry zone 1=4-4.51, stop just below 3.98; entry zone 2=3.5-4, stop just below 3.5.

9. NCTY: L1 on pullback (200 share, $1 stop) if it spikes towards 30.5, MA50=28.8.

10. NTES: L2 on pullback (200 share, $0.5 stop) if it spikes towards MA200=18.1 use MA50=17.9 as stop references, IT=19.7.

11. SINA: L1 on pullback (200 share, $0.6 stop) if it spikes towards 31.5. The stock has been skyrocketing, something is definitely up!.

12. SNDA: L2 on pullback (200 share, 0.7 stop) if it spikes towards 20.25, stop around 19.6, MA50=19.2.

13. SOHU: L2 on pullback (200 share, $0.1 stop) if it spikes towards 25.5, use MA50=24.5 as stop references.

14. STP: L2 on pullback (100 share, $1 stop), entry zone 31.5 to 32.5, use MA50=31.2 as stop references. Also, consider speculative SW-S3 on top (100 share, $1 stop) around 37, stop just above 38, IT=33.

The overall trading strategy for the coming week

As I mentioned in the earlier posts, the technical significance of the NASDAQ break-out must not be overlooked. As the results, I will try to avoid the short-on-top setups, unless there are sound with multiple technical reasons backing up the calls. I will also use smaller than usual sizes for any short trades, DT or SW. On the other hand, due to the concerns and uncertainties about the Q1 outlook when major tech companies report Q4, I will refrain from chasing the break-outs for now. I will also avoid trading the stocks during the day before AH earning release. To minimize the RSK/RWD ratios, my emphasis will be on the long-at-bottom setups.

As the earning season comes in full force, I will also actively look for DT opportunities in stocks following their Q4 reports. My approach to the earning plays consists the following steps:

1. Closely monitor the immediate AH reactions to the earning report of a company. Such reactions are always extremely volatile and difficult to trade. In the past, I sometimes cannot resist the temptations to jump in, and often lost out due to the inability to deal with the volatility. I am resolved not to commit the same mistake this time around.

2. Watch closely the pre-market movement of that stock the next morning, the key to watch is the difference between the opening price of the morning at 8 am and closing price of yesterday's AH, and then wait for another 10-15 min to confirm the trend, and then take a position.

3. Close the position around 9 am, and prepare to re-enter around 10 AM when its overall direction becomes clear.

How do you play the earning reports?

Weekly assessment of the market

The NASDAQ bulls took firm control in the past week, broke out the 2 month plus trading range, and driven the index to the highest close in 6 yrs. Along the way, it also helped to lift DOW to new high and SP500 within a hair of new high. On the weekly chart, the candle formations are bullish for all indices, with many indicators point to more upside move. Similar statements can also be made from the daily charts. For the past several weeks, I thought that the major indices were set for a significant pullback in the beginning of 2007, much like what happened in the Q1 of both 2004 and 2005, instead, they so far look more like the beginning of 2006.

The question now is how far the market can rise in the coming weeks. In my view, that will be largely determined by how tech leader fare during the Q4 report season, which will be in full swing next week, with major name such as AAPL, INTC, IBM on tap next week. If the overall outlook of Q1 from those companies is raised, I fully expect that market will have more room to run to the upside, on the other hand, if the outlooks come in below the expectation, the market could quick find a top and start a sideway movement with downside bias, much like what happened during the Q1 of 2006. Therefore, I will closely watch market reactions to major tech names following their Q4 reports.

There are some concerns for the bulls. First, on the weekly charts, there are still some divergences between the price movement and the Stochastic/MACD, which put some doubts on the up-momentum. Second, the market now has risen nearly 6 months without any meaningful pullback, and you know it is just a matter of time such pullback will happen, and more than often it occurs to the surprise of the mass, which sounds like could be anytime now.

There are some additional concerns in my view. I have noticed that a lot of world markets have seen a lot of volatile movement lately, which makes me feel that the top may be closer than thought. A fresh concern I have is the dramatic decline (nearly 3.7%) in China stock market this past Friday. The news is pretty much ignored by US news so far, and other major indices in the region largely shrugged that off, however, I will be alerted if the steep decline continues next week, which may spread the fears like wild fire before you know it.

I may revise the assessment before next Tuesday when the market reopens.

Comments are very welcome!

Thursday, January 11, 2007

Daily Calls -- Friday Jan. 12, 2007

The NASDAQ bulls finally came through today, driving NASDAQ and DOW to new highs. The technical significance of NASDAQ breaking 2 month trading range AND leading other indices are obvious, even though you want to see some kind of follow through in the next few days to confirm the break out. Yes, there were some selling on the top for many stocks in the afternoon, yes, some break-outs came in light volumes, yes, the semis did not show up today, however, unless big boys change their minds and systematically sell into the strength, I see another leg up in coming days until the earning season comes in full force. I will try to avoid any short play in the next few days.

1. AAPL: L1 on bottom (300 share, $0.4 stop) if it spikes towards 93/95 use very tight stop, don't trade any mid range, IT=97.

2. ANF: Speculative SW-S3 on top (100 share, $1 stop) when it approaches 79, stop just above 80, IT=MA50=71.1.

3. BIDU: CTT between 126.5 and 134 (100 share, $1 stop), don't trade the mid range.

4. DVN: Speculative long at bottom plays (200 share, $0.4 stop)) if it spikes towards 61/63 use tight stops, IT==66.

5. ENER: S1 on top (300 share, $0.4 stop) when it spikes towards MA50=35.8 with stop just above 36. Key resistance also around 35.

6. MEDX: L1 on pullback (500 share, $0.25 stop), entry zone 13.6-14.01 (consider 13.91), IDS just below 13.6, IT=15, MA50=13.9.

7. UNH: L1 on bottom (300 share, $0.6 stop) if it spikes towards 53.5 with stop just below 53,

8. X: L1 on bottom (300 share, $0.4 stop) if it spikes towards 71 use MA50=70.9 as stop reference, IT=73.

9. SNDK: SW-speculative L1 on bottom (300 share, $0.4 stop) if it spikes towards 41 with a stop just below it, IT=MA50=45.5.

Wednesday, January 10, 2007

Daily Calls -- Thurs Jan. 11, 2007

The market was able to overcome early weakness, NASDAQ bulls are gaining strength as they pulled the SP500 and DOW along for the upside ride. For the first time in weeks, I actually feel a bit of bullishness as I see NASDAQ is poised to test its Nov'06 high in next few days. I decided not to act on any SW short-on-top setups today, and I will be very cautious on such setups in the coming days unless NASDAQ convincingly fails yet another test of the top.

1. AAPL: L2 on pullback (300 share, $0.4 stop) if it spikes towards 96 use 95.7 as stop, IT=99.

2. AKAM: DT-L3 on top (300 share, $0.3 stop) if it spikes towards 55 with a stop just above, IT=52.

3. BIDU: L2 on pullback (200 share, $0.5 stop) if it spikes towards 125 with a stop just below, IT=130.

4. ESRX: speculative SW-L3 on bottom (200 share) if it spikes down on market weakness, IT=66, entry zone1=62.5-63.1, stop just below 62 (PL=$150, $0.6 stop, RSK/RWD=1:5); entry zone 2=63.8-64.1, stop just below 63.8 (PL=$130, $0.6 stop; RSK/RWD=1:4).

5. JCG: Speculative DT-L3 on bottom (300 share, $0.4 stop) if it spikes towards 35.3 with a stop just below 35, IT=36.5.

6. RIMM: DT-S2 on top (200 share, $0.6 stop) if it spikes towards 140 with a stop just above, IT=134.

7. SNDK: L1 on bottom (500 share, $0.3 stop). if it spikes towards 45 with a stop just below, IT=46.5.

8. SONS: L1 on bottom (1000 share, $0.1 stop) if it spikes towards 6.9 on market weakness, stop just below 6.88, IT=7.4.

9. X: DT-L1 on bottom (400 share, $0.6 stop, RSK/RWD=1:3) if it spikes towards 69.5 with a stop just below 69, IT=71.

Tuesday, January 09, 2007

Daily Calls -- Weds Jan 10, 2007

Another choppy and indecisive day. The overall market volume increased but no clear direction. The only notable thing is NASDAQ continues to show relative strength, and inches closer to its recent high. Many stocks were quite volatile today with overall impression of bearishness except AAPL. It becomes important to stick to key S/R when entering any setups, and use smaller sizes.

1. AAPL: SW-L1 (100 share) on pullback use 89.5 -- 90 as the key support zone, entry zone 90-92, IT=99, $2 stop loss, RSK/RWD=1:4. DT-L1 (300 share) when it pulls back to 91/91.7 use $0.3 stop, If NASDAQ is strong, may also consider L1 when it breaks 93.2 with a stop just below 92.7. The huge spike in volume and simutaneous sell off in other smartphone makers (RIMM, PALM) suggests that the big boys really like the profit outlook of Apple iphone.

2. ANF: speculative SW-S2 on top (150 share) if it spikes towards 77 with a stop just above it, IT=71.5, RSK/RWD=1:12 or better, Potential Loss=$150 ($0.8 stop)


3. BIDU: DT-L3 (100 share, about $1.2 stop) on bottom if it spikes towards 122 use 121.5 as stop. Consider DT-L3 if it breaks 125 AND NASDAQ is strong, IT=127, stop around 124,

4. DVN: DT-L2 on bottom (200 share), entry zone 64.5-65.1, stop just below 64, IT=67, PL=$240, $1.1 stop, RSK/RWD=1:2. MA50=68.2. Looks like it is bottoming here.

5. ESRX: speculative SW-L3 on bottom (200 share) if it spikes down on market weakness, IT=66, entry zone1=62.5-63.1, stop just below 62 (PL=$150, $0.6 stop, RSK/RWD=1:5); entry zone 2=63.8-64.3, stop just below 63.8 (PL=$150, $0.6 stop; RSK/RWD=1:4). It closed the day just at the key support around 66, the candle formation and other technical indicators point more downside.

6. JCG: CTT (counter trend trading) between 35.2 and 39 use very tight stops, 200 share, PL=$100 ($0.4 stop). Bias on the short side. Don't trade the mid-range. MA50=36.5.

7. MRVL: L3 at bottom (400 share), entry zone 19.11-19.25, stop just below 19, IT=20.1, RSK/RWD=1:3 to 1:10; PL=$150 ($0.3 stop)

8. NTRI: SW-L3 on bottom if it spikes down towards 66 with a stop just below 65.5, IT=69. MA50=65.2

9. NVDA: SW-S2 (300-500 share) on top if it spikes towards 33.5/34 use 34.2 as stop, OR when it breaks 33 AND NASDAQ is weak; IT=31.5; $0.6 stop, RSK/RWD=1:4. It is poised to dive here. Strong support just above 31, so consider reverse to the long side with a stop just below 31.

10. RIMM: speculative L1 on bottom if it spikes down, entry zone 127-128.2, use MA50=126.5 as stop references. IT=134. It sold down hard on AAPL new IPHONE, but I feel it is a bit overdone.

11. SNDK: speculative L1 on bottom, entry zone 43.2-43.6, stop just below 43, IT=45. Because of its clear down trend, sellers are convinced that it has bottomed out.

12. SONS: L1 on bottom (1000 share, $0.1 stop) if it spikes towards 6.9 on market weakness, stop just below 6.88, IT=7.4.

13. X: DT-S2 (200 share) on top if it spikes towards MA50=70.9 use 71.1 as stop ($0.3 stop), IT=69. But consider DT-L1 (300 share) if it breaks 71 on AA's Q4 report, stop just below 70.9 ($0.4 stop), IT=73.

Monday, January 08, 2007

Daily Calls: Jan 9, Tues, 2007

Another choppy and indecisive session as the bulls came out with a small victory. I start to think maybe right now is the best time to stay on the sideline until NASDAQ either breaks the Nov'06 high or the MA50 around 2400. I probably also refrain from any swing trading here.

1. AAPL: let's see what kind of news will be out there tomorrow and what's the market reaction. DT-L3 (300 share, PL=$180, $0.5 stop) may be considered if it breaks 87 (IT=89.5). If the market sells on the news, watch the support around MA50= 83.9. No SW.

2. AFFX: speculative SW-S2 on top (300 share, PL=$150, $0.4 stop, RSK/RWD=1:5) if it spikes towards MA200=26.5 with a stop just above 26.85, IT=MA50=24.1.

3. SNDK: it started pretty strong but finished weak, nonetheless, it closed about the 4 wk trading range, is it on its way to test MA50 around 45.6?

4. VRTX: speculative SW-L3 (200 share, PL=$120, $0.5 stop, RSK/RSW=1:12) if it spikes towards 31.5 with a stop just below, IT=37,

Stocks that should be considered based on the weekly calls: ANF, BIDU, ENER, ESRX, NCTY, NVDA, SONS, WLT, XRTX.

Saturday, January 06, 2007

Weekly Calls Jan. 8-12, 2007

On the Market:

The holiday-shortened first week of 2007 ended with mixed results featuring wild swings, high volatility/volumes. For the first time in nearly 2 months, NASDAQ was noticeably stronger than SP500 and DOW with a nearly 0.8% gain, while the other two suffered 05.-0.6% loss. On the weekly charts, both DOW and SP500 show bearish candle formation, but NASDAQ posts a doji. Indicators show continuing bearish divergence for all indices. The daily charts show some very interesting development:

(1) NASDAQ: its second test of MA50 around 2400 was a clear success, however, its 3rd attempt to break the Nov'06 high got foiled on the Friday.
(2) SP500: It tested key support around 1408 every day during the week and managed to close above it each time. However, it looks on its way to test MA50 (1398) for the first time since early Aug'06.
(3). DOW: It actually made a new intra-day high this week.

Some basic statements can be made here:

(1). the momentum for the 4 month long up trend continues to diminish, but it may be still early to say that the tops for all major indices are set since they are so close to the new high.
(2). bearish divergences for all major indices are persistent and growing.
(3). As the market leader, NASDAQ found strong support at MA50 and seems ready to once again test the Nov'06 high.
(4). The reversal of the up trend requires, at the minimum, that NASDAQ closed below it MA50, something yet to occur. However, it NASDAQ does close below MA50, I would expect some sharp declines in all major indices.

On next week:

The tug of war between the bulls and bears is intensifying as the volumes started jumping high, but at this point neither side can claim clear advantage. Basically, the bulls will win if NASAQ can break the Nov'06 high around 2467, and bears will win out if it closes below MA50 around 2400. Until these happen, the market will continue exhibits choppy and high volatility.

At this stage, the following strategy should be followed:
(1). Don't go long with the break-outs and don't chase the bears just yet.
(2). Look for the short-the-top setups for stocks that attempt to rebound, but use small size in the initial entry.
(3). Play long-on-bottom for some very strong stocks that have fallen to their key support levels, but be quick when taking profits.

Some changes regarding the trading calls and executions

To make it easier to follow the trading plan and overcome the "fear factor", I decide that I will include position size and risk/reward (RSK/RWD) ratio for trading calls as much as possible. I will also list the project loss number which takes both the position size and stop loss point into consideration. With such new information, I will have clear ideas on the potential P/L for any setups, and by doing so dispel the "fear factor" to some degree.

Risk/Reward Ratios (RSK/RWD) -- To maximize the overall successful rate, the minimum RSK/RWD ratios for (1) swing trade (SW, 2-5 days) --1:5; day trading (DT)--1:3; speculative trading 1:7.

Full Position Sizes: $5-$10: 2000 shares; $10-$20: 1500 shares; $20-$40: 900 shares; $40-$60: 600 shares, $60-$100: 450 shares; $100 and above: 300 shares.

DT Trading Position Size -- L1/S1: full position; L2/S2: half position; L3/S3: one third of position; speculative short or long: 1/4-1/3 position.

SW Trading Position Size -- the sizes should be further reduced to about 50-80% of the DT sizes.

Weekly Trading calls Jan. 8-12, 2007 (stocks in BOLD font are the focus ones)


Group 1 -- The short-on-top plays (No long plays allowed for this group)

1. AAPL: DT-S2 (200 share) on top when it approaches key resistances around 86.7 and 89.5 OR when it breaks and closed below MA50=83.9. PL=$150 ($0.6 stop). Pay close attention to its much anticipated news event on Jan. 9. It the market sell on that news, it probably will go down to test recent low around 77 or even MA200=73.6.

2. AFFX: S1 on top (500 share) if it spikes towards 23 with a stop just above, IT=20.5, MA50=24.1; RSK/RWD=1:5 or better, PL=$160 ($0.3 stop).

3. ANF: speculative SW-S2 on top (150 share) if it spikes towards 77 with a stop just above it, IT=71.5, RSK/RWD=1:12 or better, PL=$150 ($0.8 stop)

4. GOOG: speculative SW-S3 (50 share) on top if it spikes towards 493/499, stop just above 493/500, IT around MA50=468, RSK/RWD=1:12.5 (entry near 493) to 1:15 (entry near 498); PL=$120 ($2 stop)

5. SHLD: SW-S2 (150 share) on top if it spikes towards MA50=170, stop just above 170.6, IT=165. RSK/RWD=1:6 or better; PL=$150 ($0.8 stop)


Group 2 -- The long-at-bottom plays

1. ADSK: L3 at bottom (300 share) if it sparks down towards 40 (use MA50=39.5 as stop reference), IT=42, RSK/RWD=1:4; PL=$160 ($0.5 stop)

2. AKAM: SW-L3 at bottom (200 share) when it approaches key support levels at 50, 50.5, 51; use tight stops, IT=53, RSK/RWD=1:5 (near 51) to 1:7 (near 50); PL=$120 ($0.5 stop). MA50=51.2

3. AMZN: L2 at bottom (300 share) if it spikes towards MA200=36.4 with a stop just below, IT=38.5; RSK/RWD: 1:7, PL=$150 ($0.4 stop)

4. BIDU: SW-L2 at bottom (100 share) if it spikes towards key support around 116 and 119.5, IT=125; RSK/RWD=1:5 (near 119.5) to 1:8 (near 116), PL=$150 ($1.2 stop). Keep an eye on its recent high around 128.68 and MA50=109.4. Because of its volatility, use 100-200 shares only.

5. CRM: L2 at bottom (300 share), IT=41, entry point zone 1=37.1-38.01, stop just below 37, RSK/RWD=1:3 or better; entry zone 2=38.4 (MA50) -39.01, stop just below MA50, RSK/RWD: 1:4 or better; PL=$180 ($0.5 stop)

6. DVN: SW-L2 at bottom (200 share), entry zone 64.5-65.1, use MA200=64.4 as CS, IDS just below 63.75, IT=MA50=68.4, RSK/RWD: 1:5 or better. PL=$140 ($0.6 stop). Last Friday's action seems putting an end to the 5-week slump, but the weekly chart seems to suggest a more patient entry or wait till it breaks 66.25?

7. ESRX: SW-L1 at bottom (200 share) if it spikes towards 67.5/66 with tight stops, IT=71, RSK/RWD: 1:7 or better; PL=$120 ($0.5 stop). MA50=70.2, MA200=72.9.

8. FMCN: SW-L3 at bottom (100 share) if it spikes towards MA50=65.8 use 65.5 as stop reference, IT=70, RSK/RWD=1:8 or better, PL=$120 ($1 stop).

9. MRVL: L3 at bottom (400 share), entry zone 19.11-19.25, stop just below 19, IT=20.1, RSK/RWD=1:3 to 1:10; PL=$150 ($0.3 stop)

10. NCTY: SW-L1 at bottom (200 share), IT=32; entry zone1=30-30.5, stop just below 30, RSK/RWD=1:3 or better; Entry zone2=28.1 (MA50)-28.5, stop just below 28, RSK/RWD=1:9 or better; PL=$150 ($0.6 stop)

11. RIMM: SW-L2 at bottom (100 share) if it spikes towards 131 use 130 as stop, IT=140, RSK/RWD=1:9 or better; PL=$140 ($1.2 stop).

12. SNDA: SW-L2 at bottom (200 share), entry zone 19.7-20.1, stop just below 19.6, IT=22.4, RSK/RWD=1:5.5 or better; PL=$150 ($0.6 stop)

13. SONS: DT--L1 at bottom (1000 share), entry zone 6.96-7.11, stop around 7/6.88, IT=7.5, RSK/RWD=1:3.5 or better; PL=$200 ($0.15 stop).

13. STP: SW-L2 at bottom (200 share), entry zone1=31.6-32.1, stop just below 31.5, IT=34.5, RSK/RWD=1:5 or better; Entry zone2=30-30.5, stop just below MA200=29.9, IT=33.5, RSK/RWD=1:5 or better; PL=$150 ($0.6 stop). Be patient with the setup.

14. UNH: SW-L2 at bottom (200 share), entry zone 1=just above 52, stop just below 51.9, IT=53, RSK/RWD=1:5.5 or better; entry zone2=50.1(MA200)-50.4(MA50), stop just below 50, IT=53; RSK/RWD=1:6 or better; PL=$140 ($0.6 stop)

15. VRTX: speculative SW-L3 at bottom (100 share) when it spikes towards 33, stop just below 32.5, IT=37, RSK/RWD=1:7 or better; PL=$100 ($0.8 stop)

16. WLT: SW-L3 at bottom (200 share), entry zone 24.7 (MA50) to 25.1 (MA200), stop around 24.5, IT=27.5, RSK/RWD=1:5 or better, PL=$120 ($0.5 stop). Be patient with the entry.


Group 3 -- The range-bound CTT plays

1. ENER: CTT between 32.5 and MA200=37 use very tight stops, 300 shares, PL=$100 ($0.3 stop). MA50=36.3, also key resistance around 35. Bias on the short side. Don't trade the mid-range.

2. JCG: CTT between 35.2 and 39 use very tight stops, 200 share, PL=$100 ($0.4 stop). Bias on the short side. Don't trade the mid-range. MA50=36.4.

3. NVDA: CTT between MA200=29.2/31 and MA50=35.3/37.5 use tight stops, 300 share, PL=$150 ($0.4 stop). Bias is on the short side. SW on the short side, DT on the long side.

4. X: DT-CTT between MA200=64.2/68 and MA50=70.9/72 use tight stops, 200 share, PL=$120 ($0.5 stop). Don't trade the mid range. Bias slightly bearish.

5. XRTX: DT-CTT between 19.4/20.4 and MA200=21.9 use very tight stops; 300 share, PL=$120 ($0.35 stop). MA50=21.6. If NASDAQ makes new high, go long when it closes above MA200.

Thursday, January 04, 2007

Daily Calls -- Friday, Jan 5, 2007

The market is becoming very choppy and unpredictable, like today, all of sudden, NASDAQ came on as the strongest and pulled up other major indices along with it. Tomorrow's employment report could set some definitive tone for the near-term market direction. The key is NASDAQ as it less than 18 points from the recent high, a break and closing above that high could propel the market higher, but another failed test may just complete the topping process.

1. AAPL: DT-CTT between MA50=83.8 and 86.7/87.

2. AKAM: DT-S2 on top if it spikes towards 54.8 with a stop just above 55.

3. BIDU: L2 on bottom if it spikes towards 123 with stop just below 122.5. Keep eye on its recent high at 128.68.

4. CRM: L2 on bottom if it spikes towards 37 with a stop just below, IT=39. MA50=38.4.

5. DVN: CTT between 61 and 65, bias on short side, MA200=64.4.

6. ERTS: DT-S2 on top if it spikes towards 56.6 with a stop just above 57.

7. LRCX: DT-S2 on top if it spikes towards 54.5 with a stop just above.

8. RIMM: speculative S3 on top when it spikes towards 140 or 143.

9. SONS: L1 on bottom if it spikes towards 7.1 with stop just below 7.

10. STP: L2 on bottom, entry point 1=just above 31.61 stop at 31.48; entry point2 around 30, stop just below MA200=20.9. MA50=30.2.

11. UNH: L1 on bottom if it spikes towards 52 with a stop just below., IT=54.

12. WFMI: S2 on top, entry zone 48-48.5, stop just above 48.8.

13. XRTX: reported Q4 in AH, traded mostly between 20.1 and 21.4. Key levels: 19.5, 19.83 (day low), 20.4 (day close), 21, 21.4 (AH high), 21.7 (MA50), 21.9 (MA200).

14. ENER: L2 if it spikes towards 33.8 with stop just below 33.5; S2 on top when it spikes towards MA50=36.4 ust MA200=37 as stop references..

Wednesday, January 03, 2007

Daily Calls Jan. 5, Thur 2007

What a day, it must be quite a scary for the bulls, but bears were not exactly holding the upper hand as bulls fought back in the end to make the first trading day of 2007 an up day. Right now I don't see any convictions either way, I wonder if the picture will get much clearer in the next 2 days. In the meantime, swing long/break-out long should be avoided, and short-on-top setups should be seriously considered.

1. AAPL: DT-S2 on top when it approaches resistance around 85.4 and 86.6 use tight stops.

2. AEOS: it reported Dec sale in AH and raised the Q4 guidance, traded between 31.8 and 32.4. Probably should L2 on bottom if it spikes towards 31 use MA50=30.9 as stop reference. IT=33.01 (all time high).

3. AKAM: DT-S2 on top if it spikes towards 52.7 use 53 as stop, IT=MA50=51.

4. BIDU: L2 on bottom if it spikes towards 117 with a tight stop. May also consider speculative S3 on top if it spikes towards 125.

5. DVN: DT-S2 on top if it spikes towards 66 use a tight stop; its firt test of MA200=64.4 was successful, keep an eye on it. Speculative L2 on bottom near 61 or 63 might be considered.

6. ESRX: L3 on bottom if it spikes towards 68 use a tight stop, IT=MA10=71.5.

8. LRCX: CTT between MA200=46.1 and 51.5 use tight stops, don't trade the mid range.

9. MEDX: L2 on bottom if it spikes towards MA50=13.9, stop just below 13.5.

10. NTAP: L2 on bottom if it spikes towards 39 use MA50=38.8 as stop, IT=41.

11. RIMM: CTT between MA50=125.1 and 132 use tight stops.

12. SNDA: L2 on bottom, entry zone 19.5-20.1, stop just below 19.5,

13. SONS: L2 on bottom if it spikes towards 6.9 with a stop just below 6.88.

14. UNH: L2 on bottom if it spikes towards 50 with a stop just below. MA50=50.2, MA200=50.1.

15. VRTX: speculative L3 on bottom if it spikes towards MA200=35.6 with a stop just below.

16. WFMI: S1 on rebound if it spikes towards 46.7 with stop just above 47. It is poised to dive here.

17. JCG: L3 on bottom if it spikes towards MA50=36.3/35.5 use tight stops, IT=39.

Monday, January 01, 2007

Weekly Calls Jan. 3-5, 2007

On the market:

The market enjoyed a bit of Santa Rally in the holiday-shortened week, led by DOW which closed at new high with nearly 1% gain. Both NASDAQ and SP500 had less than 0.6% gain. On the weekly charts, candle formation was bullish for DOW but neutral for both NASDAQ and SP500. Bearish divergences of Stochastic and MACD histogram are still clear for all major indices. On the daily charts, the action in NASDAQ is worth mentioning as it rebounded strongly from the vicinity of MA50 in the first 2 sessions, but met clear selling pressure in the last 2 sessions.

Some basic statements can be made here:
(1). the momentum for the 4 month long up trend continues to diminish, but the tops for both DOW and SP500 may yet to be reached.
(2). bearish divergences for all major indices are persistent.
(3). As the market leader, NASDAQ seems topped out.
(4). The reversal of the up trend requires, at the minimum, that NASDAQ closed below it MA50, something yet to occur.

On next week:

The bulls enjoyed some Santa rally last week, but the actions on the last 2 sessions were not bullish. It is remains to be seen if the Santa rally will see a happy ending next week. For me, I will look for NASDAQ for any signals of trend reversal. Basically, if NASDAQ drops significantly next week (especially on Weds Jan. 3, the first trading day of 2007) on high volume, we could see a re-run of 2005 1st quarter. Some of the key events that may significantly impact the short-term direction of the market include: ISM (Wed 10 AM), FOMC minutes (Wed 2 PM), and Dec. employment report (Fri 8:30 AM).

At this stage, the following strategy should be followed:
(1). Watch more and do little on the first/second trading sessions of 2007.
(2). Don't go long with the break-outs and don't chase the bears just yet.
(3). Look for the short-the-top setups for stocks that attempt to rebound.
(4). Play long-on-bottom for some very strong stocks that have fallen to their key support levels, but be quick when taking profits.

It appears that the market will gap up at the open on Weds, the first trading session of 2007. How the market follows up that gap may set the tone for the near-term market movement.

Trading calls:

Group 1 -- The short-on-top plays (No long plays allowed for this group)

1. AAPL: S2 on top when it approaches key resistances around 87 and 89.5. May consider S3 when it breaks down MA50=83.7 or 83.36. MA10=83.9. Because of possible more bad disclosures on the option scandal, no over-night long is allowed, on the other hand, because it may have positive announcement on Jan. 9, don't be aggressive with short position. No long plays until it approaches 77.


2. ENER: S1 on top when it spikes towards key resistance around 35, 36.7 (MA50), or 37.1 (Ma200). The down trend looks to set in.

3. ERTS: S1 on top if it spikes towards 52.5 use MA200=52.7 as stop reference, IT=48.

4. SHLD: S1 on top, entry point around MA10=169.4 or MA50=170.4. IT=164.


Group 2 -- The long-on-bottom plays

1. ADSK: L3 on bottom if it sparks down towards 39.7 (use MA50=39.2 as stop reference) or 37.4 (stop just below 37).

2. AKAM: L1 on bottom when it approaches key support levels at 50, 50.5, 51, 52; use tight stops. MA50=50.9

3. ESRX: L1 on bottom if it spikes towards MA50=70.3 use a tight stop.

4. FFIV: L2 on bottom if it spikes towards 71 or MA50=70 use tight stops.

5. FMCN: L3 on bottom if it spikes towards 65.5 use MA50=65.3 as stop reference.

6. NTAP: L2 on bottom if it spikes towards MA50=38.8 or 38.2 use tight stops.

7. STP: L1 on bottom, entry zone 32.6-33.2 (MA10) with a stop just below 32.5. MA 50=30.

8. UNH: L1 on bottom when it spikes towards 53, stop just below MA10=52.7. MA50=50.1.


Group 3 -- The range-bound CTT plays

1. BIDU: L1 on bottom only when it spikes towards key support around 106 or 107.6 (MA50) use short stops. Also consider S3 on top when it approaches key resistances around 115.5 (MA10=115.1), and 119.5. Don't trade mid-range or initiate any positions that are far away from key S/R levels.

2. DVN: CTT between 64.4(MA200)/65 and MA50=68.9 use tight stops.


3. RIMM: CTT between MA50=125 and 131 use tight stops, MA10=130.3.

4. SONS: CTT between 6.4 and 6.9 use tight stops, MA50=6, MA10=6.6

5. X: CTT between MA50=71 and 75 use tight stops.