Swing calls -- July 22, 2007

On the market:

Last week turned out to be one of the most dramatic week in recent months, after notching new highs, all major indices registered a losing week. The overall reactions to the first week of peak Q2 reports are mildly negative. Earning reports will continue to pour in next week, feathering key companies in the oil sector, housing sector and tech titans such as TXN and AAPL. If market continues to react negatively, the major indices may be set to test key supports such as MA50. However, until the major indices broke their MA50, the trend is still up. One sector that demands particular attention is the banking sector, whose index just produced a death cross (see Trade Mike's chart and comments). All companies in this sector are now perfect short-on-top candidates. If the financial heavy weights continue their rapid descend, the possibility of new market highs will be significantly diminished.

1. AAPL: will report Q2 in Wed AH, also, Tuesday's AT&T Q2 report may also reveal iPhone sale situation and therefore impact AAPL price. Keep eye on key supports around 115, EMA50=122.7 and 127.5 if it drops following the report. Look at GOOG for possible AH play on the long side.

2. BIDU: S2 on top only if it spikes towards key resistance near 200 and 210 use very tight stop, don't go long unless it spikes towards EMA50 currently near 163.5.

3. BRCM: L1 on bottom whenever it spikes towards EMA10.

4. COST: L1 on bottom if it spikes towards EMA50 currently around 58.3.

5. ELN: L1 on bottom if it spikes towards 19.4, stop just below 18.9, IT=22.

6. HD: L1 on bottom if it spikes towards 38, stop just below 37.8, IT=40.5

7. ILMN: will report Q2 on Wed. Keep eye on key supports around 35.5,37, EMA50=38.4, and prepare to trade from the long side if it drops quick in AH, however, if it breaks solidly above 42.3, consider buying the break-out!

8. LRCX: L1 if it drops to 55-56 due to market correction, stop just below 55.

9. MRVL: L1 if it spikes down towards 18/18.5, with CS<18.5, IDS around 17.8, IT=21.

10. PFCB: currently long at 35.21, will report earning around Wed noon. Consider exit half position if it spikes towards 36 on Monday and close all position if it spikes towards 37. intra-day stop just below 34.7 and closing stop just below 35.15.

11. RACK: reports on Thursday AH, long if it breaks 14.2, and watch for key support around 11.2.

12. SBUX: L1 if it spikes towards 26.8, IDS just below 25.8 and CS just below 25.5.

13. X: reports Q2 on Tuesday, it is poised to break down based on the chart, S1 if it spikes towards 116 with a tight stop?

14. AMZN: will report on Tues AH. watch for key supports around 60, 63.7, and 67.5 (EMA50). Long at 60 or 63.7 may be considered if it spikes down in the first few minutes following the report,but tight stop, small position size and quick profit-booking are needed.

15. DHI: will report on Thursday, it is approaching a historic support around 18.5. It made new 1-yr low last week, I suspect that the Q2 report will turn it around.


The following banking/brokers are poised to fall further, however, they are all not far away from key support levels (often strong long term supports), therefore, for swing trading, the best is to wait for them to bounce back towards EMA50, which will offer setups with good risk/reward ratios. On the other hand, they can be day-traded from the short side based on 10 day 30 min charts.

1. BAC: S2, entry zone=49.1-50.25, stop just above 51, IT around 47.

2. BSC: S1, entry zone=139-145.2 (EMA50), stop just above 146, IT around 127.

3. GS: S2 if it spikes towards it EMA50 (currently 220.6) stop just above 221, IT around 198.

4. LEH: S2 if it spikes towards its EMA50 (currently at 74.4) with a stop just above 75.

6. MER: S2, entry zone=83.8(EMA10)-86.9(EMA50), stop just above 87, IT=78.

7. MS: S2 if it spikes towards 70 or 73.5 use tight stops, IT around 65.