Swing trade calls -- July 15, 2007

On the market:

The persistent advance of NASDAQ finally drove both DOW and SP500 to the new highs last week. On any charts from any angles, the break-out is solid, though could be more convincing had the overall volumes been higher. Speak of the volumes, I have a gut feeling that the short-covering played a significant part in the dramatic bull run on last Thursday and follow-through on Friday. The relatively light volumes tell me:

1. Big boys are not adding to their long positions at this level, nor taking profits right now. They are probably waiting until they see a clear signal of Q2 report/Q3 outlook.

2. The shorts are yet to capitulate, which means that the market may have more room to run up.

All major indices and a lot of stocks are in extremely overbought region, which means swing-long at the current levels may not be very profitable. Buy-the-dip remains the best strategy.

The coming week is likely to set the tone for the earning season, if the market reacts very positively, I think there will be at least another 3-6 weeks of bull run (into mid or late August). Technically speaking, it is hard to conceive that the overall trend would reverse even if the Q reports from many key companies come in lower than expected.

Short plays should be avoided as a general rule.

1. AMD: L2, entry zone=14.81-15.2, stop just below 14.4, IT=16.

2. ANF: S1 if it spikes towards 79, stop just above 79.5, IT=71.

3. BBY: L2, entry zone=45-46.7, IT=50, clear bullish divergence on the weekly chart.

4. BIDU: L1 if it spikes towards 195 or 200 use very tight stops.

5. BRCM: L1 if it spikes towards 31.1, stop just below 31, IT=33.5.

6. GOOG: Consider L1 around 515 if it pulls back on earning in AH, stop below 500.

7. LRCX: watch for the 55 resistance, a close above 55 with volume could drive it to a new high.

8. MRVL: L1, entry zone 17.75-18.1, stop just below 17.7, IT around 19.5

9. NUE: S1 if it spikes towards 67 with a stop just above it, IT=60.

10. RIMM: L1 if it spikes towards 217, stop just below 215.

11. SHLD: S1 if it spikes towards 162, stop just above 162.5, IT=153.

12. SONS: S1, entry zone8.4-8.68, stop just above 8.7, IT=8

13. URBN: S1 if it spikes towards 23, CS>23, IT=20?

14. DRIV: S1 if it spikes towards 50, stop just above, IT around 46.