Weekly Trading Calls -- July 30-Aug.3

On the market:

The market ignored some very positive Q2 reports and obsessed with the credit-crunch woes last week and suffered a mini-meltdown. The huge losses across the board have significantly damaged the fundamental technicals underlying the multi-month uptrend. The extent and speed of the decline, especially the failed stabilization/rebound attempt on last Friday, clearly suggest that the jittery and crisis may lie deeper than most people expected. On the other hand, it is still premature to say that the uptrend is now convincingly reversed. As all major indices now oversold and sit just above their key support levels, I fully expect a technical rebound next week with a likely retest of their MA50 levels:

NASDAQ: strong support around 2530. Key resistance: EMA50=2618, around 2630
SP500: strong support around 1450. Key resistance: EMA50=1514, also around 1490.
DOW: strong support around 12845. Key resistance: EMA50=13529, also around 13700.

The overall trading strategy for August should be: short on top when the major indices and stocks rebound back to the key resistance levels. For very short-time frame trading, long at the bottoms as long as the indices stay above the aforementioned key support levels. However, for any long trades, be careful with the position sizes and be ready to take quick profits.

The bottom line: for the first time in months, there are solid signals pointing to a start of a bearish reversal of the uptrend. As always the case during the early stage of a trend reversal, one should start to establish short swing positions, but do so with patience and fully expecting of some dramatic rebounds.

L1: strong buy, untrend plays, may hold. L2: rebound-buy, only for a quick profit.

1. AEO: speculative L2, entry around 24 or as low as possible, IT=27, make sure you have a risk/reward ratio of 1:6 or better.

2. AMD: L2 on bottom, entry zone=13-13.71, stop just below 13, IT=15.5

3. ANN: L2 on bottom, entry zone=32.25-33, IT=34, stop just below 32, make sure you have a risk/reward ratio of 1:6 or better.

4. BIDU: L1, entry zone 200-204, stop just below 200, IT=215.

5. BRCM: L1, entry zone=32-32.3, stop just below 32, IT=34.5

6. COH: report Q2 on July 31, consider long near 42 if it spikes down initially, IT=48.5.

7. COST: L1, entry zone=57.25-58.5, stop just below 57, IT=61.

8. CTRP: L1, entry zone=72-74, IT=82

9. DVN: S1 on top if it spikes towards 78, stop just above 78.5, IT=71

10. FNM: S1 on top if it spikes towards 63, stop just above, IT=55.

11. HD: L2, entry zone 35.3-36.4, stop just below 35, IT=39.

12. ILMN: L1, entry zone=42.5-45, stop just below 42.

13. LRCX: L1, entry zone 55-56.1, stop just below 55, IT=60

14. MRVL: L1 if it spikes towards 18, stop just below 18, IT=20.

15. RACK: L1, entry zone=11.25-12, closing stop<11.25, intra-day stop just below 11, IT=14.

16. SBUX: L1, entry zone=25-25.61, stop just below 25.75, IT=28.5

17. SINA: L1, entry zone40-41.1, stop just below 40, IT=46. (Q2 on Aug. 7)

18. SNDA: speculative L2 if it spikes towards 27 with a stop just below, IT=30.

19. STP: L1 if it spikes towards 37, stop just below 36.5, IT=42.

20. X: S1 on top if it rebounds to EMA50 around 109, stop just above 110, IT=92