Swing Calls-- Aug. 25, 2007

Have not posted for 4 weeks because I have been phasing out the daily trading activities. However, I did make several trades in this period with a net profit around $1800. What four week we have had, speaking of the roller-coast ride! The only bid mistake I made during this 4-week stretch was on the Aug. 16 capitulation day, I actually fully anticipated the action, but I was too conservative nipping from the long side because I was hoping for a larger intra-day decline. Oh well…

On the market:

A string of low-volume rebound days brought an up week for the market. On the weekly charts, all major indices posted a nice bullish engulfing candle following a near-hammer candle, with diminishing downward momentum. On the daily charts, all major indices have moved up steadily during the week and closed around or just above the EMA50 levels. Most of indicators point out further gains in the coming days, and it is likely that the major indices will attempt to test the rebound highs on Aug. 8, or the following key resistance zones:

NASDAQ: 2630-2640
SP500: 1490-1504.
DOW: 13700—13780.

The fact that the market has been moving up on significantly low volume clearly suggest the lack of institutional buying and the lingering of fear, if such pattern persists in the next week, I would expect the major indices fail their first test of the aforementioned key resistance zone.

On the overall trading strategies for the coming weeks:

Let me make one thing clear: the multi-month uptrend for the market has been challenged and so far remains intact, which implies that it remains a possibility that the market may test or even set new highs. However, given the fact that the mortgage problem is actually still in the early stage, I suspect that the market will test their lows on Aug. 16 before testing the highs, and that it is a real possibility the market is yet to find the true bottom.

With those thoughts in mind, I think the most sound swing-trade strategy for the coming days is to short the ongoing rebound when the market approaches the resistance zones, the key here is to be patient about the setup, entering only when the daily charts show clear signs of overbought diminishing upward momentum AND 30/60 min charts show confirmed reversal signs. Also, use tight stops just above those resistance zones. It is also a good idea to scale-in such short setup, with the bulk of short-position added ONLY when the reversal is confirmed on majority of indicators on the daily charts.

Trading from the long side is doable, but should restrict to day-trading or very short swing trade (2-3 days), and should enter on the dips instead of “break-outs” to minimize the risk/reward ratios.

Trading Calls:

1. AAPL: Swing S2, entry zone1=just below 138 with a stop just above 138; entry zone2=just below 145 with a stop just above 145. IT=128.
2. ADSK: speculative Swing S3 on top if it spikes towards 48 with a stop just above 48.2, IT=42.
3. AKAM: Swing S1, entry zone=35-36, stop just above 36, IT=30.
4. ANF: Swing S3, entry zone=82.9-84.9, stop just above 85, IT=75.
5. ANN: Swing S3, entry zone=34.5-35.4(EMA200), stop just above 36, IT=30.5.
6. ARO: Swing S3, enter if it spikes towards 25, stop just above 25.5 (EMA50), EMA200=25.2, IT=22.
7. BIDU: speculative swing S3 on top if it spikes towards 215, closing stop just above 215, and intra-day stop just above 220.
8. COH: counter-trend-trading between 42 and 47 use very tight stop, don’t trade the mid-range.
9. DVN: Counter-trend trading between 72.5 and 80 use tight stops, don’t trade the mid-range.
10. FFIV: Swing S2 on top if it spikes towards 40 with stop just above 40.5, IT=37.
11. GOOG: Swing S2 on top if it spikes towards 525, with a stop just above 527, IT=503.
12. ILMN: L1 on bottom if it spikes towards EMA50=43.7, CS just below EMA50, IDS just below 43, IT=49.
13. JCG: Swing S3 on top if it spikes towards 54/57 use very tight stops, IT=48.
14. NTAP: Swing S2 on top if it spikes towards 30, with stop just above 30.5, IT=26.
15. SINA: Swing S2, entry zone=43-44.4, stop just above 44.5, IT=39.
16. SONS: S1 on top if it spikes toward 6.5 with a stop just above 6.5, IT=5.8.
17. STP: S1 on top if it spikes towards 40 with a stop just above, IT=34.
18. TIF: S1 on top, entry zone=48.5-50, stop just above 50.
19. SU: S3 on top, entry zone=91-93, stop just above 93, IT=85.