Trading Calls-- Oct. 13, 2007

On recent trading:

Even though I am in one of the longest winning streak right now, 9 days and counting, and made some trades that I am proud of, my woeful incapability of letting the winners run continues. The problem has cost me over $25k of uncaptured profits in the past 2 weeks along, and it becomes routine that everyday I would have at least 1-2 trades which had a run for at least $1500 with me only pocketing 10% or less of the move. I must focus on solving this problem or at least making some improvement. I realize that the main reason for this problem is psychological, namely, the fear of losing profit when above water. One thing I will stick to next week is using smaller trading size which hopefully will allow me to let the winners run a bit longer.

On the market:

As expect, the bulls continues their parade, and fever and a sense of invincibility are growing, just look at the parabolic movement of many Chinese ADRs. Technically, charts in almost every time frame continue to be very bullish. However, aside from the fact that the market have been really stretched, there are some bearish divergences. The most notable are the OBV on daily charts and MACD on 60 min charts from all three major indices. I also find the dramatic top-reversal sell off occurred this Thursday PM very intriguing: the extreme volumes on the downside suggest that big boys start to get nervous about their paper-profits. As the market continues to push higher next week, I suspect that such dramatic sell-off may well happen again if any big names release disappointing Q3 reports. At this stage, all big sell-offs are buying opportunities, just like what happened last Friday. However, if this high-volume drops become frequent, it may help the topping process.

On next week's trading

I will focus primarily on day-trading even though the setups are mostly based on the swing strategy. I will also focus on the post-earning reports plays on the big tech companies.


Trading Calls

1. AAPL: overall quite bullish, but I sense a sense of caution/nervous here.
*** DT only using the following key S/R: 153, 159.5, 163.5, 166.6, 167.5; 170.5, 171.88.

2. ADBE: Swing only, entry zone=43-45.1, CS just below 44, IDS below 43, IT=46.

3. AKAM: both daily and weekly charts offer signs of turnaround of recent down-trend, but not all confirmation is in, expect more volatile moves in the coming days.
*** DT or overnight play, CTT between 33/34 and 39.5/42

3. AKS: last week's labor settlement news propelled it to new high, and charts are mostly bullish, there are some bearish divergence here and there. Considering that the steel sector has been performing far worse, I suspect it will pullback some bit.
** speculative swing S3: entry zone=50-51, stop just above 51, IT=45

4. AMZN: weekly chart bullish with some divergence, daily chart turn bearish, 30/60 min charts suggest more rebound.
** speculative S3 on top if it spikes towards 94 with stop just above, IT=89.

5. BIDU: weekly/daily charts overall bullish, but sells become visible near highs, I doubt it will make new high before Q3 report on Oct. 25.
** DT-CTT when it approaches the following key S/R: 294, 300, 330, 334, 345/346.

6. COH: weekly/daily bearish, 30/60 min charts bearish but oversold
** Swing S1, entry zone=45-46, stop just above 46; IT=42
** Speculative DT-L2 if it spikes towards 40/41, stop just below 40.

7. DRYS: bullish all around, but sellers in close-watch here
** DT-L1 if it breaks 123, stop just below 121, IT=130?
** DT or Swing L2 if it spikes down todays 114/112 use tight stops, IT=120.

8. JCG: still in confirmed down trend, but shows signs of bottom around 43.
** DT or swing L2 if it spikes down towards 42/43, IT=46
** DT S2 if it spikes towards 50/52 use tight stops.

9. LDK: bearishness persists due to distrust of the management, but the raise of its earning guidance will bring bargain-hunting buyers. Be quick to take profits.
** DT-S2 if it spikes toward 49 or 52 use tight stops
** DT-L2 if it spikes toward key support at 33.5, 37, 40.

10. MRVL: weekly turning bullish, daily more bullish, looks like it is ready to challenge EMA200=17.6 and key resistances at 18/18.25.
** Swing L1, entry zone=16.8-17.02, stop just below 16.7, IT=18.

11. RIMM: bullish but stalled.
** DT-CTT when it approaches key S/R: 105, 107.5, 114, 118.8, tight stops.

12. SHLD: neutral at both weekly/daily charts, mildly bearish on 30/60 charts
** DT-L2 if it spikes towards 136 or 139 use tight stops
** DT or Swing S2 if it spikes towards 149 or 153 use tight stops, IT=145.

13. TIF: weekly mildly bullish, daily turns bearish and a hint of top, 30/60 min charts bearish but points to a oversold rebound.
** SW-S1, entry zone=55-56.7, stop just above 57.4, IT=52.

14. UA: weekly chart is about the confirm the reversal of uptrend, but daily and 30/60 min charts point out further rebound.
** DT-S2 if it spikes towards key resistances around 62, 63, 65.6

15. BA: the delay of new jets delivery probably will only get worse. weekly/daily bearish with signs of double top formation; 30/60 min also bearish
** DT or Swing S2, entry zone=97.5-99, stop just above 100. IT=95/94,


Earning play focus list:

1. SNDK: increasing bearish on both weekly/daily charts, 30/60 min also very bearish, but oversold. Looks like it will have a bad Q report.
** Q3 report: Oct. 18 AH
** KEY S/R: 36, around 40, around 42, around 45, 50, 55, 58.5

2. GOOG:very bullish all around, but will it miss earning for the second time in a roll?
** Q3 report: OCT 18 AH
** Key S/R: around 520, around 560, around 585,around 610.

3. EBAY: bullish all around,
** Q3 report: Oct 17 AH
** Key S/R: around 33.75, around 35; around 36.5, around 38.5,

4. YHOO: weekly bullish, daily stalled
** Q3 report: Oct. 16 AH
** Key S/R: around 23, 24.5, 27, 27.37, around 28.5, 31, 32, 33.61.

5. INTC: weekly diminishing bullishness, daily slightly bearish
** Q3 report: Oct 16 AH
** Key S/R: around 22, around 23.5, around 24.5, around 24,around 26.5,27.71

I will also keep an eye on the following Q3 report:

Mon: EDU (BMO)
Tues: IBM,
Thurs: NOK, NUE, XLNX

Note on the China ADRs

Many of these Chinese ADRS have doubled/quadrupled their prices in the past 2-6 weeks featuring parabolic movement, high volumes and extreme volatilities. In my view, this is one of the sign the the current bull market has entered the last innings as speculative and momentum traders become reckless. I don't think those gains can be sustained both on technical and fundamental basis. I would love to start building some initial small short positions in those names, unfortunately, Ameritrade does not have shares for short for almost all those stocks, another sign?