Saturday, October 20, 2007

Trading Calls-- Oct. 22-26, 2007

On last week's trading:

My winning streak ended at 13 sessions on Friday when I was controlled by intense emotions and committed despicable mental mistakes one after another. That was on top of the numerous terrible trades earlier in the week, mostly the same old same stories in which I failed to capture majority of profitable movement. I am really sicked of all those mistakes and I am disgusted that I keep repeating them. I must do something here! Starting next week, I will purposely reduce my trading size to see if that would help me to combat those psychological issues. I also need to remind myself to be realistic, not greedy, and most of all, to stay cool-minded and disciplined.

On the market:

The volatile week ended with a big sell-off on the Friday. The developing weakness in the market probably can be attributed to the not-so-bright Q3 reports from key industrial and financial companies, which explains why both DOW and SP500 are notably weaker than NASDAQ. Tech sector overall remains relatively strong, but the Q3 reports are not nearly one-sided bullish like they had been in previous quarters.

On the weekly charts, both SP500 and DOW turn slightly bearish while NASDAQ remains slightly bullish. It is worth to point out that a weekly bearish-engulfing Marubozu candle has formed for all three indices, the size of which is pretty close to that of the July 27 one. The overwhelming bearish candle formation will prevent any sustainable rebound in early part of the next week if not outright leads to more losses.

On the daily charts, all indicies are clearly bearish, highlighted by the extremely bearish Marubozu candles on the Friday, with both SP500 and DOW slice through the EMA50. While the near-term bearishness is evident and short-the-rebound seems a sound strategy for the next week, it should be noted that all indices are approaching to some very strong support levels: NASDAQ-2690-2725, SP500-1480-1500, DOW-13200-13520, and it is conceivable that some rebound from these levels will happen.

Another bearish note: both SP-mid cap and Russell2000 seem to have formed solid triple/double tops.

One other noticeable sign that the market is turning bearish is the red-hot Chinese ADRs have started a serious retreat. It is too bad that Ameritrade does not have any shares for short for almost every one of them.

For next week's trading:

Once again, I will focus on Q3 earning plays. I will also pay attention to any shortable rebounds using key resistance levels as stop references. Due to the increasing volatility, I will be cautious about swing trades, long or short.

Trading Calls

1. ANF: clearly range-bound and weekly chart favors long if it approaches the lower boundary of the trading range.
** Swing-L2 if it spikes towards 71-72, with a stop just below 71, IT=79.

2. COST: weekly chart bullish, daily chart neutral.
** Swing/DT L1 if it spikes towards 62, stop just below 62, IT=65.

3. CRM: weekly bullish, daily bearish.
** Swing L2 if it spikes towards 49/46, stop when closes below those levels. IT=53.5.

4. CTRP: both weekly and daily charts bullish.
** Keep close eyes on the 54 resistance and 54.71 all time high, L1 if it breaks such levels with a closing stop just below 54.
** DT L1 if it spikes down towards 48/46 using tight stops.

5. DRYS (focus stock): both weekly and daily charts bullish, but more pullbacks are possible due to the huge gains in recent days.
** DT S1 if it spikes towards 123, stop just above, IT=120
** DT S2 if it spikes towards 117/118, stop just above 120, IT=111
** DT Swing L2 if it spikes towards 110/111, stop just below 110, IT=117
** DT Swing L1 if it spikes towards 99/100, stop just below 99, IT=110.

6. ISRG: bullish all around, blow-off Q3.
** DT Swing L1, key support around 263 and 266, IT=280.

7. RIMM: bullish all around.
** DT/swing L1 if it spikes towards 100/105.

8. SHLD: both weekly/daily charts bearish, but the strong buys occured a couple of weeks ago may have some implications here.
** Speculative L3 if it spikes to 128/123 with tight stops, IT=136.

9. SNDK: both weekly/daily charts very bearish. lower Q4 outlook will depress bulls for a while.
** DT/Swing S1 on rebound if it spikes towards 45.5/47, IT=41.5.

10. SONS: weekly chart turning bullish, daily chart more bullish
** DT/Swing L2 if it spikes towards EMA50=6.3, with a tight stop just below, IT=6.5/7.

11. TBSI: weekly very bullish, daily bullish but may be more pullbacks.
** Swing/DT L1 if it spikes towards 61 or MA10, use tight stops if DT, IT=67/70

12. UA: both weekly/daily very bearish,
** Swing/DT S1 if it spikes toward 57-58, stop just above 58. IT=49/50.

13. WFMI: weekly remains bullish, pullbacks entering oversold region.
** Swing/DT L1 if it spikes towards 46-46.5, stop just below 46, IT=48.

Earning Plays:


AAPL: both weekly/daily charts quite bullish, market is obviously expecting a very positive report, a negative surprise will send it down to 153/155 region for sure.
Key to look from the report: rev 6.05B, earning 85cent, Mac 2.2 M.

TXN: both weekly/daily charts turning bearish.
Key S/R: around 33, around 31.8, 34.8-35.5, 37.37.2.


AMZN: both weekly/daily charts bullish but bearish divergence developing.
Key S/R: around 70, 74, 88, 94, 96.73.

COH: both weekly/daily clearly bearish and on the edge of breaking down. My gut feeling is the Q3 report will be strong as usual, but considering market reactions to its Q2 report and the macro consumer discretionary spending conditions, it seems a good play to short any QUICK rebound.
Key S/R: near 40, around 43, at 46!

ILMN: bullish all around. This is a true growth story. My gut feeling is that if there is any weakness in its Q3 report, it should be treaded as a buying opp for swing trades.
Key S/R: around 49.6, around 51, 54, 63.38.


AKAM: both weekly/daily charts show signs of turn around of the down trend.
Key S/R: 27.75, around 30, around 33, 35, 38-39.5, around 43.

AFFX: both weekly/daily bullish, but overall range-bound. The key question about its business is if ILMN is chipping away its business.
Key S/R: 23.85-25, around 27, around 28.7, around 31, 32.


BIDU: bullish all around. A stellar Q3 report is expected and probably baked in the the price.
Key S/R: around 270, around 294, around 300, around 225, around 330, 359.45.

FFIV: weekly just turned bullish, daily more bullish.
Key S/R: around 36.5, around 40,around 43, 47.

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