Saturday, October 27, 2007

Trading Calls-- Oct. 29-Nov. 2, 2007

I am still struggling to correct a couple of key issues in my trading, and if anything, it has become crystal clear that if I ever hope for a successful trading career, I must find a way to completely remove those key mistakes from my system.

On the market:

I must admit that overall the major indices in the past week were much stronger than I had expected. The extremely bearish candle formations of the week before were substantially mitigated for DOW and SP500, and in the case of NASDAQ, almost fully invalidated. On the weekly charts, it seems that NASDAQ is ready to challenge its recent high at 2834, and DOW/SP500 in similar albeit a bit weaker positions. On daily charts, it is worth to point out that the major indices found very strong support from their key levels, which is highlighted by the 2 sessions where the bulls staged tremendous comeback from the big sell-offs. The bullishness on the daily charts is very clear.

Besides the continuous earning report flood, next week features two key events: the FOMC decision on Weds and the Oct. employment report on Fri. Right now the market fully expects a .25% rate cut, while I expect they will get it, I am not sure if a less than .5% cut will disappoint bulls.

A couple of observations on the earning season so far: first, most reports from big industrial, financial and other non-tech companies have been overall disappointing; second, many tech sector names (except the semis) have had better-than-expected earnings and outlook, but in many cases, there are signs of distributions in the post-earning rally (just look at the bearish candle of MSFT on the Friday).

I have to say that I am continuously impressed or frankly baffled by the fact that the market has kept rising despite of unfavorable news from all fronts, and I don't really know what's the driving force behind it, liquidity, momo-traders, frustrated shorts?

On next week's trading

I will continue focus on day-trading, and will refrain from shorting especially before the FOMC decision. Due to the bullish bias early next week, I might also consider break-out setups, but will be quick to take profits.

Trading calls:

1. AAPL: weekly chart very bullish, but daily chart show signs of distributions ever since the earning report; 60/30 min charts modestly bearish. I feel that it may fill the gap in the coming days.
** S2-DT: if the opening signal confirms, use open and key resistances around 186 and 189 as stop references. IT=183.
** L2-CTT: if it spikes towards key support levels at 175, 179, or even around 182.8.

2. AMAM: weekly chart just confirmed the turn-around of the down trend; daily chart bullish; 30/60 min in overbought area and suggests some pullback.
** L1-DT or Swing: if it spikes towards 35.5 or 37, IT=41.

3. AMZN: weekly chart mildly bullish, daily chart mildly bearish; 30/60 min charts bullish though in overbought area.
** DT-CTT if it spikes towards key S/R at: around 88, 92, 94 use tight stops.

4. BIDU: both weekly and daily charts are bullish though with some bearish divergence developing.
** DT-L2: if it breaks 360, or spikes towards 300, 323, 330.

5. BRCM: the big post-earning drop turns every chart bearish.
** DT/Swing S1 if it spikes towards EMA50 (currently around 37) with a stop just above 37, IT=32.

6. COH: the post-earning drop signals a new around of down trend. Weekly chart shows increasing downside momentum; daily chart bearish but in extremely oversold conditions; 30/60 min charts point out more rebound.
** Swing S1, entry zone=37-39 and 40-41, IT=30.

7. CTRP: weekly chart bullish, daily mildly bullish. 30/60 min charts show increasing bullish momentum but in overbought region. With its earning date around Nov. 7, looks like the pre-earning run is about to start.
** DT/SWing L1 if it breaks 54, IT=59. DT stop just below 53.5, Swing stop just below 51.

8. DRYS: Weekly chart bullish, daily chart shows the bull run stalled below last week's high around 130 with some bearish divergence.
** DT-L2 if it spikes towards 105, around 117, 120.
** DT-S3 if it spikes towards 129 with a stop just above.

9. ENER: weekly chart is on the verge of confirming the reversal of the down trend; daily chart; 30/60 min charts overall bullish but sellers are still evident.
** SW-L2 if it spikes towards 26.6, CS just below 26.3, IDS just below 26, IT=30.

10. FFIV: the post-earning drop turns every chart bearish.
** SW-S1 if it spikes towards 36/38 with closing stop just above, IT=32.
** DT-S1 if it spikes towards 38/39.5 use tight stops, IT=36.5

11. ILMN: ongoing pullback due to patent lawsuit and slightly less bullish outlook. The weekly chart is still bullish, the daily chart suggests more pullback likely; 30/60 min charts suggest rebound on the way.
** SW-L1 if it spikes towards 51 or 48/49 with CS just below 51 or 48, IT=54. However, it may stop here with low around 52.8, in which case, wait for bullish candle and diminishing selling pressure before making entry.

12. JCG: another broken down retailer. Weekly chart bearish, daily too but some rebound on the way.
** SW/DT S1 if it spikes towards 42, use EMA50 as stop references.

13. NUE: Weekly chart shows increasing bullish momentum; daily chart bullish; 30/60 min charts show overbought conditions with diminishing momentum.
** SW/DT L1 if it spikes towards 59 or 61 use a tight stop just below, IT=65.

14. TBSI: weekly chart bullish with increasing momentum; but daily chart shows diminishing momentum with possibility of more pullback.
** DT-L2 if it breaks 68, IT=70
** SW-L2 if it spikes towards 57 with CS just below it.

15. VRTX: Weekly chart confirmed trend-reversal with increasing bearish momentum; daily chart also bearish but more rebound possible; 30/60 min bearish.
** DT/SW S1 if it spikes towards 35 with stop just above EMA50=35.4
** DT/SW S2 whenever it breaks the previous day low, IT=29.

16. X: Weekly chart just confirmed trend-reversal; daily chart also bullish; 30/60 min charts show overbought conditions but momentum still strong
** DT L1 if if breaks 111.5, IT=114, stop just below 111.
** Swing L1 if it spikes towards 107 with CS just below it, IT=114.

Earning Watch:

1. CROX: Q3 report oct31-nov2?. weekly bullish but daily has bearish signs. KEY S/R: around 57, 60, around 63, 69, 72.4.

2. GRMN: Q3 Oct. 31 BMO, weekly bullish with diminishing momentum, daily bullish but stalled under recent high. KEY S/R: 95, 105, 109, around 116, 125.68

3. UA: Oct. 30 BMO. weekly show confirmed reversal of uptrend, daily chart shows quite strong rebound with more likely. Key S/R: 53, around 58, around 60, around 62, around 66.

4. LDK: Oct. 29? bearish all around. Key S/R: 22, around 28, around 35.6, around 41.5, around 46, 52.

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