Saturday, November 10, 2007

Weekly Trading Calls -- Nov. 12-16, 2007

On the Market:

For the first time in nearly three months, bears took solid control and pounded bulls to the submission. Another round of confession by financial heavyweights pushed the major indices through the key support levels early in the week which emboldened the bears to launch an all-out attack on the tech bulls who quickly entered a panic retreat mode. For the week, all major indices suffered huge loss with NASDAQ led way for a 6.5% drop.

On the weekly charts, the bearish-engulfing Marubozu candle of Oct. 14 week finally got a big follow-through, especially in NASDAQ which posted an ominous evening star formation. The momentum is now solidly on the negative side and on the rise for both SP500 and DOW. The bearish candle formations and many other indicators clearly point out the likely further downside movement in the coming days.

On the daily charts, things are even more bearish as both SP500/DOW closed below MA200 while NASDAQ firmly below EMA50. Even though the 3-day sell-off pushed all indicies near oversold region, the high volumes and increasing negative momentum suggest more losses on the way. As the major indices seem to on its way to test their early Aug. lows, there are some key support levels that are critical to bulls: NASDAQ-2490 to 2520, around 2580; SP500-around 1450 and 1430; DOW-around 13000 and 12850.

The big question right now is if the current huge decline is a repeat of the late July/early Aug epic. and thus represents a perfect buy-on-dip opportunity for the ever so trustful Santa rally OR this is the beginning of the end of the multi-year up trend? The problem for the bearish case is that as long as the major indices succeed the test of previous low, bulls are far from done. The problem for the bullish case is that it was Fed's rate cuts stop carnage and drove market higher in Aug. now with the Fed already cut twice without a lot of room to go further, what factors are going to halt and reverse the powerful free-fall? Right now, I am leaning to the bearish case but I will keep an open mind. I don't expect a lot of subprime headlines next week as the financial stocks show signs of stabilization, and I will pay close attention to retail sale data and find out if retail sector can rebound a bit here.

On the Trading:

After several key mental mistakes that burnt big holes in my account, I finally came to face the reality and did something I should've done several years ago by implementing an external supervision mechanism that is aimed to stop any train-wreck acts in track. Things are working fine so far as I posted a 20% again for the week. However, I still need to be more realistic about the profit expectation and more awareness and control in risks. For the next few weeks, I will set a daily target of 1% gain, and weekly at 6%.

Given the current market conditions, I will try to avoid swing long trades while actively look for swing short setups. I will continue to focus on day-trading from both side and take advantage of the volatility.

Weekly Trading Calls:

1. AAPL: bears took out their multi-month frustration on bulls the big way. Weekly has a evening star candle formation with other indicators turning bearish, but it is still a clear uptrend stock. Daily seems to form a towering-top formation, closed weekly right at the EMA50, but with all the things running for bears, further slide is likely; 30/60 min charts bearish but in oversold area.
** DT-S1 if it approaches key resistances at 168, 174/175 or 179/180 with a stop just above those levels.
** DT-L2 if it spikes towards 153 with a stop just below.
** SW-L1, entry zone=145-149, stop just below 145, IT=153.

2. AKAM: Low volume and mild retreat in the midst of tech melt-down. Weekly: trend-reversal still intact; Daily: first test of EMA50 was successful but it may drop more if NASDAQ accelerates to the downside.
** SW-L1, entry zone=32-33.11, IDS just below 31.7, CS just below 33, IT=40.

3. AMZN: Weekly: the risking negative momentum is on the verge of confirming a trend reversal; Daily: Friday's broke-down spells more losses for bulls; 30/60 min chart: bearish but in oversold area.
** DT/SW S1 on top if it spikes towards 83/84 with a stop just above 84;
** DT L2 if it spikes towards 70/71 with a stop just below 70,

4. BIDU (focus stock): the unrelenting bulls along with momo traders got crushed. Weekly: still a clear up trend but the bearish engulfing candle is ominous for bulls; Daily: more bearish with negative momentum on the rise; 30/60 min: bearish with signs of stabilization.
** DT-S2 if it spikes towards 360 with a stop just above, IT=330.
** SW-S1 if it spikes towards 400 with a stop just above 410, IT=360
** DT-L2 if it spikes towards 300, 315, 324 use tight stops.

5. CROX: Weekly: bearish with negative momentum on the rise; Daily: bearish, oversold and Friday's action show signs of temporary bottom; 30/60 min: mildly bullish
** DT-L2 if it spikes towards 35 with a stop just below 34.8, IT=40
** DT-S1 if it spikes towards 44 with a stop just above, IT=40,
** SW-S1 if it spikes towards 46/47 with a stop just above 48, IT=40.

6. CTRP: earning report drove it to new high. Weekly: bullish all around; Daily: bullish.
** DT L1 if it spikes towards 55.55 with a tight stop, IT=59
** DT L1 if it spikes towards 54 with a stop just below, IT=56
** SW L1 if it spikes towards 51, stop just below 50, IT=54.

7. DHI: bearish all around, BUT bullish divergences developing on both daily/weekly charts; 30/60 min in overbought region. Is it time to buy the bottom here?
** SW speculative L3, entry zone=11.41-11.81, IDS just below 11, IT=13.4

8. DRYS (focus stock, currently long near 98 during the closing moment on Friday):
Stellar earning report failed to buoyant the stock in a sea of red. Weekly: diminishing up momentum with indicators favor more down side move; Daily: closed below MA50 for the first time since Aug, negative momentum on the rise, but candle formations and volumes in the last two sessions show signs of stabilization; 30/60 min: in oversold region with signs of rebounding and temporary bottom at 95. I closely watched level II and tape last Friday, and there were signs of big boys buying at the current level; it would have closed above 99 had market not sold off that hard in the last 30 min, and bulls should take into comfort that even with such sell-off it closed above its open. I suspect that it will rebound as long as the BDI indice continues to hold/rise from the current level. I shorted it on the closing moments on the Friday before, resulting in a 7+ points gain, and now looking for a sizable gain from the long side.
** For the holding position: stop if breaks 95, if it fails to break 100 on Monday, consider exit at least half of the position, if it breaks 100, it will be almost certain to test 105 if not 108.
** DT S2 if it spikes towards 105, 108, 112, and 120 with tight stops.
** DT S3 if it breaks 95, but must take quick profit, IT=92, stop just above 96.
** DT L3 if it spikes towards 90, with a stop just below, IT=95.

9. GOOG: even strongest bulls cannot withstand the furor of the long frustrated bears. Weekly: clearly up trend but a bearish-engulfing candle on all-time high volume could spell more pullback; Daily: bearish with increasing negative momentum;
** DT L2 if it spikes towards 640, stop just below 636, IT=660
** SW L2,entry zone=600-611, stop just below 600, IT=660.

10. GRMN: even the best GPS failed to navigate it out of a sea of trouble. Weekly: just confirmed the trend reversal, increasing negative momentum points to more loss; Daily: bearish and oversold, stabilized at EMA200,
** DT SW S1 if it spikes towards 95 with a tight stop, IT=83 for SW, 93 for DT.

11. ILMN: Weekly: diminishing up momentum but still clear up trend; Daily: neutral is bullish considering the market conditions.
** DT L1 if it spikes towards 51, stop just below, IT=55
** SW L1, entry zone=46-49.1, IT=55, CS just below 46.

12. ISRG: No bulls can escape bears wrath! Weekly: 2nd down week in a roll, still a very clear bullish case; Daily: increasing negative momentum spells more decline if the major indices fall further.
** SW L1, entry zone 265-271, stop just below 265, IT=300.

13. PFCB: bullish divergence on daily chart plus the modest inside buys stopped bleeding for now, is it time to load it up?
** SW speculative L3, entry zone 27-28, stop just below 27, IT=30.

14. RIMM: see comments on GOOG and AAPL.
** DT L1 if it spikes towards 100 or 106 with tight stops., IT=115.
** SW L1, entry zone 93-95, IT=118

15. SOHU: the post-earning euphoria drown in the red sea. Weekly: bearish-engulfing candle but everything else still bullish; Daily: parabolic bull run squashed by bears but on lighter volumes.
** DT L1 if it spikes towards 50, stop just below, IT=57.
** SW-L1, entry zone=45-46.11, IT=57,

16. SONS: the better than expected earning report powered it up in a falling world. Weekly: trend-reversal confirmed with increasing bullish momentum; mildly bullish but diminishing up momentum; 30/60 min: in overbought region and signs of pullback.
** DT SW L1, entry zone=7-7.21, stop just below 7 for DT, IT=8

17. VMW: the momo traders are no match for pissed-off bears. and I am still pissed off that Ameritrade did not have any shares for short when I was frantically trying it as it was breaking 105, and they still don't have any now. Anyone who has better experiences with different brokerage? Weekly: you cannot get a better morning star formation than this one; Daily: a free-fall with increasing negative momentum.
** DT-S1 if it spikes towards 103, stop just above 105, IT=96,
** SW-S1, entry zone=104-109,stop just above 110, IT=96

18. WFMI: Weekly: momentum turning bearish, huge bearish candle; Daily: broken down below both EMA50/200, negative momentum on the rise.
** DT SW S1 if it spikes towards 46, stop just above, IT=44.5
** SW S1, entry zone 45.8-47, stop just above 47, IT=42
** DT L1 if it spikes towards 40, stop just below, IT=42.

19. WLT:
that good earning report sure has a staying power. Weekly: bullish on increasing momentum; Daily: bullish, a bit overbought, but bulls not backing down.
** SW L1, entry zone=32.5-33.11, stop just below 32, IT=40
** DT L1 if it spikes towards 35, stop just below 34.6, IT=36.

Earning Watch:

1. SINA: report 11/14 AH, will it enjoy a post-earning run like SOHU? overall bullish trend, looking for small entry near 47 before earning. Key level: 42, around 46-47,around 50.2, 55-56, 59.

2. STP: report 11/15 BMO, will it have a report like FSLR? Key levels: around 44,48, 54.8, 62, 75.64.


lumberman said...

I enjoyed reading this flying wabbit is this a weekly article?

flyingwabbit said...

Yes, I try to post the weekly analysis and trading calls every weekend, mostly on Saturdays. Thanks for your kind words.

lumberman said...

Thanks flyingwabbit,I have your page bookmarked,I hope it refreshes ok,is this the only place to look?

Anonymous said...

hey your blog is helpful, curious on your trading background and successes...thx.

Anonymous said...

very good analysis/calls, please keep it up!