Weekly Swing Trading Calls--Dec. 10-14, 2007

On the market – Searching for the golden compass

With now the US government joining the subprime mess rescue forces, bulls continued their march and closed week with all major indices gaining 1.6% or more and reclaimed some key technical levels along the way.

Weekly charts for all 3 indices are mildly bullish with indicators point out to further up side move; daily charts are even more bullish as they charged into overbought region on increasing positive momentum. The only thing that bears may take into comfort is that the rally came in on significantly reduced volumes, signaling that many major players are not ready to put on their bull costume and join the parade, which makes perfect sense as the market prepares for next Tues FOMC rate decision.

The market has now priced in all the good news: US Government is on their side, the job growth is not too bad which may help to avoid recession, and FED will cut 25 bp for sure. So what else is left in bulls' tank? A 50 bp cut? possible but less likely with the Nov. employment report we had. Santa? As reliable as the Santa rally has been, without a 50 bp cut, will the mighty Santa be able to help bulls to challenge the double-top formations of almost all 3 indices? And in case the market does get the 50 bp cut, how long the fuel will last?

I think market's reaction to FOMC decision next week will be a telltale sign of the market direction for the coming months. In my view, if the market sell-off hard and falls once again below the key technical levels (SP500 around 1490 and NASDAQ around 2630), a retest of the recent lows will be sure on the way. If the market rallies on light volumes, I myself will start to build up short positions, with some patience and all the respect to the Santa, and get ready for a brand new year!

The bottom line: generally speaking, at this stage of bull cycle, easy money on the long side has been made, but bears are still looking for the gold compass to find out if their time is finally coming.


Weekly Trading Calls

I am going to be brief as I try to spend some time to back-testing some trading strategies using the latest of version of the StrategyDesk.
Many trading calls (notice the word spikes) only apply when the market moves violently following FOMC decision.


1.AAPL – the forbidden fruit, for bears!
Weekly chart: bullish all around, now looking at it, in the past 3 months, it only had 2 losing week!
Daily: solidly broke into new high on increasing momentum; entering overbought region.
60 min: staying in overbought and bulls not worried about..
** SW L1 if it spikes towards key support at 180, 175, and 170, IT=200.


2.COH – current shorted at 37.38
Weekly: the 3 week rebound came to the end, stochastic no long oversold, negative momentum continue to diminish, still solid down trend
Daily: mildly bearish, both volume and momentum are contracting, sellers evident just below MA50.
** for current position, IDS around 38.5, CS just above 38 with a bullish candle, IT=32
** SW S2 if it spikes up on FOMC decision, entry zone 40.8-44, stop just above 44, IT=38.


3.DHI: bottomed out, for now
Weekly: solid up week with solid bullish candle, MACD histogram confirming trend reversal, stochastic points further oversold rebound
Daily: closed above MA50 for the first time since June, bullish bow-tie formation developing
** SW L1, entry zone 12-12.52, IT=15, stop just below 11.7.

4.DVN:
Weekly: the bullish engulfing candle formation signals a typical new highpullbackresuming primary up trend setup
Daily: bull rip through key 84 resistance and closed week above MA50.
** SW L1 if it spikes towards key support near 80 and 84 use tight stops, IT=91

5.DRYS:
** CTT between 81 and 100 using tight stops, bearish bias, keep an eye on MA50, don’t trade the middle range.

6.EXM:
** SW S2 if it spikes towards 59, IDS just above 50, CS=MA50.
** SW L3 if it spikes towards key support near 40 and 44, using tight stops, IT=50

7.FSLR:
There are some bearish divergences, but it is still a solid bullish case no matter how do you look at it.
** SW L2 if it spikes towards key support at 200 and 210 use tight stops, IT=235.
** speculative S3 if it spikes towards 280 with a tight stop, IT=230,

8.JCG:
Bullish all around after a much-better-than-expected earning report, but as a part of the retailer sector, there is a ceiling under current macro-eco conditions.
** SW S3, entry zone=53.8-56.5, stop just above 57, IT=48.
** SW L3 if it spikes towards 47, stop just below 46, IT=52

9.LDK: bulls finally came through!
Weekly: super bullish engulfing candle, stochastic ready to rebound out of the deeply-oversold area.
Daily: EMA10/10/30 bow tie formation developing, closed above MA50
** DT L1 if it spikes towards 40, stop just below, IT=45
** SW L1 if it spikes towards 37, stop just below 36, IT=50.

10.NVDA:
** Currently shorted at 34.38, IDS just above 35, CS above MA50=34.7, IT=31.


11.PFCB: can you say bottom?
Weekly: still a clear-cut bearish case, stochastic suggests further rebound out of the deeply oversold territory.
Daily: 6 consecutive up days and closed just above MA50
** with a down trend like this one, I just don’t trust the true bottom can be formed without re-testing. SW S2 if it spikes towards 30, stop just above 30, IT=26.

12.RIMM: trend reversal developing?
Weekly: MACD histogram crossed below zero line for the first time since late May, signaling the momentum switch which often is followed by trend reversal. Most indicators point to further downside movement. Notice that unlike other big tech stocks such as AAPL, its only had one up week since late Oct, and all down weeks came on good volumes.
Daily: bearish bow-tie formation developing, support near 100 very strong.
** SW S1 if it spikes towards 118, stop just above 120, IT=100.
** DT/SW S1 if it breaks 98, CS just above 100, IDS just above previous day high, consider adding more position if it breaks 96, IT=86,

13.SLB:
Weekly: it looks like a resuming primary trend setup, but other indicators may yet to run the bearish course
Daily: 7 straight up days stalled last Friday and closed the week just below MA50 near 99, momentum still on the rise but stochastic is in the overbought area.
** DT S2 with a stop just above 99.11, IT=95
** SW L2 if it spikes towards 91, stop just below 90, IT=100
** SW L2 if it breaks 99, CS near 97, IT=110.

14.STP: refer to FSLR
** SW L1 if it spikes towards 72, stop just below 69, IT=98.

15. FNM:
** SW S1, entry zone=42-48, IDS just above 50, CS above 48, IT=33.

16. FRE:
** SW S1, entry zone=41.8-46, stop just above 47, IT=30