Saturday, December 01, 2007

Weekly Swing Trading Calls--Dec. 3-7,

On the market--Deja Vu all over again?

For a while, it appeared that bears were in firm control as bulls failed to mount any kind of sustainable rebounds despite of the deeply-oversold conditions and the favorable seasonality. Then came the FEDs, who had a change of heart, not only signaled the rate cuts but even went on to say that the irresponsible risk-taking behaviors should not be punished if such punishment will cause recession. Emboldened bulls promptly went on all-out assault, leaving bears dazed and confused.

All major indices scored 2.5% or more gains this week. On weekly charts, all major indicies posted a bullish engulfing candle formation with indicators showing diminishing downside momentum. On the daily charts, all major indices reclaimed MA200 but failed the test of MA50; with indicators show increasing positive momentum.

With market now fully expecting a 25 bp rate cut or even 50 bp if next Friday's Nov. employment report comes in weaker than expected, is this going to be a carbon copy of last Aug's rally? My view? possible but unlikely. Why? First, unlike last Aug, the economy is in worse shape and may well get even worse before getting better; second, unlike last Aug, the room for further rate cuts is simply smaller. Furthermore, the unintended negative impact of rate cuts will not only increase but also show up faster in a material way.

With the above considerations, I view the ongoing rebound as a good opportunity for setting up swing short-on-top trades. The key, however, is patience. Aside from watching key resistance levels of major indices (DOW 13750, NASDAQ 2700-2720, SPY 1490-1500), it is crucial to wait for the rebound to run its course and use previous highs as stop references.

My feeling for the next week is that it is going to be a range-bound market until the Friday's employment report. With the rate cut expectation already baked in, bulls will be hard-pressed for more sizable gain, in fact, presence of sellers were evident this past Friday. Bears, on the other hand, will find it extremely difficult to regain the control as long as the possibility of 50 bp rate cute remaining in the card, let along the bullish seasonality. In a bigger picture, bears are probably holding on to the belief that FED is forced to cut rate because macro-economy outlook is much worse than most expected, and the market just cannot make new highs with such outlook hanging over head, let alone the unpredictable and potentially catastrophe negative impact of further rate cuts.

Count me in that camp, for now.

Weekly Trading Calls:

1. AAPL: Re-loading for the new highs?

Weekly: bullish but weaker momentum
Daily: bullish with increasing momentum, but sells start to come out as it approaches recent high.
60 min: declining out of overbought conditions is running its course.
** SW L2 if it spikes down towards 175/176, stop just below 175, IT=188
** SW L1 if it spikes towards 170, stop just below 169, IT=180

2. ARO: the end of rebound?
Weekly: bearish candle formation along stochastic poised for retreating from the over-bought conditions, but momentum is still positive and strong
Daily: top-looking candle formation, momentum shifting to the down side, indicators point to more slide.
** SW S2, entry zone=26.4-28, stop just above 28.5, IT=23

3. BIDU: onto new highs?
Weekly: evening star candle formation? indicators mostly bullish
Daily:increasing upside momentum, but sells came out after 6-straight up days;
60 min: mildly bearish as over-bought condition works it out.
** SW L2 if it spikes down towards 340/350, stop just below 340, IT=390.
** Speculative SW S3, entry zone=410-420, stop just above 430, IT=330

4. C: Dead cat bouncing?
Weekly: bullish engulfing candle, oversold and diminishing down side momentum
Daily: oversold rebound running the course on increasing positive momentum, but up volumes notably lighter.
** SW S1, entry zone=35.8-37.5, stop just above 38, IT=31

5. COF: what's in your wallet?

Weekly: in oversold region, spinning top candle formation, clear and confirmed down trend
Daily: versold rebound running the course on increasing positive momentum, but sellers are lining up.
60 min: neutral
** SW S2, entry zone=56-59, stop just above 60 or MA50(currently 61.7), IT=50

6. COH: luxury on the run?
Weekly: 3 straight up week on significantly lighter volumes, oversold rebound running the course, negative momentum continues to diminish, clear and confirmed downtrend.
Daily: un-abating positive momentum, approaching overbought, heavy resistance zone ahead.
60 min: mildly bullish.
** SW S1, entry zone=39-40.5, IDS just above 40.5, CS above MA50 with a bullish candle, IT=34.

7. DHI: is the bottom finally in?
Weekly: continuous bullish divergence, heading out of oversold region, again!
Daily: another oversold rebound on the way, but is this finally for real?
60 min: retreating from over-bought
** SW L1=2, entry zone 11-11.5, stop around 10.7, IT=13.5.
** SW DT L1 if it closes above MA50 with bullish candle, IT=15

8. DRYS: smooth sailing again?

Weekly: bullish-engulfing candle with volume following 4 straight down week, indicators still show negative momentum and implications from the precipitous decline.
Daily: powerful oversold rebound, while some indicators suggest more gains, candle formations point out increasing seller activities.
60 min: poised for further retreat from short term overbought conditions.
** SW DT S2, entry zone=98-105, IDS just above 105, CS just above MA50 with bullish candle formation, IT=85.
** SW S1, entry zone 110-120, stop just above 120, IT=95.

9. EDU: learn to profit from volatility!
Weekly: bullish engulfing candle and clear up trend
Daily: oversold rebound seems to more room to go,
** SW L2, entry zone=74-76, stop just below 73.5, IT=84
** Speculative S3, entry zone=87-91, stop just above 92, IT=74

10. EXM - refer to DRYS
** SW S1, entry zone 57-60, stop just above 60, IT=44

11. FMCN: bulls die hard!
Weekly: momentum is on the verge of shifting to the down side, alternate loss/gain week for the past month, the down volumes and candles outsized the up ones.
Daily: oversold rebound may have more room to run
60 min: overbought and staying overbought.
** SW S3, entry zone=58.8-60, stop just above 60.5, IT=52.

12. GRMN: navigating out of woods?

Weekly: bullish rebound, but negative momentum may slow its upside move
Daily: increasing positive momentum, approaching overbought, able to stay above MA50, but failing to clear resistance just below 109.
60 min: mildly bearish.
** SW S2, entry zone=115-117, stop just above 117, IT=100.

13. NVDA: turn of the tide?

Weekly: long shadow highlighted selling pressures near key resistance, increasing down side momentum, still ways to go before being oversold
Daily: Oversold rebound may have ended with Friday's big black bearish candle.
60 min: very bearish but in deep oversold region
** SW S1, entry zone1 32.8-34, stop just above 34.2, IT=29.

14. RIMM: up trend ending?

Weekly: momentum is poised to shift to the downside, downside volumes outpaced up volumes in recent weeks, stochastic points to further slide,
Daily: the overbought rebound came to an abrupt end with Friday's big black bearish candle
60 min: bearish but in oversold region
** SW S2, entry zone=116-120, stop just above 120, IT=100

15. TBSI: Refer to DRYS

** SW S2, entry zone 45-50, IDS just above 50, CS above MA50 with a bullish candle, IT=36.

16. VMW: on the second wind?
Weekly: bullish-engulfing candle but diminishing momentum, will it be able to test the classical evening-star top formation?
Daily: oversold rebound well on the way, but candles on both Thurs/Fri show increasing selling pressures.
60 min: mildly bearish, overbought decline is emerging
** SW S1, entry zone=99-104, stop just above 105.5, IT=80.

17. X: when steel meets stiff resistance!
Weekly: indicators mostly point to more slide, bow-tie formation developing
Daily: oversold rebound running its course, increasing up momentum, but sellers step in around MA50 MA200 convergences (around 101.4) on the Friday.
60 min: poised for overbought decline.
** SW DT S2, entry zone=99-101.5, stop just above 102, IT for DT=93, IT for SW=87.

1 comment:

Anonymous said...

excellent calls on EDU and DHI, just amazing!