Thursday, January 31, 2008

Bulls march on!

But the parade got some down pour in the last 10 min and into AH when GOOG threw a stinky ER. Tomorrow's job report will ensure yet another high volatile day, but I suspect that with FOMC decision now being made, it no longer matters much, in fact, as the most charts are now flashing buying-every-dip signals, any weakness due to a weake job report tomorrow probably will be aggressively bought. We shall see.

Wednesday, January 30, 2008

Whipsawed, chopped, and trapped?

Except Razor who has an uncanny ability to make the perfect sense of what's happened today, may I assume that many of you are as confused as me? I personally was whipsawed a couple of times, but who are feeling trapped right now? Bulls or Bears?

The charts just look disheartening to bulls, and AMZN's ER in AH and beating almost start to convince me that most tech ER are going to be bad. With tomorrow's GOOG ER on tap, I feel the urge to put my bear costume back on, but then again, Razor said the Friday's job report is going to be good, hmmm..

Tuesday, January 29, 2008

Follow-through day or fall-apart day?

Tomorrow's FOMC rate cut decision is paramount to both bulls and bears. As I have mentioned in an earlier post, bulls need a follow-through day to confirm the capitulation bottom of last week, and tomorrow is THE day they could count on Fed's help. On the other hand, if we see a heavy sell-off following the rate decision, the feeble oversold rebound will end and the retest of the bottom becomes inevitable.

I have made two lists, one is for shorting the 50 bp cut driven rally, and the other is for buying the no rate cut induced sell-off. They obviously look absurd as the entry points are very far away from the current levels, so I am not going to waste your breath.

My gut feeling is a 25 bp cut, and that will bring a long and slow waterboarding for both bulls and bears.

Best luck!

Monday, January 28, 2008

Tuesday Real-Time Actions

Not a whole lot of setups as everyone tries to position for the FOMC decision on Weds. I might take a long position in COF if it opens down below 49 due to AXP (SW-L2, entryzone48-48.8, stop just below 48, if it breaks 50, hold for 54 or FOMC whichever comes first). Good luck and good trading!

Monday Real -Time Actions

I saw Razor and qiqiapr have been active on POT today and I figure I should have a daily post here just for any folks who might be interested in posting real time trades. I myself will be very busy with my day job for the foreseeable future, but will try to do as much as I can. So far I did a couple of quick AAPL scalping from the short side for some beer/Scotch money, just hopeless.

Sunday, January 27, 2008

Weekly Trading Calls -- Jan 27, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”, I feel that the market is likely to trend up leading to Wed FOMC rate decision, which along with a few other key data/reports, will determine the extent of the on-going rebound. I expect another week of huge volatility, and to avoid the whipsaw, the soundest strategy is to be patient and act only on setups that have excellent r/r ratios.

1. AAPL – From the apple of bulls’ eye to the apple of bears’ eye?
The fallout of the disappointing outlook continued just as I predicted in my last week’s analysis.
Weekly: 4th straight losing week on heavy and rising volume, negative momentum rising rapidly, extremely bearish candles point to further near-term loss, however, long-term MA as short-term MA formation are still in uptrend postures, not quite oversold yet.
Daily: 4 straight losing day but volumes declined substantially in the past 3 sessions, negative momentum continues to rise, in oversold conditions;
** DT/SW-S2 if it spikes towards 138/140, IDS just above MA200 (near 145), CS just above 140. For DT, stop just above 141.
** DT/SW-L3 if it spikes towards 110 with a stop just below, IT=120, r/r=2:8

Weekly: the 3 week decline was halted, but a classical thrusting candle formation seem to favor the on-going down trend; negative momentum continues to rise, long-term trend still solidly up
Daily: A solid successful test of MA200, negative momentum continues to diminishing; oversold rebound clearly on the way, notably stronger than other big tech names, closed above MA10 around the key S/R level around 300 on Friday, seller presence clearly seen around key R zone from 320-330. Next week’s GOOG ER will have a big impact on BIDU’s movement.
** SW-S2, entry zone 345-350, IDS just above 360, CS just above MA50, IT=320, r/r=18:28
** SW-L2, entry zone 240-246, IDS just below 237, CS below MA200, IT=280, r/r=7:35

Weekly: only the 3rd up week since topping out in late Oct’07 on substantially light volume, negative momentum stalled, in oversold;
Daily: negative momentum dissipating, oversold rebound on solid footing, but down-trend still firmly in place.
** DT/SW-S2 if it spikes towards MA200+EMA30 (around 66.3)/70, IDS just above 71, CS around 70, IT=58,
DT/SW-S1 if it spikes towards MA50 (around 75.5), IDS just above 80, CS at MA50, IT=MA200.

4. EDU
Weekly: 2nd week with extreme volume but minor loss, negative momentum on the rise,
Daily: oversold rebound on the way, huge volatility
** DT/SW-S1, entry zone 66-70, stop just above 72, IT=60

Weekly: 5th straight losing week on heavy and increasing volume, negative momentum on the rise
Daily: consolidating between 143 and 186 in the past 6 sessions, tepid oversold rebound
** DT: L2 if it spikes towards 143, IDS just below 140, IT=166
** DT/SW-L1 if it spikes towards MA200 (131.4 now), stop just below 130, IT=148
** DT-S2 if it spikes towards 200, stop just above 202, IT=186
** DT/SW-S1 if it spikes towards 220-225, IDS just above MA50 (225.2), IT=200.

6. GOOG – On the verge of long-term trend reversal?
It’s ER on Jan. 31 may have a huge impact on its long-term trend.
Weekly: 4th straight losing week on steadily increasing volume and negative momentum, but still long term trend still intact
Daily: triple-top trend reversal in full swing, only 4 up sessions (all on much lighter volumes) since Jan. 2; signs of big-boy jumping the ship; signs of bad ER coming.
** DT-S3 if it spikes towards 600 with a stop above, IT=580
** Speculative SW-S3 if there is an immediate post ER spiking in AH towards 620-640, stop just above 640, IT=560

7. GS
Weekly: the well defined down-trend channel in tact, but both stochastic and RSI flashing the reversal signals of the ongoing trend; negative momentum stalling
Daily: classical down-trend channeling, evident bullish divergences in MACD histograms
** DT/SW-L2 if it spikes towards 185 with stop below, IT=198
** SW-L1, entry zone 170-175, stop just below 170, IT=200.

Weekly: uptrend flattening, negative momentum on the rise,
Daily: consolidation mostly between 250-280 in over 2 weeks as all are waiting for the Jan. 31 ER, the following calls are ONLY for the Jan. 31 AH immediate reactions following the ER:
** speculative S2, entry zone 320-340, stop just above 340, IT=300
** speculative L1, if there is an initial spiking down towards 200 or MA200 (near 220), stop just below those levels, IT=230.

9. MOS
Weekly: the uptrend continues following a classical bullish Three-line Strike candle formation.
Daily: parabolic both ways, huge volatility, clear strong uptrender
** CTT between 70/80 and 100/110 with stops just across the boundaries; bias is bullish, don’t trade the mid-range.

10. POT
Technical picture very similar to that of MOS, but a bit weaker than MOS.
** CTT between 150 and 115, stop just above 152 and below 108.

11. RIMM
Weekly: the 4 week slide halted, negative momentum un-abating, oversold, overall trend still up
Daily: successful test of MA200, oversold rebound on the way,
** CTT between 80 and MA50 (at 104.7 now) with tight stops, bias slightly bearish, don’t trade the mid-range

12. SPWR
Weekly: extreme and all-time high volume driven by the latest ER, negative momentum on the rise; extremely bearish candles in the recent weeks, approaching oversold
Daily: the recent slide was capitulated by the post ER high volume move, signs of over-sold rebound, negative momentum abating,
** CTT between 60 and MA200 (83.5)/90, don’t trade mid-range, bearish bias.

13. STP
Technical picture similar to that of SPWR
** CTT: between 46 and 58/65/MA50, don’t trade ranges in between, bearish bias

14. WFR
Weekly: bullish piecing candle formation, solid uptrender, but negative momentum developing
Daily: selling on good ER on Friday, but indicators mostly favor short-term moving up. In danger of developing head-and-shoulder pattern.
** DT/SW-L3 if it spikes towards 68.5/70, stop just below, IT=80,
** SW-L2 if it spikes towards MA200 (64.8 now), stop just below 63, IT=70

15. X

Weekly: it hardly budged in last week’s turmoil, clear up-trend,
Daily: the higher-low and high-higher pattern intact, indicators favor further upside movement,
ER: On Jan. 29, with conference calls at 3 pm
** Chart wise, it feels like any weakness immediately follow ER may represent a good buy opportunity, especially in the range of 91-96.5 with a stop just below 90. Keep an eye on 104 where MA50 and MA200 will converge.

Weekend Notes on the Market

Bulls saw the bottom, but do bears care? The post-capitulation struggle rages on!

What a week it was! A solid breach of the Aug’07 lows in the prior week opened the floor gate that flushed out all weak bulls along with the panicking Fed in the classical capitulation occurred in the Jan.22 and 23. The subsequent ensuring technical rebound, however, ran into a wall on the Friday.
On the weekly charts, for all major indices, the negative momentum continues to rise, but all in oversold conditions (Stochastic and RSI), with some signs of oversold rebound. It is interesting to note that since 2003, whenever both Stochastic and RSI for the major indices are in deep oversold conditions as they are now, the market always trend up for next several weeks. However, one must realize this is the first time since 2003 that market is firmly in the bear territory. It is also worth to point out that, failed to post a solid bullish meeting-line candle formation, NASDAQ has been noticeably weaker than the other two indicies.
On the daily charts, the consecutive huge white candles on both Jan.22 and 23, coupled by the extreme volumes, indicated a classical capitulation bottom. The ensuring rebound, however, was thwarted when the major indices attempted to test their Aug’07 lows on the Friday, witnessed by big bearish engulfing candles. The negative momentum continues to diminish with solid signs of oversold rebound.

Some thoughts and observations about the current market conditions and near-term outlook:
1. With a rogue French trader, the panicking Fed, and everyone else seems on the run, the market is in a deep mess with raging fear.
2. Big players have been actively repositioning themselves: there are solid signs of rotation of smart money from tech/solar/agriculture/fertilizer to retailer/homebuilder/banks and other beaten down sectors.
3. Market’s overall reactions to Q1 ER are bearish, especially on the tech names, just look at MSFT, big boys took its good ER as an opportunity to unload their long positions.
4. Even though the rebound was stopped harshly on the Friday, I expect the market to trend up next week, at least leading to the FOMC decision. The longevity of this rebound will be determined by the FOMC decision as well as a few key economic data next week.
5. Market has fully priced in additional 25 bp cut and hoping for 50 bp cut, but frankly, I am not so sure about even a 25 bp cut. My guess is that market will retest the bottom if there is no cut and will extend the rally if there is 50 bp cut.

Weekly calls will be posted later today.

Friday, January 25, 2008

Evaluation of last week's trading calls

Thought about doing this for a while now, so let me just get on to it now:

In my last weekend's "Weekly Trading Calls", I analyzed 14 stocks and made a total of 25 trading calls:

** Winning calls: 8, or 32%, for a total of 70 points (8,6,5,4,7,8,33)
** True Losing calls: 1, or 4%, for a loss of about 1 point;
** Un-materialized calls: 13, or 52%.
** Near-miss calls: 4, or 16%

The near-miss calls are those that were either barely not being hit or barely stopped out. Several of them were heart-breaking ones that would've produced spectacular profits:
1. BIDU:
The call -- "DT-L2 if it spikes towards MA200 (around 241), IDS just below 240, CS below MA200, IT=254, r/r=3:12"
The near miss -- It spiked to as low as 237 on Jan. 23, which would've stopped out the position and miss the subsequent profit of as much as 90 points.
2. ICE:
The call-- "Speculative L3, entry zone=118-126, stop just below 117, IT=MA200, r/r=9:28"
The near miss-- On Jan. 22, it spiked to as low as 126.87, therefore did not hit the order that could produce as high as 38 points.
3. SONS:
The call -- SW-L2 when a capitulation occurs in coming days, scaled entry zone 3.21-3.52, stop just below 3.2, IT=4.5, r/r=0.32:0.98
The near miss-- On Jan. 22, it spiked down to as low as 3, therefore would stop out the position that could've produce over 30% of gain in the follow sessions.

The best winning calls are on RIMM, CRM, and AAPL.

And here is the sad part: I only acted on one winning call (SOLF). While some can be attributed to the near-miss calls (I literally stared at the BIDU and SONS when they were in those ranges), the failure of acting on the winning calls are a bit disturbing. Just read a post by Dr. Brett Steenbarger titled "The Most Important Reason Individual Investors Lose Money", and one of such important reason is "failure to trade reliable, tested ideas", I need to be cured, really!

Note on this week's trading

I made a few trades this week:

1. Tuesday, AAPL: 1/3 long position from last Friday's AH at 161.11, out at 157.88 for a loss of just over 3 points. Took a chance for a pre-ER running, but that French trader ruined it!

2. Tuesday, CTRP, DT long at 40.12 and out at 44.38 for a gain of just over 4 points. As usually, a great setup and entry, but another quickie for me, think I will ever learn?

3. Tuesday, SOLF, DT long at 15.11 (the low of the day) but out at 15.88 when the Fed rate news hit the wire. Again, a very good setup ended poorly, I mean, I almost felt like a petty thief, what's the matter with me?

4. Weds to Friday: Did a few DT on AAPL from the short side, scalping from 0.2 to 1.5 points (2 stopped out and 5 winning), earned some money for weekend funs, but could not hold on to the winners for some annual vacation funds.

The above tells you a lot about the fact that why I have a full-time regular job instead of being a good trader who can make a living out of this.

Wednesday, January 23, 2008

Diving, jumping, spiking, and finally, bottoming!

As a half-assed bull, I liked what I see today, especially the volumes and the way indicies closed. Capitulation? Pretty much so. I expect the market to trend up for the next several days, and the earlier you go long the safer and more profitable you will be. But make no mistakes, this is no re-run of the Aug'2007 episode, that is why I am sending my bear costume to a dry-cleaner so that when I get it back a few days from now, I will look like a slick, shinning and well rested bear. Until then, I am going to march with those real bulls and may be laughing with them on their lame-ass bear jokes :)

p.s. notice the money are rotating out of tech, solar and agriculture/fertilizer names into retailers and banks?

Tuesday, January 22, 2008

FED blinked, but who capitulated?

My gut feeling is that bears, more than bulls, capitulated today, and I suspect that both camps are probably feeling that they are the ones who got screwed by the FED. Market is trying to put down a bottom here like it did in Aug'2007, but such bottom requires at least one follow-through day within next 3-5 days as confirmation. With AAPL down over 10% in AH on earning warning, the odds are not good for bulls to have a follow-through day tomorrow.

I am all in cash now, feeling dizzy and and a bit lost at the moment. To be a bull, or not to be a bull, this is the question!

Position update

Just exit CTRP at 44.38 for a gain of just over 4 points or 10%, I am maybe damned, but it is hard to resist the urge of taking such quick profits. Will consider re-enter around 42.

Trade Alert

Just caught another falling knife: CTRP, Long at 40.12, IT=43.88, stop just below 40.

FED threw in a monkey wrench!

Yes, I said that! The size was too big to not being seen as desperate, and the timing is just terrible because it prevented an imminent capitulation, thus prolongs the slow-bleeding. I wish it would have cut the rate after the market close today. Oh, well.

Position update:
AAPL: out when it spiked at 157.88, this 1/3 position was taken on Friday AH at 161.11.
SOLF: 1/2 position long at 15.11 but out at 15.88 with the rate cut news hit the wire.

best luck to all!

Monday, January 21, 2008

Weekly Trading Calls -- Jan. 21, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”; the US market is deeply oversold, a technical rebound will occur, but no one can time the turning point, and if you make an ill-timed entry on the long side, you could be in a world of pain.
As I am writing now, the futures of major indices are down HUGE following the overnight pounding of stock markets around the world. The market is set to gap down big when it reopens on Tuesday, is this the capitulation I have been waiting? Maybe.
For next week, my overall strategies are: day-trading short the stocks that are breaking down due to poor earning report; swing long with scaled entry of strong stocks during the capitulation. Bottom line: market is in down trend, fears are rising, going long is much more dangerous that going short.

1. AAPL – From Golden to Rotten?
A lackluster presentation at the MacWorld Expo last week stoke the fear that without new revolutionary products, Apple will see slower growth ahead as it is facing rising competition and declining iPod sales. The result is a 2-day high-volume sell-off that dropped it below the key 170 level.
Weekly: A big down week on 52-wk high weekly volume, negative momentum spiking, all indicators point to more downside; long term trend still up; moving averages still in up trend formation.
Daily: decisively broke the key support around 170; bearish moving averages bow tie formation in full swing; negative momentum stalled; in oversold.
Q report: AAPL is set to report on Tue AH, while I fully expect a very strong Q report, I am really not sure about its outlook. Any signs of growth slow down will drive it to test MA200 (around 144) if not lower. My gut feeling is that without any new blockbuster products and in an extreme challenging economy, Apple’s long running up trend will pause if not completely reverse.
** Currently long 1/3 position at 161.11, stop just below 159, IT=164, will close before Q report.
** DT-L2 on Tuesday if it spikes towards 150 with a stop just below, IT=156/158, exit before Q report. r/r=1:6 or better.
** DT-L1 on Tuesday if it spikes towards 145/146 with stop just below MA200, IT=154, exit before Q report, r/r=2.5:7.5 or better,
** DT/SW-S2 if it spikes towards 180 in Tue AH or Weds opening moments, IDS just above 182, CS just above 180, DT-IT around 170, SW-IT around 160. DT-r/r=2.5:9 or better; SW-r/r=2.5:18 or better.

2.AMD – is the worst over?
Weekly: Q earning report drove the stock higher for the second week on heavy volumes; candles in the past 3 weeks post a near morning stars formation; still a clear down-trender; solid signs of oversold rebound
Daily: up volumes dwarf down volumes in recent days; closed above MA10 this week for the first time in 2 months; oversold rebound in full swing; positive momentum rising
** SW-L3 with scaled entry, entry zone=5.52-6.21, IDS just below 5, CS below 5.3, IT=MA50. r/r=1.2:2.5 or better.

Weekly: a big down week with weekly volume spiked to the 4th highest since its IPO; negative momentum on the rise; extended bearish candle body and other indicators point to further downside.
Daily: a break down through key support at 300 trigged big sell-off; signs of buys step-in on Friday with a high volume hammer candle; signs of oversold rebound
** DT-L2 if it spikes towards MA200 (around 241), IDS just below 240, CS below MA200, IT=254, r/r=3:12 or better
** DT/SW-L1 if it spikes towards 220, IDS just below 215, CS below 220, DT-IT=MA200; SW-LT=260; DT-r/r=6:19 or better; SW-r/r=6:49 or better.

4. CME – Trading fear commodities?
Weekly: fourth straight down week on above average weekly volume; negative momentum spiking; long term trend still clearly up; moving averages formation still bullish; indicators favor more immediate decline.
Daily: typical sharp decline-shallow rebound-further decline pattern so far; broke and closed below MA200; signs of buyers on Friday with a bullish Harami candle formation; some bullish divergence in negative momentum; signs of oversold rebound.
** DT-L3, entry zone=511-521, IDS just below 507, CS below 520, IT=560; r/r=14:39 or better;
** SW/DT-L1, entry zone=491-502, IDS just below 490, CS below 500, DT-IT=540, SW-IT=560, DT-r/r=12:38 or better; SW-r/r=12:58 or better.

5. GS – Orderly retreating as the world crumbles!

Weekly: another down week on rising negative momentum; bearish moving averages bow tie formation in the making; approaching oversold (RSI/Stochastic); long term trend still clearly up.
Daily: the orderly declining pattern still persists; Death cross occurred this week; not oversold yet; bullish divergences in negative momentum;
** DT-L3 if it spikes towards 175, stop just below, IT=180.88, r/r=1:5.5
** SW-L2, entry zone=168-171, stop just below 168, IT=188, r/r=3.5:16

6. CRM
Weekly: 3rd straight down week on average volume; momentum turns negative for the first time since last Sept.; still a clear up-trender; more near-term downside likely
Daily: bearish moving averages bow-tie formation in the making; in oversold but seemingly unable to muster a rebound
** DT-L1 if it spikes towards 48 with IDS just below 48, CS just below MA200(48.32 now); IT=549.8; r/r=0.4:1.6
** SW-L1, entry zone=45-46.6; IDS just below 45, CS just below 46, IT=52, r/r=1.7:5.5

7. FSLR – Before sunrise or before sunset?
Weekly: 4th straight down week with weekly volume spiking to all-time high, a clear sign of distribution; Three Black Crow candle formation with bearish candle bodies expanding; negative momentum on the rise; can you say parabolic up and down?
Daily: negative momentum continues to rise; bearish moving averages bow-tie formation in place; in oversold but seemingly unable to muster a rebound; closed on Friday forming a bullish Harami candle (or inside day).
** SW/DT-L3 if it spikes towards 140 with a stop just below, IT=154, r/r=1.5:14
** SW-L1, entry zone 120-131, IDS just below 120; CS just below MA200 (at 129.11 now), IT=160; r/r=12:29 or better.
** DT-S3 if it spikes towards 200, stop just above, IT=185; r/r=1.5:14
** SW-S1 if it spikes towards 220, stop just above, IT=185; r/r=2:34

8. HMIN – Time to catch this falling knife?
Weekly: 3rd straight down week on rising but still below average weekly volume; approaching oversold conditions;
Daily: 2 week long breaking down ended on Friday with a bullish engulfing candle; signs of oversold rebound.
** SW-L3, entry zone 26-27.1, IDS below 26, CS below 26.7, IT=30, r/r=1.2:2.8 or better
** SW-L1 if it spikes towards 24, stop just below, IT=32, r/r=0.5:7.5

9.ICE – icing on what?
Weekly: a big down week on rising but still about average weekly volume; negative momentum on the rise; still a clear up trender; expending bearish candle body points to more downside move in the short term.
Daily: the Three Black Crow formation capped by a bullish Harami candle on the Friday; spiking negative momentum; oversold; decisively dropped below MA200; bearish moving averages bow tie formation in full swing
** SW-S1 if it spikes towards 165 with a stop just above, IT=MA200, r/r=1:9 or better
** Speculative L3, entry zone=118-126, stop just below 117, IT=MA200, r/r=9:28

Weekly: 4th straight down week on rising negative momentum; moving averages still in clear up trend formation; approaching oversold;
Daily: attempting to form a bottom; oversold; negative momentum stalled
** SW-S2, scaled entry zone 94-99, stop just above 100, IT=88, r/r=6:6 or better
** SW-L2, scaled entry zone=75-81; stop just below 75, IT=88, r/r=6:7 or better

11. SOLF – Don’t let the sun going down on me?

Weekly: second big down week on high volume; long bearish candle body and other indicators favor more near-term downside movement
Daily: bearish all around with bottoming attempt; in deep oversold; negative momentum high but stalled; a test of MA200 (14.68 now) looming
** Speculative scaled SW-L1, entry zone 14-16.3, IDS just below 14, CS below MA200 on a bearish candle; IT=22; r/r=2.3:5.7 or better

12.SONS – Deja vu all over again?
Huge insider buys late last year cannot stop the slide, which is well in sync with Russell2000 and Telecom sector; but fundamentals appear to be intact;
Weekly: 7th straight down week with signs of acceleration (3 Black Crow candle formation); rising negative momentum; in deep oversold;
Daily: just straight down; deeply oversold;
** SW-L2 when a capitulation occurs in coming days, scaled entry zone 3.21-3.52, stop just below 3.2, IT=4.5, r/r=0.32:0.98

13. DRYS – Hanging high and dry!
Weekly: another week of high volume drop, but considerable down shadow presented for second straight week indicating the presence of buyers; negative momentum continues to rise; in oversold;
Daily: attempting to put a bottom here; signs of oversold rebound
** Speculative SW-L1 if it spikes towards 40, stop just below, IT=MA200(66 now); r/r=2:26.

14. GOOG – Find the bottom, fast and accurate?
Weekly: 3rd straight down week on rising but still relative light volume; negative momentum on the rise; candle formation and indicators favor more near-term downside move; still a clear uptrender;
Daily: selling intensifying as it testing key support around 600; negative momentum stalled; in oversold;
** SW-L2, scaled entry zone=560-568, IDS just below 560; CS just below MA200(near 568 now), IT=620, r/r=18:52 or better.

Sunday, January 20, 2008

Weekend Notes on the Market

Bulls blinked, bears tortured, now what?

Heavy losses across the board on rising volumes extended the losing streak for all major indicies to 4 weeks. A nascent oversold rebound on Monday was utterly destroyed by the disappointing Q report from Intel. The implication of disappointing earnings/outlooks from key companies, as I pointed out in last week’s "Weekend Notes on the Market", made bulls feeling like they were grabbing a straw in a raging river, and many blinked. All major indices decisively broke the last line of the bulls’ defense – the Aug’07 lows, and therefore solidly confirmed the reversal of the long up trend.
On the weekly charts, heavy and rising volumes for all major indices came along with bearish candles with long bodies; bearish moving average bow tie formation is presented in all indices; negative momentum are rising; for the first time since last August, all major indices entered oversold territories as indicated by both Stochastic and RSI.
On the daily charts, it is bearish all around with no solid signs of bottoms, and all major indices in deeply oversold conditions.
Some thoughts about the current market conditions:
1.It is pretty clear by now that the 2008 decline is different from those occurred in Aug and Nov 2007 because it has changed long-running up trend. Right now, the Russell2000 leads the decent into the bear market territory with a decline of over 20%, while other major indices are only a few % shy of the 20% marker.
2.It is worth noting that almost everyday this past week, the bulls attempted to rally in the early going, which gave bears constant nerve racking. This evident buy-at-bottom mentality probably explained why the fear (as measured by VIX) stayed low until last Thursday.
3.All major indices are in deeply oversold conditions on both weekly and daily charts, last time such event occurred was in Aug’07, and we all knew what happened.
4.A powerful over-sold rebound could occur anytime (think FED FOMC, think Bush too), in fact, it should’ve occurred last week, but it did not! Selling begets more selling, aggressively long just because of the market is oversold could ruin your account in a hurry.
5.With some key tech names reporting next week (AAPL, Ebay, MSFT, TXN, MOT, JNPR, BRCM), tech sector will dictate the market direction for the coming week. One good report will NOT save the market (see IBM), one bad report will embolden bears (see INTC), and if most are bad, I think we will see a full-fledging bear market all the way to this Fall, if not longer.

Will post my weekly trading calls on Monday, Jan. 21.

Friday, January 18, 2008

Note on this week's trading

I made 5 trades this week:

1. Tuesday, AAPL: DT, shorted at 174.4 and 171.48,covered at 169.52 for an gain of 3.5 points.
2. Tuesday: AAPL: DT, half position, shorted at 172.48, covered at 167.12 for a gain of 5.3 points.
3. Wednesday: AAPL, DT, shorted at 168.88, covered at 163.11 for a gain of 5.7 points (not posted in real time)
4. Thursday: AAPL, DT, shorted at 163.28, covered at 162.61 for a gain of over 0.6 point (not posted in real time).
5. Thursday: POT, DT, long at 115.11, out at 119.11 for a gain of 4 points.

Each one looked not too bad on the day, but most of them look stupid by the end of Friday, why? Because I don't have the guts to stick to my swing calls in the face of huge volatility, I chickened out for some quick and cheap thrills, in other words, I sucked.

Since this is a long weekend, I probably will not post my "weekend notes on the market" until Sunday and "weekly trading calls" until Monday.

Bears, uh, I mean beers for a good weekend everyone!

Thursday, January 17, 2008

Position update

Just exited POT at 119.11 for a gain of 4 points, the rebound volumes of major indicies are too light, I will re-enter POT between 115-117.11 with a stop just below today's low.

Trade Alert

Just caught first falling knife: POT, long at 115.11, stop just below today's low, IT=119.

Thursday Note

As I predicted in my yesterday's note, the market is yet to find a true short-term bottom. I made a quick short on AAPL in the early going this morning as the market gapped up in the open.

Right now all major indicies have solidly broken yesterday and Aug'07 lows except QQQQ. The thing that puzzles me a bit here is I see no volume spikes as new lows being made. I have eyes on some buy-at-bottom long setups, but I will hold my trigger tight until I see clear capitulation on the bulls part. For those who are really risk-averse, I recommend that you don't act on any intra-day rally, rather, you enter the long setups in the closing minutes ONLY when you at least have a bullish engulfing candle to back you up.

Wednesday, January 16, 2008

Wednesday Note

Did not get chance to post earlier, had a very busy day and only managed to play for the 1st hr or so, during which I did a quick short of AAPL at 168.88 and covered quickly at 163.11 before heading out.

What a close today! For a good part of the day, it looked like bulls were making another incredible comeback after testing the Aug'07 lows, but the last 30 min wiped out bull's 5 hr hard-fought gains. That makes me wonder if the big boys intentionally prop up the market using the FED imminent rate cut rumor only to dump their load hard in the end. I doubt the near-term bottom is in, still too much buying and not enough selling.

Blame the FED, it is waterboarding both bulls and bears right now.

Tuesday, January 15, 2008

Mid-week Note on the market

Intel's disappointing Q report and outlook, on the heals of another heavy losing day, ensures a test of the long-held Aug'07 lows tomorrow. Judging from AH reactions of many big stocks, the Aug'07 lows will be breached, at least in the opening moments. I suspect that bears will finally become aggressive given the important implications of Intel's disappointing Q report and outlook. While I fully expect market will rebound/rally into FOMC rate cute meeting later this month, I will suspend many long-side trading calls in the last weekend's note or significantly lower the entry zones. Don't catch the following knives unless you are really good at it or you know when exactly FED will issue an emergency rate cut.

Position Update

AAPL: just covered all position at 167.12, damn, I really should not be day-trading here. May consider swing short if it spikes to 170, and long at 160/162 if it spikes down.

The market is approaching the Aug'07 lows, but judge from the volumes, I doubt bears are doing most of the work here, and big boys are sitting tight, no?

Trade Alert

AAPL: just re-entered half short position at 172.48, stop just above 173, IT=169.

Posistion Update

AAPL: just exited all position at 169.52, may short the rebound again.

Trade Alert

AAPL: Just add another half position at 171.48, stop just above 173, IT=168. Cannot believe I am day trading again, but....

Trade Alert

AAPL: Just shorted half position at 174.4, stop just above 176, IT=170.2. So far not much out of the MacWorld...

Saturday, January 12, 2008

Weekly Trading Calls -- Jan. 14-18, 2008

Please refer to my earlier posts on "Next Week's Overall Trading Strategy and consideration of rising volatility" and "Weekend Analysis on the Market".

A. Buy-at-bottom or CTT setups

Held solid support around 170, but will next week's MacWorld event trigger a pre-Q report bull run to a new high or the decline on the heavy volumes signaling the start of the end of this long up trend?
Weekly: still a clear uptrender, but momentum became negative for the first time in 3 months with volume at 1 year high, indicators mostly favor more downside movement.
Daily: 5 losing sessions in the last 6 days, all on heavy volumes, downside momentum stalled as the support around 170 withstood multiple testing; stochastic points to oversold rebound.
** CTT when it spikes towards 169/170 or 182/183 use 168/184 as stop, IT near the opposite end of the 170/182 trading range. Don't trade the middle range.
** S3 if it breaks 168/169 on good volume, stop just above 170, IT=161.
** L3 if it spikes towards 160, stop just below 158, IT=168.

2. AKS
Long uptrend in reversal, but money still can be made from both sides
Weekly: downside momentum increasing, indicators point to more downside
Daily: broke down MA200 and failed to reclaim it, moving averages in clear downtrend formation, stochastic points to oversold rebound; key support at 36 held,
** L2 if it spikes towards 32 use a tight stop, IT=36
** S2, entry zone 40-42, IDS just above MA50, IT=36,

On the verge of trend reversal?

Weekly: A big down week on above average volume, in danger of forming a double top with plenty of bearish divergences, but overall it is still a clear uptrender.
Daily: triple top formation in process; negative momentum on the rise, bearish moving averages bow tie formation in process, approaching oversold conditions
** L1 if it spikes towards MA200 around 76.5, IDS just below 75, CS just below MA200, IT=81.

Weekly: a sizable losing week on rising volume, in danger of forming a double top with plenty of bearish divergences, but overall it is still a clear uptrender.
Daily: rising negative momentum, bearish moving averages bow tie formation in process, oversold conditions,
** L2 if it spikes towards 300, IDS around 295, CS around 300, IT=330.

4. CME
Weekly: a hammer candle formation on very heavy volume, momentum turning negative, most indicators favor more downside
Daily: oversold rebound well on the way
** CTT between 575 and 650/MA50 with a $5 stop.
** S2 on any bearish-engulfing candle from this point further with stop just above the high of the previous day.

5. CRM
refer to "last week's trading calls"
** L1 if it spikes towards 50, stop just below, IT=57

Refer to "last week's trading calls"
** L2 if it spikes towards 48 with a stop just below, IT=54.
** L1 if it spikes towards MA200, IDS just below 45, CS below MA200, IT=54.

7. DRI
Will this be the exception of oversold rebound?

weekly: another high volume sell-off week pushes it deeper into oversold region, the volume and the Black Marubozu candle formation point to more downside movement in the near future.
** Daily: strong bearish movement with signs of abating negative momentum, in oversold conditions for a while now.
** Speculative L2 if it spikes towards 18/20, IDS below 18, CS below 19, IT=25.

Parabolic, up AND down?

Weekly: the evening star formation gets following through with a big down week on heavy volume, indicators favor more downside
Daily: negative momentum on the rise, bearish moving averages bow tie formation in process, approaching oversold conditions,
** L2 if it spikes towards 200 with a 2 point stop, IT=220.
** speculative S3 on top if it spikes towards 255, IDS just above 260, IT=200.

Pinpoint your way down?

Weekly: spiking volume and heavy losses extending the losing week streak to 5 in a roll now, negative momentum increasing, approaching oversold
Daily: solid transformation of a long up trend, and analysts sure know the perfect timing for down/up grade;unabated negative momentum, but oversold rebound may be on the way.
** S2 if it spikes towards 80 with a tight stop, IT=75.
** S1 if it spikes towards MA200, IDS just above 90.
** speculative L2 if it spikes towards 60, stop just below, IT=70.

10. HMIN
Weekly: a big down week but volume is low, more immediate downside likely, approaching oversold
Daily: downside move accelerating, in oversold
** L3 if it spikes towards 28, CS around 28, IDS around 27.
** L1 when a bullish engulfing candle forms here, IT=32

11. ISRG
can an analyst change its long running uptrend?

Weekly: A big losing week on high volume resulting from an analyst downgrade; momentum turns negative for for first time in nearly a year; bearish divergences continue to develop, indicators point to more down side movement in the near future
Daily: a head-and-shoulder pattern in the working; unabated negative momentum, bearish bow tie moving averages formation in process, in oversold conditions,closed in the key support zone 258/265
** S2 if it spikes towards 288/300, IDS just above MA50, IT=265
** L2 if it spikes towards 235, IDS just below 230, CS around 230, IT=260
** L1 if it spikes towards 220, IDS just below MA200, CS below 220, IT=260.

12. MA
The subprime mess finally caught this high roller.

Weekly: a big losing week on very heavy volume, extending losing streak to 4 weeks, big bearish candle and other indicators favor further sliding
Daily: last Friday's high volume drop extended losing streak to 8 days!, increasing negative momentum, bearish bow tie moving averages formation in process
** L3 if it spikes towards 170, stop just below, IT=185
** L2 if it spikes towards 160, IDS just below MA200, CS around 160, IT=185
** S2 if it spikes towards MA50, IDS just above 200, CS just above MA50, IT=180

13. RIG
Weekly: a clear and strong uptrender, diminishing positive momentum, candle formation and indicators point to more near term decline
Daily: 7 losing sessions in the past 8 push it near oversold, negative momentum rising.
** L2 if it spikes towards MA50(currently near 133), IDS just below 130, CS just below MA50, IT=145.
** L1 whenever a bullish engulfing candle forms in the coming days, IT=145

14. RIMM
Trend reversal confirmed?

Weekly: a big down week on high volume, negative momentum continues to rise, indicators favor more downside movement
Daily: broke and closed below key support around 95, confirming the reversal of the long up trend, in oversold conditions
** S3 if it spikes towards MA10, IDS just above 105, IT=95
** S1 if it spikes towards MA50/110, IDS/CS just above, IT=95,
** L2 if it spikes towards 85 use MA200 as stop reference, IT=95.

15. SGR
Weekly: highest volume in 18 months failed to push it down much, downside momentum stalled, still a uptrender
Daily: strong support zone from 54-57, indicators mildly bearish
** L3 if it spikes towards 55, stop just below 54, IT=MA50
** L2 if if spikes towards 52, stop just below MA200/51.8, IT=MA50/60.

16. SOHU
Weekly: 5th straight losing week on relatively light volumes, momentum turns to negative for the first time since last summer, indicators favor more downside movement, uptrend still intact; noticeably stronger than its peers such as SINA
Daily: low volume slow bleeding continues, signs of firming up near key support around 47, oversold rebound signs.
** L3, entry zone 47-48, stop just below 47, IT=50
** L2 if it spikes down towards 40/42, stop just below 39, IT=47

B. Short Setups

1. BSC
Weekly: a hammer candle formation on very heavy volume plus extreme oversold conditions translate to a strong technical rebound,
Daily: rebound well on the way, but the steep down trend questions the possible v bottom.
** S2 if it spikes toward 90, IDS/CS just above MA50, IT=82.
** S1, entry zone 99-104, stop just above 105, IT=90

2. CMG
If the restaurant sector is doomed, it is only a matter of time before this goes down hard.

Weekly: second down week as the volume rose, indicators favor more downside
Daily: unabated negative momentum, signs of oversold rebound on the way.
** S1 if it spikes towards MA50, CS just above MA50, IDS just above 135, IT=MA200

Boom to bust, just like that!

Weekly: a week of heavy loss and now under MA200, in oversold, but so what?
Daily: down trend in firm place but some oversold rebound may come
** S3 if it spikes towards 70, CS just above 70, IT=60.
** S2 on any bearish engulfing candle formation along the rebound.

4. GS
refer to analysis on BSC. keep in mind that GS is the strongest in this sector.
** S2 if it spikes towards 208 with a stop just above 210
** S1 if it spikes towards MA200/MA50 use a tight stop, IT=185

5. STP
The end of a parabolic up trend?

Weekly: a huge down week on heaviest weekly volume EVER, the huge volume+huge black candle may be indicative of fundamental changes of perspectives by the big institution holders, indicators favor more slide
Daily: 4 high volumes losing session in the past week, negative momentum continues to rise, in oversold,
** S2 if it spikes towards MA50/75, IDS just above 76, CS above MA50 with a bullish candle, IT=56.
** L3 if it spikes towards 55, IDS just below 53, IT=70.

If you think my analysis makes sense to you and would like to keep a track of my future trading calls/analysis, you can subscribe the feed to my blog using the RSS widget on the top left.

On overall trading strategy for the coming weeks

As I mentioned in my Weekend Analysis on the Market, despite a losing week, bulls showed increasing resistance and so far the Aug.07 lows of the major indices remain intact. Given all these, shorting aggressively at this level has a poor risk/reward ratio, to say the least. On the contrary, going long here to catch a quick rebound has a much better risk/reward ratio, that is if you know "How to catch falling knives"! Technically, the most sound swing trading strategies at this point are either shorting aggressively if the market breaks down the Aug.07 lows or waiting for the rebound to fully run its course and then establish short positions using key resistance levels as stop loss points.

On volatility and my last week's trading calls

Market volatility increased notably in the recent months, and according to this excellent analysis by Dr. Steenbarger, the volatility will continue to increase.
The increasing volatility probably contributes to the fact that while many of my Last Week's Trading Calls were on the money, some missed by inches (such as AAPL long call with a stop at 179), some missed by a mile (such as CME, though I made a good real-time adjustment and ended up a trade with 26 points gain). In light of this, I will try to take rising volatility into my trading calls, which will translate into wider entry zones and stop-loss ranges. To compensate for such changes, I will either use smaller position sizes or be more active on real-time adjustments.

I will post my weekly trading calls on Sunday Jan. 13.

Weekend notes on the market -- Jan 12 ,2008

Hesitating bears vs. cornered bulls, who will blink first?

Bulls endured another losing week while bears got no satisfactions as the Aug'07 lows for all major indices still stand firm.
On the weekly charts, volumes for major indices spiked to 2 month high, but the bearish candle bodies are substantially smaller than those of the prior week with considerable down shadows, indicating bulls' rising resistance. Moving averages formation are in the early stage of trend reversal, while all technical indicators point to more downside movement.
On the daily charts, bulls were able to not only keep the Aug'07 lows intact, but also stall the downside momentum. While the moving averages now in solid down trend formation, stochastic show clear signs of oversold rebound.

Some thoughts on the market direction for the coming weeks:
1. At this stage, it appears that subprime related bad news may not be enough to push the major indices down below their Aug'07 lows.
2. With the determined support from FED, bank/finance sector may stage a rally into FOMC meeting, which in turn, should help bulls. Check out this excellent post on the banking sector.
3. With FED impact diminishing (just look at this week's reaction to big Ben's rate cut pledge), I think the upcoming Q1 report season will decide the market direction for the next 2-3 months. The market obviously has already discount the weak Q1 report season, however, if the outlook for the come Qs are overall lower than expected, the market will break the Aug. 07 lows and possibly extend the sliding all the way to the summer if not further. On the other hand, if Q1 report season turn out to be better than expected, the major indices will rally, but I doubt they will be able to resume the uptrend by at least reclaiming their MA50.
4. I have a feeling that burned badly by FED/bulls a couples of times last year, bears are actually very disciplined so far this year, I wonder if they are waiting for FOMC rate cut to be over or clearer signals from the Q1 report season before showing their claws.

Interested in analysis on some stocks? Check out the "Trading Calls for this week".

On last week's trading

I made four trades last week:

1. CME: long at 576.11, exited at 598.8 and 604.8 for an average gain of nearly 26 points.

2. FSLR: long at 211.21, exited at 228.8 and 229.8 for an average gain of 17.5 point.

3. AAPL: daytrading, long at 176.02, stopped out at 175.4 for a loss 0.62 point.

4. AAPL: reversed to short after stopped out at 175.48, covered at 171.61 and 172.52 for an average gain of nearly 3.5 point.

A note on my posting

I went a bit hog wild last week as I posted my real time alerts on trades and positions. This has been the first time for me and I will continue to do so. However, I will avoid day-trading, instead, focusing on very short swing trading (holding time 2-5 days).

Whenever possible, I will continue to post my weekend note on the market and weekly trading calls either on Saturdays or Sundays.

For the real time trade alerts/position update, I will try to do post within minutes after a trade being made, but may take longer sometimes as I do have a fulltime job :)

For those who are interested in my real time alerts, I recommend that you subscribe my blog feed with the AddThis link on the left, which works with all major web-based RSS feed readers.

I welcome any comments and suggestions.

Friday, January 11, 2008

Position update

AAPL: just covered the remaining position at 172.52 for a gain of about 3 points. Did so because it felt like squeezing blood out of a stone. Given the light volume, probably not much left on the downside.

The light volumes have held me back from pulling triggers on my RIMM call earlier today, oh well...

Position update

AAPL: just covered half of the position at 171.61 for a gain of nearly 4 points, stop at 173.11 for the remaining position. Will consider cover all short and go long if it spikes towards 169/170 with a stop just below 168.

Position update

AAPL: long position stopped out at 175.4, reversed position short at 175.48, stop just above 177, IT=172.11.

I actually don't want to daytrade, but got a little bit time on hand today. Probably not going to open new positions if the volumes stay light.

Intraday note

The market is doing a slow motion crash just like 2 days ago this time, and there are just no volumes, which prevented me acting on some short setups (such as NVDA, S2 when breaking 27.7, stop around 28.2; RIMM, S2 when breaking 98, stop just above 101,IT=94). Since it is Friday, may be it is best to take a break.

Trade alert

AAPL: just went long at 176.02, stop just below yesterday's low, IT=179.8.

Market is down big, but volumes are very light across the board, I doubt bears are seriously pushing at this level, it is probably all scared retailer bulls.

Watch QQQQ support at 47.4 and SPY at 140, if they were breached convincing, I will pick up some short positions.

Thursday, January 10, 2008

Position update

CME: just exited the remaining long position at 604.8 for a gain of over 28 points. May consider re-enter around 575 or 560 with a $5 stop.

Not much of follow-through for the bulls today, Big Ben's pledge of all-out support only had a positive reaction for about 30 min, if the market closes poorly today, yesterday's lows may not the real short-term technical bottoms.

Position update

FSLR: just sold the rest of the position at 228.8 for a gain of over 17 points, may consider re-enter the position if it spikes towards 200 or 210 with a $2 stop.

CME: raised the stop to just below today's low at 588.

Bulls got no follow-through from yesterday's late surge, which makes me feel that we may need a capitulation here to hit a short term bottom.

Wednesday, January 09, 2008

Position Update

FSLR: closed half position at $229.8 for a gain of over 18 points; raised the stop to just below 220 for the remaining half position.
CME: closed half at 598.8 for a gain of over 22 points, raised the stop to just below $582 for the remaining position.

Do I feel lucky? Actually, NO, the capitulation never really came so I held back on several buys (AAPL, BIDU, STP, JCG, as planned in my last weekend's trading calls). The market turned around just at the nick of time, and the way it closes, we should see some follow-through tomorrow and even Friday. If you did get in today, great but don't get cute on that or you won't smile for long (see my earlier post on how to catch falling knives).

Trading alert

Second knife caught: long CME at 576.11, stop just below 570, intra day IT around 584.

The market is doing slow crashing, need a capitulation here to catch more knives.

Trading alert

Just caught the first knife: FSLR, long at 211.21, IT=219, stop just below 208.

The market gapped up in the open again, still not enough panic to be aggressive on the long side.


Tuesday, January 08, 2008

Mid-week note on the market

The market has been noticeably weaker than I expected in my weekend note. After several attempts of early morning or intra-day rallies failed, the market rolled over into the close today. The sharp drop today has every major indices made a lower low, which completes the first concrete signal of the primary trend reversal (after made a lower high in last Dec.). Such major trend reversal signal could be further confirmed in the coming days if the major indices break and close below their Aug'07 lows, which are really just a stone throw away (Russell 2000 has already done so).

As the NASDAQ leads the market breaking down with 8 consecutive losing days and counting, fears are tuning into panics as the volumes rose rapidly in the past two days with many sectors breaking down previously held bottoms. Buying the drop here is really becoming the catch-the-falling-knives act, but my gut feeling is that with the current deep oversold conditions, a panic-driven capitulation is what it takes to trigger a sharp technical rebound, and the panic may reach the extreme when the market tests its Aug'07 low.

The keys to catch the anticipated rebound are:

1. Pick the knives with the dullest edges, such as those solar names, agricultures/fertilizers, and even BIDU, AAPL, ICE.
2. Be patient with the attitude that you rather miss it than risk it. For example, given what's happening in the past two days, I will not catch AAPL unless it gets close to 162 with stop just below 160.
3. The entry point must be very close to a well-defined strong support, which will be used as the stop-loss should the knife falls through.
4. Must place the stop-loss or the falling knife will hurt you!
5. Don't be greedy when the rebound occurs because the rebound is against the overall trend, lock in profits by raising stops or scale-out the position.
6. Finally, consider reverse the position when the rebound runs out of steam.

OK, I think I am ready for a gap down and a test of the Aug'07 lows now. You?

Saturday, January 05, 2008

Trading Calls for the next week or two -- Jan. 5, 2008

Please refer to the previous post for the overall strategy consideration for the coming weeks.

A. Buy-at-bottom or CTT setup

Weekly: clear uptrend, some mild bearish divergences, huge bearish engulfing candle could spell more loss before rebounding.
Daily: Friday's action validated some bearish divergences and then some more, more downside is likely, but the expectations of next weeks MacWorld event may stir bullish sentiment.
60 min: extreme bearishness and weakness and oversold point to an imminent technical rebound.
** L2, entry zone=170-175.22, CS just below 170, IDS just below 169, IT=189
** L1: entry zone=158-162.22, CS just below 160, IDS just below 158, IT=180

Weekly: still in uptrend but upside momentum dissipating
Daily: more downside before any technical rebound
60 min: in oversold
** L2 if it spikes towards 320, stop just below 320. IT=380
** L1 if it spikes towards 300, CS just below 300, IDS below 298, IT=340.

3. CF
Bullish all around.
** L1, entry zone 100-105.5, IDS just below 100, CS below EMA10, IT=119.

4. CME

Weekly: still clear uptrend, but more decline is ahead before rebounding
Daily: 2 consecutive big down days put bulls in defensive standing with key support zone 600-610, oversold but very bearish candles point to further downside
60 min: oversold,
** L1 if it spikes towards 585, CS just below MA200, IDS just below 580, IT=640.

5. CMG
Weekly: big loss with a huge bearish engulfing candle, but uptrend still intact
Daily: Friday's big drop did a lot of technical damage to the bullish case, more downside likely before rebounding
60 min: in oversold for a while now
**L3 if it spikes towards 115 with a tight stop, IT=135
**L2 if it spikes towards 102, IDS just below 100, CS below MA200, IT=130.

6. CRM
Weekly: strong up trend
Daily: in pullback mode, more down side likely
** L1 if it spikes towards 56 or 50 use tight stops, IT=60

7. CTRP:
one of the most consistent base for buy-on-dip-then-hold play
** L1 if it spikes towards 48 or 50 use tight stops, IT=60.

8. DHI:
Weekly: still a clear down trend, but signs of bottoming out
Daily: testing the previous bottom, in oversold
** speculative L2 if it spikes towards 10, stop just below 10, IT=13.

Weekly: still a clear case of strong up trender, but last 3 weeks' candles formed the evening star, indicators point to more pullback.
Daily: overall still bullish, but negative momentum is on the rise.
60 min: in oversold.
** L1 if it spikes towards 220, IDS just below 215, CS just below MA50, IT=250

10. GRMN
Weekly: trend-reversal process developing, more downside.
Daily: short and intermediate trends all down, watch its testing MA200 around 85.6 in oversold conditions.
** L2 if it spikes towards MA200, CS just below MA200, IDS just below 85, IT=92.
** L1 if it spikes towards 80, stop just below 80, IT=89.

11. ICE
Weekly: still a clear up trender, but big bearish engulfing candle suggests more decline in the near future.
Daily: the Three Black Crow candle formation strongly signals near-term trend reversal, this coupled with increasing negative momentum does not bode well for bulls.
** L2 if it spikes toward 160/155 zone, CS just below MA200, IDS just below 150, IT=179.

12. ISRG:
Weekly: still a clear strong up trender, up volumes dwarf down volumes, but up momentum has dissipated.
Daily: looks like a head-and-shoulders formation near completion, more short-term downside likely
** CTT between 264 and 330 use tight stops, don't trade the mid range.

13. JCG
Weekly: big down week came in on light volumes, indicators point to more pullback
Daily: 6 straight down sessions on increasing negative momentum, the post-earning gap is in the test, in oversold
** L1 if it spikes towards 38 with CS just below 38, IDS just below 36, IT=MA50.

14. RIMM
Weekly: up trend flattening, more downside in the cards
Daily: gapped down and closed below MA50, candle formations suggest persistent distribution following the earning report fueled gap up. Even if it breaks 96, the downside may not be much given the latest Q report.
** L1 if it spikes towards 85 use MA200 as stop references. IT=100.

15. STP
Weekly: clear and strong uptrend despite of the abundance of sellers whenever it hits new highs.
Daily: clear up trend but some bearish divergences, momentum on the downside
** L1 if it spikes towards key support zone of 74/76, or MA50 use tight stops, IT=88.

16. WLT

** L1 if it spikes key support zone of 30/32, use MA200 as CS, IDS just below 29., IT=37

17. YGE
Weekly: still a clear up trender, but the Evening star candle formation may spell more near term decline
Daily: downside momentum on the rise, the volatility continues
** L2 if it spikes towards 30 with a stop just below, IT=38
** L1, entry zone 24-28, stop just below 24, IT=MA50

B. Short setups

Weekly: looks like a boom turn bust play, in oversold but negative momentum on the rise.
Daily: short and intermediate trend down,
** S1 if it breaks 69.5 or closes below 70, IT=MA200=64, stop just above 71

2. EXM

another crashing shipper like DRYS, similar technical picture but even weaker as it closed below MA200 for the first time in over 15 months!
** S1 if it breaks/closes below 37, IT=30, CS just above MA200, IDS just above 40.
** S1 on top if it spikes towards 40, IDS just above 41.5, CS just above 40, IT=32.

Weekly: while the uptrend still appears intact, MACD histrogram offers the first sign of the possible reversal of the inter-mediate trend, other indicators point to the downside.
Daily: sliced through MA50 with negative momentum on the rise
** S2 if it spikes towards 680, CS/IDS just above MA50, IT=620.
** S1, entry zone 699-715, stop just above 720, IT=640.

4. SU
along with other energy sector names such as XOM, SLB and DVN, last Friday's action could well be the start of an inter-mediate double top formation. Short setups on these names have a very attractive risk/reward ratio!
** speculative S1 either when it breaks 109 or spikes towards 113, stop just above 113.5, IT around 97.

Weekend notes on the market -- Jan 5 ,2008

Bears are finally arriving!

There is no doubt that bears are more thrilled than bulls that 2007 is over and 2008 has started. Friday's job report caught bulls off guard and the precipitous drop ended the first trading week as one of the worst on record. I am not going into chart analysis for the major indices since they are bearish all around regardless what time frame or angle you look at, just some thoughts:

1. The housing mess is definitely spreading, just look that the retailer index or almost every consumer-driven companies' latest earning reports (pharmacy, retailer,restaurant).

2. FED will further cut rates, even aggressively, but the impact will be short-lived at this stage.

3. Institutions finally decided to take down their bull costume. For that, you may check out an excellent analysis on COT by the Smart Money Tracker (posted on Dec. 31, 2007).

4. Except Russell 2000, all major indices still have one more key support: NASDAQ around 2400, DOW around 12500, SP500 around 1370. But the chance that bulls final standing at these levels will be firmly breached in coming weeks has dramatically increased.

5. NASDAQ is leading the downside move, and yesterday, the big caps on the NASDAQ were sold off aggressively. Such fact suggests that if anything, the down trend is in its early stage.

On the overall trading strategy for the coming weeks:

This week's huge drop came in on relatively light volumes overall, this plus the fact that many stocks are in oversold conditions, I expect the market to rebound in coming days, therefore I may still play the long-at-bottom setup for those that are still in clear uptrend and have a very defined support nearby as stop-loss references (best example: AAPL, entry zone=170-175, stop just below 179, IT=190), but I will use smaller size and shorter holding time. However, the best strategy is using any rebounds to build up short positions. Bottom line, the psyche of the market has clearly changed, and while the time may be yet to come for easy money to be made on the short side, sticking on the long side is getting more and more dangerous.

Will post my trading calls soon.