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.

3. BIDU
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

10.RIMM
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.