Friday, February 29, 2008

A week of royal screwing, for bulls, bears and Wabbit!

Thought last week was really screwy with all the opening gaps were completely reversed, but there is no comparison with this week, as bears were screwed early and bulls got mowed over by the end. I, on the other hand, got drowned in a sea of frustration! I had been really patient for days waiting for the signs of ending of the counter-trend rally, and got a bunch of half-assed signals from Tuesday to Thursday, and before I could put my act together, bulls ran off the cliff today, just like that!

Is this the market or is it because I simply don’t have the balls?

Only managed one trade this week: AMZN—shorted at 67.2 this morning, covered at 64.21 for about 3 points.

Evaluation of my last weekend's weekly trading calls:
I made a total of 16 trading calls on 14 stocks; out of those, 7 winning calls (44%), 2 losing calls (13%), and 6 non-hitters (38%), and 1 near-miss.

What do you all think next week is gonna be like?

Thursday, February 28, 2008

Have traps, but got balls?

Got a bit time on hand tonight, below is what I got for tomorrow:

Both DOW and SP500 started to wilt under the heat of their declining MA50, but overall volumes were even lighter, which makes me think that there could be another test in the next several days. NASDAQ fell too but some big names were not weak. Things are getting tricky here. With Yen making new high, and oil/commodities soaring, tomorrow will be tough for bulls. Keep an eye on QQQQ, a break about 44.6 on heavy volume will be a buy signal for big techs, on the other hand, if it breaks down through 43.6, the rally could end here.

1. AAPL: while it had a bullish day, the last hour action shows clear presence of bears in the R zone. If the overall market remains range-bound, I will go long from 123-126.5, and sell from 132-136.

2. AMZN: SW/DT-S1, short when it breaks 67 or if it spikes towards 70, stop just above 70.6, IT=64/60, consider reverse to long if it spikes down to 60.

3. CEO: SW-S3, entry zone 173-175, stop just above 175, IT=161.

4. CF: SW-S3, entry zone 127-130, stop just above 131, IT=115

5. DRYS: DT-L1 if it spikes towards 70/71, stop just below 70, IT=75

6. DVN: it is starting parabolic move, and based on candle body and volume, some kind of capitulation is very close, SW-S3, entry zone 109.5-114, stop just above 115, IT=100

7. FSLR: SW-S3, 207-215, stop just above 215, IT=180.

8. MON: SW-S3, 119-124, stop just above 124, IT=112

9. SGR: it is approaching a critical point here as it is very very overbought. Plan 1: SW-S3, 69-72, stop just above 72; Plan 2: SW-S2 if it opnes high and breaks 67, IT=62.

10. TBSI: SW-S2 when it breaks MA200=36.33 or if it spikes towards 38, stop just above 39.5, IT=MA50 (around 30.5)

11. WM: a very classical breaking down pattern here, SW-S2, 15.6-16.6, stop just above 16.7, IT=14

Tuesday, February 26, 2008

Got traps?

You got to tip your hat to the bulls: they have marched on for 3 straight days as the negative news kept pouring in, and by the end of today, DOW became the first major indices to test its MA50 with SP500 very close behind. I am scratching my head right now, I mean, we start to see the concrete evidences that both inflation and house price decline begin to accelerate, how much longer can the bulls party on without waking the bears up from their sweet SWEET dreams? With one eye on the MA50 tests by the major indices and the other eye on MA200 test by VIX, wabbit is once again contemplating some traps, sneaky!

Sunday, February 24, 2008

Weekly Trading Calls -- Feb 24, 2008

Overall Trading Strategy for Next Week

As I mentioned in my Weekend Notes on the Market, with the big boys continue to stay put, the negative and spreading macro-economic headlines and the solid signs of buyers around both Mid-Jan and early Feb lows determine that the market may remain range-bound for the near future. CTT will continue to be the best overall strategy until the market breaks out of the range on heavy volumes.

Weekly: went down another notch with new low but managed to close above the previous low; continues to under-perform NASDAQ with its 3rd straight losing week but volumes continue to shrink; negative momentum high and un-abating; both stochastic and RSI in deep oversold conditions but no concrete signs of rebounding yet;
Daily: clear bearish volume and candle patterns; most indicators favor more downside movement; momentum still in the positive territory
** SW/DT-S2, entry zone 122-MA10, IDS just above 126, CS just above MA10
** SW/DT-S1, if it spikes towards 130/131, IDS just above 132, CS just above 130, IT=126
** SW/DT-L3 if it spikes towards 110, stop just below, IT=116.

Weekly: 8 straight losing weeks but volumes declining for the past 4 weeks; extended stay in deep oversold conditions; negative momentum high but stalled for the 3rd week
Daily: momentum positive but diminishing; candle formations has bearish bias.
** CTT between 64/65 and MA200/MA50 (converging around 81) with tight stops, don’t trade the mid-range.

3. BSC

Weekly: momentum flipped to the positive side last week and now rising; long and rising candle tails highlighting the presence of buyers at those levels; stochastic just crossed down;
Daily: solid signs of continuation of oversold rebound; closed around MA50; candle formation has bullish bias; momentum just flipped to the positive side
** SW-L2, entry zone=78-83.6, IT=92.

Weekly: another up week on decent volume continuing the oversold rally started just below $50; a winning week on light volume; negative momentum nearly dissipated; most indicators bullish for the near future
Daily: positive momentum stalled as it rallied back towards the post ER-high; lingering in the overbought region for the past 2 weeks; moving average in solid up trend formation.
** CTT-SW between MA50/MA200 (converging around 71) and 94.8-100; stops just below 70 or above 100, don’t trade the mid range.

Weekly: a week with modest decline on modest volume; negative momentum retreating; indicators mostly favor upside for the near future.
Daily: the down drift following the big post-ER run-up progressing on declining volumes; most indicators mildly bullish
** SW/DT-L3 if it spikes towards 200, stop just below, IT=MA50
** SW/DT-L2 if it spikes towards 180, stop just below, IT=196

Weekly: negative momentum remained high but stalled for 3rd straight week; candle formation favors continuation of the down trend; in oversold
Daily: candle formation clearly bearish; positive momentum dissipated; buyers abundant around 500
** SW/DT-S2, entry zone 524-534, IDS just above 540; CS just above 535, IT=500/480

7. NUE
Weekly: 5 straight winning week that started below 48; positive momentum rising; both stochastic/RSI in over bought; indicators favor more near-term gains.
Daily: positive momentum stalled; lingering in overbought condition for last 3 weeks; indicators mostly favor most upside
** DT-L2 if it spikes down towards 62/MA10, stop just below 62, IT=65
** Speculative SW-S1, entry zone 68-72; IDS just above 72, CS just above 70 on bullish daily candle; IT=60.

Weekly: a big up week on average volume; signs of well-progressing oversold rebound; negative momentum retreating; candle formation favor more near-term upside
Daily: rising positive momentum; approaching overbought;
** DT/SW-L2, entry zone=100-105, stop just below MA50; IT=118

Snap Calls

9. AIG
SW-S1, entry zone=51.9-56, IDS just above 56, CS above MA50 when the candle is bullish (at 54.3 now).

10. BIDU
CTT between 215/223 and MA200/280, don’t trade the mid-range.

11. CTRP
Speculative SW-S2, entry zone=55.88-59, stop just above 60, IT=46, hold over the ER on Feb. 27; I suspect while the Q4 maybe fine, the guidance of Q1 would be bad during the national wide lasting wintry conditions during the peak holiday season. Prepare to reverse to the long side from 40-42 to play for the summer Olympic season.

12. GS
CTT between 157/166 and MA50, bearish bias, don’t trade the mid range.

13. ISRG
CTT between 270 and 298/308, don’t trade the mid range.

14. MON
Speculative SW-S3, entry zone 119-129, stop just above 130, IT=110/100

15. RIG
SW/DT-L2 if it spikes towards 131, stop just below 130, IT=140

16. TBSI
SW-S2, entry zone 41.8-44.8, stop just above 45, IT=35

Saturday, February 23, 2008

Weekend notes on the market -- Feb 23 ,2008

Impasse, but for how much longer?

A wild week on the Wall Street, featuring 4 consecutive “gap and crap” that water-tortured both bulls and bears, had an crazy ending as the last minute bond insurer bail-out rumor fueled a bullish comeback from the edge of collapse on the Friday. The rally put both DOW and SP500 in the winning column and NASAQ in the losing column for the week, though none of which came in on significant margins.
On the weekly charts: the high negative momentum either remained stalled (NASDAQ) or diminished somewhat (DOW and SP500) for the 4th straight week; for all major indices, the stochastic poised to turn down again; the declining pattern in both weekly price range AND the overall volumes now extended to 5 straight week; other indicators neutral for the near future.
On the daily charts: the positive momentum either stalled (DOW and SP500) or waning (NASDAQ); while winning and losing sessions alternated, the overall moving direction has a down bias within an overall bear-flag like formation; the widely watched triangle formation was solidly broken to the downside on the Friday, but only to come back with a hammer candle for all major indices; other indicators are neutral for the near future.

Thoughts and observations about the current market conditions and near-term outlook:

1. The treacherous macroeconomic headlines forayed into a new theme this week as the latest CPI data raised real fear of the stagflation for the first time in years. It becomes clear that the inflation can no longer be overlooked and this may be just the beginning. Such new negative headline, along with the existing and continuing deteriorating ones (see “One in ten home loan is under water”) will continue suppress any rally to say the least.
2. Driven by the excessive liquidity from many center banks, the commodity and related sectors enjoyed a break-out week. Such surge could further enhance the inflation fears.
3. Friday’s last minute furious rally made one thing clear: there were and will be plenty of ready and able buyers if major indices approach their mid-Jan AND early-Feb lows.
4. The major players continue to sit tight for the 4th week in a roll. Until they are committed to either side (large move+heavy volume), the market is likely to remain range-bound for the near future.

Will post weekly calls on Sunday.

Friday, February 22, 2008

Saved by the bell?

Bears had bulls right where they wanted, and the Friday was slowly and surely turning into a doomsday for the bulls, and then all the sudden, bailout rumors started to fly, and next thing you know, bulls were running everywhere while stunned bears were scrambling for covers. What a wild week we have had, but if you had sat tight all week, nothing seemed really changed by the end.

For the week, all my positions got stopped out: POT, MON and DVN were stopped out on the Tuesday with very small losses; AAPL was stopped out late Friday afternoon at 118.11 for a gain of nearly 11.5 points (shorted at 129.48). Which left me a bit ambivalent about the SW instead of DT: had I been just DT, I would have had profits in POT/MON/DVN, on the other hand, I would not have had a very sizable winner in AAPL. Somehow, I feel that 1 big winner+3 small losers are not as triumphant as 4 small winners, but then again, maybe that is exactly the mentality I should change.

For last week's trading calls: there are a total of 25 calls on 16 stocks, out of which, 4 winning calls (16%, with nice ones on RIMM, BSC, and FSLR), 4 losing calls (16%), 3 near-misses (12%), and 14 non-hitters (56%). With the market being crazy like this, I guess I should not feel too bad about the so-so stats.


Thursday, February 21, 2008

What if there is no gap at open tomorrow?

You sure would be a happy fellow if you have been fading the opening gaps all this week! It would be very interesting to see what happens if there is no gap at open tomorrow. The thing is, the marcro-economy is really dicey, that's why there are more seller than buyers when the market jumps high, but in the same time, plenty of bulls feel that the bottom is in, so they out number bears when the market sinks low. The real test will come when the market opens flat, and we will find who have more convictions. I will keep an eye on some of the key levels tomorrow (69 for IWM, 43.2 for QQQQ, 137.6 for SPY, and 122.2 for DIA), if they are breached on strong volumes, watch out below! In the meantime, how about just sit tight like the big boys do?
Still holding AAPL, if it breaks 120 tomorrow, a test of 117 will be in the card.

Tuesday, February 19, 2008

Gap and crap, now what?

Soaring commodities gave bulls a preview of how the market would look like should there be a raging inflation. Too bad that a few of my positions were in the wrong sectors at the wrong time (stopped out for DVN, MON and POT for small losses thanks to small token positions used), but still holding AAPL for 118/120 (am I trying to squeeze the blood out of a stone or what?). Bulls have to feel deflated at the end of the day, but looks like HPQ might give them another shot in the arms tomorrow at open. Since big boys are still siting tight (not necessary pretty) on their fat asses, why shouldn't we?

Monday, February 18, 2008

Weekly Trading Calls -- Feb. 18, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”, the market has been range-bound in the past 3 weeks, and with continuously declining volumes, such pattern is likely to persist until some kind of catalysts drive the market out of this range. While I feel that there is a bit of up-side bias for next week, CTT using the key S/R near the boundaries of the 3-week trading range as entry/stop references is like the strategy with the best r/r ratios for the time being. However, one must be ready to take directional/momentum positions should the major indices break out the current range on heavy volumes.

Weekly: negative momentum stalled for the 3rd week; deeply oversold; still under-performing NASDAQ but volume and candle body indicating abating selling pressure.
Daily: momentum flipped to the positive side, volumes dropped to near average with candle bodies contracting;
** SW-L3, 118-124.11, stop just below 117, IT=130
** SW-L1 if it spikes towards 110, stop just below, IT=122
** DT-S2 if it spikes towards 130/132, stop just above 132, IT=128
** DT-S1 if it spikes towards 135/136, stop just above 173, IT=132

2. AIG
Weekly: a big down week on the all-time high volume as the write-down news came out; negative momentum on the rise; significant buying seen just above its multi-year low; not oversold yet
Daily: negative momentum stalled; signs of oversold rebound,
** SW-S2, 49-54, stop just above MA50 (55.3 now), IT=40

Weekly: negative momentum stalled; oversold;
Daily: momentum on the positive side; indicators mixed for the near term direction
** CTT between 67/68 and MA200 (at 80 now) with stop just across the boundaries, don’t trade the mid range


Weekly: a winning weekly with volume near all time high; negative momentum stalled; near oversold; indicators mildly bearish overall,
Daily: momentum flipped to the positive side for the first time in 2008; other indicators mixed; closed just above the key MA200.
** CTT-SW between 238/240 and 280/285, don’t trade the mid-range.
** DT-L3, 255-258, stop just below 255, IT=273

5. CMG
Weekly: A losing week on heavy vol as the result of underwhelming ER; negative momentum on the rise for 7th week; not oversold yet; long tails of the candles seen for 2nd straight week indicating strong buying in the key support zone
Daily: The post ER sell-off ended with a very bullish candle formation; momentum still negative but with bullish divergence; overall technical picture still bearish
** SW-S2, entry zone =114-120, stop just above 120, IT=105

6. DHI
Weekly: mild declining on much lighter volume; positive momentum stalled; indicators slightly bearish;
Daily: the inching down declining came on much lighter volumes; negative momentum still rising, entering oversold conditions; presence of candle tails indicative of buyers; first testing of MA50 successful;
** SW-L2, entry zone=12-13.1, stop just below 12, IT=15

Weekly: pre-ER run was enough for an up week on good volume; negative momentum diminishing; indicators mostly favor more near-term upside
Daily: the post-ER reaction was a big bearish Marubozu candle, which engulfed the doji candle of the previous day and together strongly suggesting the top of a 4-week running up; positive momentum stalled with signs of overbought pullback,
** SW-S2, entry zone=84.8-87, stop just above 88.5, IT=70
** DT-L2 if it spikes towards 70, stop just below 69, IT=75.

Weekly: A good ER drove up a big winning week on all-time high volume; negative momentum receding; indicators mostly favor more near term gains.
Daily: momentum turned positive and rising; post-ER gap above key R around 200; closed near MA50,
** SW-L2: entry=213-220, IT=240, stop just below 213
** SW-L1 if it spikes towards 200, stop just below, IT=220.

Weekly: 2nd up week on much lighter volume; negative momentum stalled, signs of oversold rebound;
Daily: momentum flipped to the positive side; indicators mostly favor more near-term gain
** SW-L3: entry=519-530, stop just below, IT=560
** SW-S2, entry=560-MA200(at 573.6 now), IDS just above 580, CS just above MA200, IT=540.

10. GS
Weekly: negative momentum on the rise; indicators mostly favor near-term downside
Daily: unabating negative momentum; in oversold with signs of rebound; clear down-trending
** CTT-SW between 168 and MA50 (at 200.2 now), don’t trade the mid range

11. RIMM
Weekly: negative momentum receding; signs of oversold rebounding
Daily: momentum stayed in the positive territory lately; seems like a short-term 2-bottom formation; indicators mostly favor upside gain; a close above MA50(near 99) may prompt a test of 110
** SW-L2, entry zone=90-95, stop just below 90; IT=110
** SW-L3, entry zone=82-85, stop just below 82, IT=MA50

12. BSC
Weekly: momentum flipped to the positive side for the first time since last November; volume pattern bullish for the past several weeks;
Daily: Friday’s high-volume rise shapes up a nice base-breaking out form; solid oversold rebound signs; momentum poised to turn positive
** SW-L2, entry zone=78-81, stop just below 77, IT=93,

Snap Calls

13. CME
** SW-S2, entry zone 579-MA200 (589 now), stop just above; IT=550.

14. SPWR
** SW-L2, entry zone=70-72, stop just below 70, IT=90

15. WFR
** SW-L2, entry zone=68-72, stop just below 68; IT=82

16. YGE
** CTT between 18 and 26 with tight stops, don’t trade the mid-range

Sunday, February 17, 2008

Weekend notes on the market -- Feb 17 ,2008

Waiting for the catalysts?

The market recouped some loss from the previous week while the major indices remained range-bound for 3rd week in a roll.
On the weekly charts: for all major indices, the negative momentum either stalled or diminished somewhat; overall volumes declining for the 4th week in a roll; indicators nearly neutral for the near-term future.
On the daily charts: for all major indices, the momentum are all in the positive territory; bullish movement in the early part of the week was largely negated by the bearish counter-move in later part of the week; indicator mildly bullish for the near-term future; overall volumes continued the contraction pattern ever since the mid-January bottom.

Thoughts and observations about the current market conditions and near-term outlook:

1. The macroeconomic environment remains treacherous as the distinctively negative tone in headlines persists. Any rally in such environment would often attract more sellers than buyers, which was exactly what occurred this past week.
2. As long as the overall volume contraction continues, the market is likely to remain within the trading range since the Mid-Jan bottoming.
3. Oil, along with other commodities, is once again advancing. If next week’s inflation data comes in worse then expected, the stagflation scenario may start to gain traction, which would be a clear negative for the market.
4. The major players seem to mostly stay put in the past 3 weeks, they are obviously waiting for some kind of catalysts before committed to either side. Until that happens (large move+large volume), CTT near the upper and lower boundaries of this 3-week trading range seem to be the most sensible approach.

Will post weekly calls on Monday.

Notes on this week's trading and trading calls

While the wabbit traps have been woefully empty, I did manage a few winning trades from the short side though all with token position size:
GS -- shorted at 184.88, covered at 175.11
AAPL -- shorted at 129.48, holding for 122
POT -- shorted at 151.8 (1st short at 152.8 was stopped out at 154.11), still holding
MON -- shorted at 115.8, still holding
DVN -- shorted at 93.88, still holding.

Evaluation of my last weekend's weekly trading calls:

I made a total of 29 trading calls on 18 stocks; out of those, 11 winning calls (38%), 2 losing calls (7%), and 16 non-hitters (55%). Most of the winning calls produced sizable profits. If such pattern continues for a few more months, I might just implement a "robotic" execution protocol in my account so I can do my day job AND make lots of coins as Razor put it. Dream on!

Wednesday, February 13, 2008

Wabbit Traps

Bulls not only put up a better show today even though volumes were still underwhelming, but seem more than ready to have some kind of mini orgy leading up to the Friday's option expiration (razor is right, those puts will be wiped out). To me, unless the major indices closes above their MA50, the bulls are partying deep in bears territory, and you know how that would end. Excited by the imaginary gory scenes, I figure it is time to set up some wabbit traps using small short positions or puts, below is the list of traps, no laughing please:

** AAPL: entry 134.8-136, stop just above 137, IT=126
** BIDU: either just below 300 or 320 with a stop just above, IT=280 or 300
** DRYS: 92-94, stop just above (hold for ER?), IT=70??
** FSLR: 254-260, stop just above, IT=220
** GOOG: 558-573, stop just above, IT=513
** NUE: 63.8-65, stop just above, IT=58
** SPWR: 84.8-90, stop just above, IT=75
** STP: 58.9-63, stop just above, IT=53
** UA: 48-51.5, stop up to 52.5, IT=43

So, what's for dinner? Steak or wabbit stew?

Tuesday, February 12, 2008

Running out of steam?

The headlines and numbers are looking pretty good, but on my list, many are running out of steam on yet another low volume up day. To make it a bit more interesting, I entered a several token positions for SW early this morning, some of which are from the weekly calls, stops are all above their corresponding today's highs
** AAPL-shorted at 129.48, IT=122
** GS-shorted at 184.88, IT around 175
** POT-shorted at 152.8, stopped out at 154.11, reshorted at 151.8; probably a premature trade
** DVN-shorted at 93.88, IT=88; it is stronger than I expected but the stop is just so close!
Missed opportunities: GOOG short around 530, FSLR short just below 200.

Sunday, February 10, 2008

Weekly Trading Calls -- Feb 10, 2008

Overall Trading Strategy for Next Week

As I mentioned in my Weekend Notes on the Market, given the increasingly treacherous macro-economic conditions, the bulls will likely struggle more than bears even though I feel that market is likely to trend up next week. One thing I learned last week is that setups from the long side no longer working out as usual, and must be entered at a very oversold conditions (on 60 min) in order to have some decent profits. On the other hand, the short setups were often fruitful even if the entry conditions were not perfect. Another thing I noticed is that more than ever, the key S/R must be used in any trading decisions (just look at what happened when AAPL breached its support near 126). With all things considered, I think the sound strategy in the coming weeks should focus more on the short side than the long side.

Weekly: the Tweezers bottom formation was destroyed by another high-volume sell-off week after the recent low near 126 was breached; negative momentum continues to rise; in oversold conditions.
Daily: classic drop-pullback-drop bearish pattern; down volumes dwarf up volumes since Jan.2; unable to rally from oversold conditions; bullish divergence in momentum
** DT/SW-S3 if it spikes towards 130/131, with stop just above 132; DT-IT=126, SW-IT=122
** SW-S2 if it spikes 136 with stop just above, IT=126
** SW-S1 if it spikes towards MA200 (146.8 now)/150, stop just above 150, IT=130
** DT-L3, if it spikes towards 122 with stop just below 121.5, IT=125
** DT-L2, if it spikes towards 110 with stop just below, IT=120

Weekly: 6th straight losing week on rising negative momentum and persistent lower-high and lower-low pattern; oversold conditions;
Daily: bullish divergence in momentum, signs of oversold rebound;
** SW-S2 if it spikes towards MA200 (at 79.7 now), IDS just above 81, CS just above MA200, IT=70
** SW-L3 if it spikes towards 64/65 with a stop just below 64, IT=72.

Will next week’s ER stop the slide?

Weekly: another big losing week on rising negative momentum, in oversold conditions
Daily: Solid breaking down below MA200, bullish divergence in momentum, in oversold conditions,
** Speculative SW-L3 (hold through ER), entry zone 211-221, stop just below 210, IT=255. I suspect the current sell-off may be a bit overdone when it issues ER on Feb. 14.
** Speculative SW-L2 (only for immediate post ER reaction), entry zone 190-201, stop just below 190, IT=220
** Speculative SW-S2 (only for immediate post ER reaction), entry zone 180-185, stop just above 185, IT=262.

4. CME
Weekly: a huge losing week on tremendous volume, suggesting the reversal of the fortune, ominous bearish candle and spiking negative momentum heavily favor further decline in the near future.
Daily: The huge Marubozu candle on extreme volume on last Wednesday will thwart any rally in the near future; most indicators favor more downside
** SW-S1, entry zone 565-580, IDS just above MA200 (587.5 now), CS just above 580. IT=500
** SW-S3, entry zone 540-547, IDS just above 550, CS just above 540, IT=500.

5. CMG
Will its latest ER prove that after all, it is also just one of those struggling restaurants as consumer spending wilting? And have you noticed that there are a lot more restaurants TV commercials lately?
Weekly: negative momentum rising steadily as it broke to the down side;
Daily: broke down through MA200 for the first time in a year; bullish divergence in momentum, signs of oversold rebound
** Speculative SW-S3 (hold through ER), entry zone=114-125, stop just above 125, IT=100
** Speculative SW-S2 (only for immediate post ER reaction), entry zone=125-135, stop just above, IT=115.

6. DHI
Has the homebuilder sector really bottomed out?
Weekly: a big down week after 4 consecutive up weeks, all on heavy volumes; positive momentum stalled; bearish engulfing candle favor more immediate downside
Daily: momentum flipped to the negative side and most indicators favor down side move; down volumes significantly less than up volumes;
** DT-L2 if it spikes towards 13, stop just below, IT=14
** SW-L1, entry zone=11-12.2, stop just below 11, IT=15

7. DVN
Weekly: 2nd winning as the steep recovery continues; negative momentum abating,
Daily: rising positive momentum, clearly bullish candle formations in the past 3 weeks; approaching overbought conditions as it gets closer to the upper boundary of its 3 month trading range
** SW-S3, entry zone 91.8-94, stop just above 95, IT=85.

Weekly: negative momentum rising,
Daily: negative momentum dissipating, range-bound
** CTT between 200 and MA200, don’t trade the mid range

Weekly: a winning week after a losing streak of 5; negative momentum still rising but the hammer candle and signs of oversold rebound may favor more upside in the near-future.
Daily: negative momentum diminishing, signs of oversold rebound,
** SW-S1, entry zone 540-560, IDS just above MA200, CS just above 560, IT=500.

10. GS
Weekly: a big down week on average volume, bearish-engulfing candle favors more near-term down side.
Daily: head-fake breaking out of the well-defined descending channel; likely to test recent low around 175 if breaks 185
** SW-L2, if it spikes towards 175 with a stop just below, IT=MA50
** SW-S2 if it spikes towards MA50 with a stop just above, IT=190.

11. ILMN
Weekly: stellar ER and outlook failed to boost the positive momentum as it closed the week marginally lower; still a clear uptrender,
Daily: uptrend clear but bearish divergence in momentum
** Current position (near 71) stop if it breaks 65.3, IT=72
** SW-L2, entry zone 60-MA50 (61.8 now), IT=70, stop just below 60.

12. MON
Weekly: momentum flipped to the negative side for the first time since Sept.07, still a clear up-trender
Daily: mixed picture as bulls/bears battled hard
** SW-S3 If it spikes towards 116, with stop just above 117, IT=96

13. POT
Technical picture similar to that of MON with a tad more bearishness
** SW-S3, if it spikes towards 145/147/150, IDS just above 153, CS just above 147, IT=115.

14. STP
Weekly: another huge down week on rising momentum; the big bad bearish candle strongly suggests more near-term decline; approaching oversold conditions
Daily: solid breaking down below MA200, bearish candle formations and volumes, but diminishing negative momentum.
** SW-L2, entry zone 32-37, stop just below 32, IT=MA200

15. YGE
Weekly: good news on the outlook and new customer failed to stop the rapid decline as the losing streak now extended to 6 on high volumes; in oversold conditions but more near-term downside is likely as the negative momentum continues to rise;
Daily: earlier bottoming attempt invalidated by more selling along with other Chinese solar names, bullish divergence in momentum, closes near the key support around 18.
** Any long position should be reduced in the range of 20.5-24
** SW-L2, entry zone=12-14.1, stop just below 12, IT=30

16. YHOO
No need to pay too much attention to technical indicators except the key S/R
** SW/DT-L2, entry zone 22-24.1, stop just below 22, IT=26 (MA200)
** SW/DT-S2, entry zone 31.8-34, stop just above 34, IT=29

Snap Calls

17. ISRG
CTT between 280 and 340, with tight stops, don’t trade the mid-range.

18. RIMM
CTT between 80 and 97, don’t trade the mid range, bearish bias

19. SOLF

SW-L3, entry zone 14-15.1, IDS just below 14, CS just below MA200, IT=22

20. UA
SW-S2, entry zone 47.8-51, stop just above 51 or MA200, IT=40

21. WYNN
SW-S2, entry zone 122-130, stop just above 130, IT=MA50 or 110,

Saturday, February 09, 2008

Weekend Notes on the Market

No rally, no bottom?

Last Tuesday’s shocking ISM non-manufacture index utterly destroyed the nascent rally, and the emboldened bears promptly went on attacking, sending the all major indices to a weekly loss of 4% or more, and along the way, casting the doubts about the Jan’08 bottom.
On the weekly charts: for all major indices, the most evident and ominous signal is the big bearish candles whose bodies engulfed those of the week before, thus largely negating the previous bullish near Morning Star candle formations; negative momentum increased a bit, while the signals for oversold rebound are still there; bearish moving averages bow-tie formation in full swing; the sizable weekly decline came on volumes that were lighter than those of the previous weeks.
On the daily charts: for all major indices, the momentum is poised to turn negative with most indicators favor more near-term downside move; however, presence of buyers are evident in the last 2 sessions,

Thoughts and observations about the current market conditions and near-term outlook:

1. The macroeconomic environment is increasingly treacherous. With its impact spreading to many other fields, the sub-prime mortgage mess itself seems far from over. These factors cast long shadow on the Wall Street, and will cap any rally in coming weeks.
2. The US$ may be at the turning point, suggesting other major economy may be forced to cut rates. Although the increased liquidity may buoyant the stock markets in the near future, its detrimental and long-term impact on inflation may ultimately unravel the market.
3. The market was trying to test the Jan’08 low, and so far the test seems successful (check QQQQ and IWM charts). However, the overall light volumes this week suggest that the major players did not participate much either way, making it premature to ascertain either the Jan’08 bottom has been successfully tested or the bottom-ensuring rally is done.
4. The market is now at a crucial point as the Jan’08 bottom is being threatened, while the technical pictures are far from one-sided bearishness, the non-stopping and mostly negative economic headlines would help bears more than bulls in the days to come.

Will post weekly calls on Sunday.

Notes on this week's trading and trading calls

As my regular job has becoming more demanding, I had to cut down my time on trading/blog on week days. Managed to do 1 DT and 3 overnight SW and 1 SW long, except ILMN, all came out nicely.
As for my >weekly trading calls: for 18 calls on 10 stocks, there are 2 winners (FSLR DRYS), 4 losers (AAPL, BIDU,GS,SPF), 1 near miss (FSLR) and the rest of non-hitters. This is the first time in quite sometime that the losing calls outnumbered the wining calls, probably reflecting my underestimation of current dire economic environment in my last weekend's market analysis.

Looking ahead, I probably have to further cut down time on trading as due to the job, and I am thinking about using a simulation trading system to execute my trading calls, which in a long run, can provide a nice record for systematic evaluation of the trading calls and performance. I am currently considering Investopedia's Stock Simulator, would love to hear any suggestions.

Tuesday, February 05, 2008

No service, no rally?

I knew this is going to be a sucker's rally, but did not realize it could fizzle so thoroughly before I could get my hands on those retailers on my list. While it seems bulls are stepping into the economic mine field, I am yet to be convinced that they are done by now. Sorry about about the GS call, which was destroyed by an analyst from Oppenheimer. On the other hand, my calls on FSLR, BIDU, SFP are so far so good. Please be careful on the long side!

Sunday, February 03, 2008

Weekly Trading Calls – Feb. 3, 2008

Overall Trading Strategy for Next Week

For the reasons discussed in my Weekend Notes on the Market, I feel that the market is poised to further extend the rally in the coming days. However, the market is approaching overbought, and as long as the macro-economic environment remains dire, the rally will be bumpy and volatile, therefore, instead of chasing the bulls, one should consider scale-in approach and use key S/R levels as entry and stop references.

Weekly: 1st up week on average volume following 4 straight high volume losing week; negative momentum still rising, approaching oversold, a bullish Harami candle this week and a Tweezers bottom formation point to the possibility of short-term bottom near 126;
Daily: diminishing negative momentum, up vol notably lighter than down vol, weak rebound from prolonged and deep oversold conditions
** DT/SW-L2 if it spikes toward 130 with a stop just below, IT=135, r/r=1:5
** SW-L1 if it spikes towards 127 with a stop around 126, IT=132, r/r=1:5
** DT-S3 if it spikes towards 140, stop just above 141, IT=136, r/r=1:4
** SW-S2, entry zone 145-150, IDS just above 150, CS just above MA200 (near 146 now), IT=140,

2. ANF
Weekly: well defined trading range since Oct’06 with slightly overall bullish bias, bullish candles and indicators point to further near-term gain,
Daily: positive momentum on the rise, in overbought, vol and candle formations highlighted bullish tones.
** SW-S1, entry zone 84-86, stop just above 86, IT=72, r/r=2:12. No matter how strong this retailer is (it is one of the strongest), like Razor said, this NOT an environment for a consumer-driven company like ANF to break out the long held trading range. ER due Feb. 14 AH.

Weekly: negative momentum continues to rise; indicators mildly bearish, not in oversold yet
Daily: negative momentum dissipating, solid support seen near MA200,
** CTT between MA200 (stop just below 249) and key R at 300 (stop just above), don’t trade mid range.

Weekly: a big up week with rising vol and extending bullish candle, negative momentum starts to recede, solid signs of oversold rebound on the way
Daily: overall bullish candle formation and vol actions in the past 3 weeks, closed above MA50, approaching overbought.
** SW-L2, entry zone 65-68.1, stop just below 64.5, IT=74
** SW-S2, entry zone 80-83, stop just above 85, IT=75

Weekly: 1st up week on relatively light vol follow 5 straight down weeks, negative momentum still on the rise,
Daily: negative momentum dissipating, volatility dropping, indicators slightly bearish overall
** SW-S1 if it spikes towards 220, stop just above MA50, IT=200
** DT-S3 if it spikes towards 200, stop just above, IT=192
** SW-L3, entry zone 160-167, stop just below 160, IT=179.

My last week’s analysis was pretty much on the money.
Weekly: the disappoint ER extended the losing streak to 5 week with vol and negative momentum continue rising; bearish candle formation also favors more near-term loss, in oversold but may not matter as it trends down.
Daily: the high vol decline continues, negative momentum wanes a bit, in oversold.
** SW-S2, entry zone 528-550, stop just above 560 or MA10, IT=480

Weekly: 2nd straight up week on relatively light vol, negative momentum stalled, solid oversold rebound on the way
Daily: Momentum flipped to the position side, move averages in firm down-trend formation.
** SW-S2 if it spikes towards 80, stop just above 80, IT=71
** SW-S1 if it spikes towards 85, stop just above MA200/50 (projected to be around 88), IT=75

8. GS
Weekly: negative momentum abating, solid oversold rebound on the way
Daily: rising positive momentum, approaching overbought, vol decreasing as it moving up in the last 3 sessions, closes above MA50
** SW-L1, entry zone 199-203, stop just below MA10, IT=210

Its latest ER is a perfect example why some analysts on the Wall Street are either incompetent or have sinister hidden agendas.
Weekly: extreme volatile week ended on a high notes because of a stellar ER, solid oversold rebound on the way
Daily: momentum flipped to the positive side, indicators favor more upside movement; but this post-ER day has the lowest vol among others,
** Speculative SW-S2 if it spikes towards 340, stop just above, IT=300
** SW-L1 if it spikes down towards 280, stop just below, IT=300

10. SPF
This company seems so destined to file bankruptcy that nearly 70% of float is short, as it has just started to rally with the rest of homebuilders, its upcoming ER on Tuesday will kill either bulls or bears.
Weekly: 3rd straight winning week on rising volume and positive momentum; bullish candles with body continues expanding, oversold rebound in full force
Daily: classic case of the base breaking out pattern, positive momentum on the rise, in overbought,
** Speculative SW-L3, entry zone 4-5, IT=8, stop just below 4, r/r=1:3

Stalking list
The following are the stocks I will closely monitor as they approach crucial levels.

11. CROX (SW-S1)
It has built a decent bottom at 27/30 and now breaking out, but I expect the rally to be stalled in the key R zone from 39-42, MA50 around 36.5, MA200 around 46.4. IT=31

12. TIF (SW-S2)
Another retailer on the rebound. Key R zone=44-48, MA50 around 43.3, MA200 around 48.8. IT=40

13. UA (SW-S1)
Yet another retailer. Key R zone=45-50, MA50 around 43.5, MA200 around 51.8. IT=37

14. SHLD (SW-S2)
Key R zone 120-130, MA50 around 104, MA200 around 140, IT=MA50

15. TBSI (SW-S1)
Key R zone=36-44, MA50 around 31.9, MA200 around 35.6, IT=30

16. YHOO (speculative SW-S1)
I really doubt that the deal with go through, without which YHOO is probably worth low 20's. With the offer price around 31, it seems that a short between 29-31 has a pretty decent r/r. Bidding war? That might be even better.

Saturday, February 02, 2008

Weekend Notes on the Market

The bottom is in for now, but what about the top?

With Fed’s unconditional love, the bulls posted the second straight winning week, and are now poised to further extend the rally.
On the weekly charts: For all major indicies, the negative momentum starts to retreat, crystal clear signals of the beginning of an oversold rebound (both RSI and Stochastic), candle formations all bullish, especially for SP500 and DOW (very close to the Morning Star).
On the daily charts: the momentum not only flipped to the positive side but rising, other indicators also favor more upside movement; last Friday’s gains put the market solidly above the top of the past 5-day consolidation range (well, maybe except the QQQQ).

Thoughts and observations about the current market conditions and near-term outlook:

1. As I pointed out in my last weekend’s notes, the market would need follow-through days to confirm the bottom and it got a couple of high volumes days the past week, so technically speaking, the bottom is now much certain not only for the short-term, but also for the inter-mediate term.
2. With the Fed has not only pledged to be but also acted like the Wall Street’s bitch, the bulls start to think about all the growth the rate cuts would generate in later part of this year. In other words, with the floor being firmly placed, the market psyche is turning cautiously bullish, which may explain why the bleak Dec job report did not trigger much sell-off on the Friday.
3. It is interesting to see that Russell 2000, which led the market down since Oct’07, is now leading the rebound with force. I noticed before that the small caps are often the first to top and the first to bottom. So its latest movement signals that the market may be near or have reached a bottom.
4. While the QQQQ has been a bit under-performing the market, there are some signs that tech might become the latest beaten down sector what will see some solid rebound (see banks, homebuilders and retailers), but with many disappointing tech ER lately, please curb your enthusiasm.
5. While many evidences lead me to predict that the market will extend the rally for next week or two, the rebound will be most likely a bumpy one because there is a possibility that the economy could deteriorate much worse than market has now priced in, the dismal Dec.’s job and GDP reports, which caught almost every market analyst off guard, highlight the clear and present danger.
6. It is worth to point out that several key world markets are now in a full-blown down trend (examples: Japan and China), and that just won’t sit well the bulls camp.
7. Despite of many near-term bullish signs, let me make the following clear: the market is still in a clear down trend and the bulls will face bears’ stiff defense as they approach many solid resistances.

Will post the weekly trading calls tomorrow.

Friday, February 01, 2008

Notes on this week's trading and trading calls

Lots of day trading this week, while I made some decent profit, the amount of money I left on the table, or should I say the hopelessly poor execution, really makes me sick. Case in point, I shorted BIDU near 292 Friday AH after I spotted signs of distribution in both YHOO and BIDU following the big MSFT bid news, and was pretty sure that BIDU would be dragged down by GOOG to at least test 270. Then, after about 20 min of waiting during which it was range bound, I covered near 285 and thinking to get back in near 288. Such cheap behavior was promptly punished -- right after I covered, it broke down and went to as low of 262.4. So I made like 6 points, but that is a lot less than what I could've or should've made. See the problem here?! Something has to be done, I will probably stop trading (at least DT as razor suggested) for a few weeks to do some soul searching, just cannot keep going like this!

Feeling tired so I am going to be brief on my last weekend's weekly calls: for 24 calls on 15 stocks, there are 2 winning calls (WFR for 6 points and X for 10 points) and 1 losing call (DRYS for 1-2 points), with overwhelming non-hits. Obviously I over estimated the range of swing in terms of the market reaction to FOMC decision and Dec. job report.