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,


flyingwabbit said...

no fret over missed opportunities or spilled milk :) because if anything, they are abundant in the stock market. like razor said, pay attention to key S/R and make plays when it comes to your setups. good luck!

flyingwabbit said...

razor and yuriy:
hmm, am I wrong or these days ppl in professions like yours make very good living? what'd heck you guys got so involved in the stock market? Insomnia? seeking highs? don't tell me because you were broke like me :P

razor said...

well I've been playing for 18 years, I find the dynamic and drama of the market facinating, its the ultimate reality show.
When cd rates approached 6% I took a break from trading and locked it 70% of my liquid cash is locked at 5.2% and I'm trying to max the gains by trading the other 30% of my stack...job or not, I can never have enough coin.

razor said...

p.s. why in the world would you short yhoo?

flyingwabbit said...

so, it boils down to about getting lots of coins :) and I say, screw that 5.2% rate and the lock!
As for the yhoo short call, I realize that the r/r is not that attractive, but why not :P