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.

1. AAPL
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.

3. BIDU
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.

4. DRYS
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

5. FSLR
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.

6. GOOG
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

7. GRMN
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

9. ISRG
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.