Sunday, March 30, 2008


Sorry, folks, not feeling well this weekend and won't do my weekly trading calls, will try to post something during the week if I am able to.

Friday, March 28, 2008

Friday notes

Bulls started with so much enthusiasm and aspiration this week, but things got sour as the week went on.

Has been busy with job and no trading this week. Also, I somehow feel really bored about the market, maybe it is because of all the low volume days, maybe it is because of all of the back-and-forth, trend-less and conviction-less movement. Or maybe I am just confused.

On last week's trading calls: out of a total of 24 calls on 17 stocks, 5 winning, 5 losing, 12 non-hitter, 2 near-miss. If you ask me, that is some boring stats.

I sure hope y'all had a more exciting week!
Have a good weekend, folks!

Sunday, March 23, 2008

Weekly Trading Calls -- March 23, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”, with the market now survived multiple tests of the Jan’08 bottom, a counter-trend rally might be developing. Considering there are little positive fundamental changes in the macro-economy environment, the best SW-long setups are still those that are based on key support and as closes to the bottoms as possible, rather than based on the breaking-out. On the other hand, patience is needed for any SW-short setups for the ideal conditions (overbought) and entry points (near key resistances).


Weekly: 2nd winning week as the volume declining for 3rd week; negative momentum receding for 6th week; nascent over-sold rebound signs;
Daily: short-term MAs turning up as it approaching the top of the 6 week trading range and MA50; momentum remained positive but overall stalled for the past 2-3 weeks; stochastic entering overbought; mild bearish divergence between volume and price in last 2 weeks;
** SW-CTT between 126/129 and 145/MA200
** CTT-DT can be considered using the following key S/R as references: 126, 129, 130, 132, 136.6, 140.


Weekly: 2nd winning week following the 11-week losing streak; volumes for the 2 winning weeks relative light; negative momentum receding for 3rd week; solid over-sold rebound signs; short-term MAs in bearish formation.
Daily: momentum positive and rising; short-term MAs turning up as it closes above MA50; approaching over-bought,
** SW-S2, ez=77.8-80, IDS just above 82.4, CS about 80/MA200 on bullish candle, IT=70/72.

Weekly: a big losing week after it broke the 5 week triangle formation, which ironically following a head-fake break-out of the triangle formation to the upside, confirmed the continuation of the ongoing trend; negative momentum on the rise again following 3 weeks of decline; very bearish candle formation; lingering in oversold for the last few weeks;
Daily: momentum flipped to the negative side for the first time in 5 weeks; 6 straight losing days as it approaches oversold;
** SW-S1, ez=219-238, stop just above 240, IT=180.
** DT-L3, ez=180-186, stop just below 180, IT=195.

4. CME
Weekly: 5th straight losing week on rising volume; negative momentum high but stalled for 5th week; bearish MA bow-tie formation; hammer candle with very long down shadow; in oversold but little signs of rebound
Daily: bullish momentum divergence; MAs in solid down trend formation; indicators overall neutral for near-term future
** DT-L2 if it spikes towards 440 or 420 using tight stops
** SW-L3 if it spikes towards 400, with stop just below, IT=440
** DT/SW-S2, ez=508-535, IDS just above 540 or MA50, CS just above 520 on bullish candle, IT=480.

5. FCX
Weekly: negative momentum on the rise again; stochastic crossed and headed down; broke down the 3-week trading range; short-term MA bearish but long-term MA still bullish
Daily: negative momentum on the rise; bearish short-term MA bow-tie in process; MA50 crossed down MA200; volume pattern bearish;
** SW-S2, ez=92.8-99, IDS just above 100, CS about MA50 on bullish candle; IT=80

6. GS
Weekly: a big winning week following 6 straight losing week; negative momentum receding for the first time in 8 weeks; huge bullish engulfing candle coupled with multi-year high volume indicative a bottom; solid oversold rebound signs;
Daily: momentum positive and rising; short-term MA turning up; all indicators favor more near-term upside.
** DT/SW-L2, ez=165-172.2, IDS just below 165, CS below 172 on bearish candle, IT=190.
** DT/SW-S2, ez=196-200/MA200, IDS just above 200, CS just above 198 on bullish candle, IT=188.

7. MON
Weekly: a losing week as the price range moved down a notch; negative momentum rising for 5th straight week; short-term MA turning down; stochastic crossed and headed down;
Daily: negative momentum rising; bearish short-term MA bow tie formation; bearish candle and volume pattern for recent days
** SW-S1, ez=MA10-MA50, IDS just above 114, CS above MA50 on bullish candle, IT=MA200

8. MOS
Weekly: momentum turning negative for the first time since last September; short-term MA turning down/flat; stochastic crossed and headed down; long up shadows from the candles of the last several weeks indicative of selling pressures near the top.
Daily: negative momentum persisted in the past 2 weeks and on the rise again; short-term MA turning down; stochastic headed down; closed below MA50 3 times in recent days;
** SW-S1, ez=99.5-110, IDS just above 110, CS just above MA10 on bullish candle, IT=80.

Weekly: 2nd up week in a roll as positive momentum rising; indicators favor more near-term upside
Daily: momentum flipped to the positive side and rising; closed above MA50 as short-term MAs turning up; other indicators favor more upside move.
** DT-L2 (for Monday) if it breaks 104.6, stop just below 103, IT=109
** SW-L2, ez=97-102.1, IDS around 95, CS just below 98 on bearish candle, IT=114.

Snap Calls

10. ABX

** CTT between 36/38.7 and 47.4/50. The precipitous drop might pause near 40/MA200 to back fill the gap.

11. AIG
** SW-S2, ez=49.5-55, IDS just above 55, CS above 52.5 on bullish candle, IT=42/45.

12. APOL
** SW-S1, ez=61.8-68, IDS just above 68, CS above 65/MA200 on bullish candle, IT=54.

13. DVN

** SW-L2, ez=84-88.5, IDS just below 84, CS below MA200 on bearish candle, IT=95

14. FXI
** SW-S1, ez=MA10/134.8—143, IDS just above 143/MA50, CS just above 138 on bullish candle, IT=126.

15. ILMN
** Speculative SW-S2 if it spikes towards 76, IDS just above 76.7, CS just above 74 on bullish candle; IT=70/MA50.

16. LEH
** DT/SW-S3 if it spikes towards 54, IDS just above 54, IT=50
** SW-S1, ez=56.8-MA200, IDS just above 63, CS just above MA200 on bullish candle, IT=48.

17. WLT
** SW-L1, ez=44-48.2, IDS just below 44, CS just below 47 on bearish candle, IT=55

Saturday, March 22, 2008

The bottom is in, but is the rally on?

Bears got a shot on foot by the extreme fear caused by the collapse of Bear Stearns, while bulls were embolden by Fed’s rapid-fire market-saving maneuvers. The results are the first solid up week in 5 weeks with multiple and ultimately successful test of the Jan’08 bottom.

On the weekly charts: for all major indices, the negative momentum extended its receding pattern to 8th week; candles in near Evening Star formations; nascent oversold-rebound signs; MAs still in solid down-trend formation.
On the daily charts: for all major indices, the momentum finally turned to the positive side; overall candle formations in recent days bullish; solid oversold-rebound signs; short-term MAs direction turning flat/up; DOW closed above MA50 twice this week and for the first time since end of last year.

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

1. With the Jan’08 bottom survived multiple tests in the past two weeks, the heartened bulls will try to mount a rally from here. If such rally gains traction early next week, I suspect that the bears might inadvertently fuel the rally since the short interests are at multi-month highs.
2. The market is still in a confirmed down trend, to seriously challenge that, bulls have to at least push the major indices above their February highs (SP500 at 1388, DOW at 12757, NASDAQ at 2376).
3. This week’s rally was mostly fueled by the ferocious recovery in the bank/brokerage sector and US$, but their V-shape bottoms are likely to be retested in coming days/weeks.
4. Fed gambles big with its all-out efforts to save the market. By throwing its balance sheet into the thick of the credit mess, Fed’s risks would be heightened if the housing market continues to slide in coming months, which would have grave implications. Such fact implies that Fed would be even more resourceful and desperate to defend the market in the coming weeks, and for bears, that means pushing too hard as the market approaches the bottom could be suicidal.
5. While the possibility of the market trending up in coming days is growing, I suspect this counter-trend rally might be used as selling opportunity. Already, there are some evidences of negative money flow and the big boys might be selling into the strength during the latest rally.
Will post the weekly calls tomorrow.

Friday, March 21, 2008

Bears lost for the week, but can bulls keep winning?

The fear, stirred up by Bear Stearn's demise, finally reached the extreme level and bears got backfired. On the other side, the torrence of the liquidity from Fed lifted all leaking ships, and bulls now hope for some smoother sailing ahead.

Had a busy week with work and only DT AAPL a couple of times for some booze money.

On Last Week's Trading Calls:
I made a total of 20 calls on 15 stocks, out of which, there are 5 winning calls (25%), 6 losing calls (30%), 7 non-hitters (35%) and 2 near-misses. The notable winners are AMZN, GS, MON, and FXI. The notable loser is CME.

Enjoy the weekend!

Sunday, March 16, 2008

Weekly Trading Calls -- March 16, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”, the market’s direction in the coming weeks will be decided by the battle between the FEAR factor and the Fed factor. Barring a massive failure of the market, with the rising fear and extreme bearish sentiment on both the Wall Street and the Main Street, coupled with the ever determined and desperate Fed, I suspect that any precipitous sell-off in the next few days may offer more profitable opportunities from the long side than the short side. However, when trading from the long side, one must be patient with the setups, disciplined with the stops, and quick with the profits-taking. Even though most of my calls are for SW trading, one should focus more on the stop-loss and IT, as the spiking volatility could easily make the IT of the SW setups reachable within DT or overnight trading time frame.

Weekly: an up week on relatively light volume as it outperformed the NASDAQ for the third straight week; negative momentum abating for the 5th straight week; in oversold with nascent signs of rebounding;
Daily: stayed above the MA10 for most of the week; momentum remained on the positive side; short-term MAs turning flat; volume pattern for the last 3 weeks overall bullish
** DT/SW-CTT between 119 and 130/132, bias neutral
** DT/SW-L1 if it closes above 130 on bullish candle, IDS just below 128.5, CS just below 130, IT=MA50
** DT/SW-L2 if it spikes down towards 115/117, IDS just below 115, CS below 118 on bearish candle, IT=123.

Weekly: first up-week snapped a 10-week losing streak; out-performs the market for the 2nd week; negative momentum started to diminish for the first time in weeks; a near morning star candle formation; in oversold with nascent signs of oversold-rebound;
Daily: momentum flipped to the positive side and risking; oversold rebound well on the way; bullish momentum divergence; other indicators bullish for the near future
** DT/ST-L1, ez=64-65.2, IDS just below 63, CS around 64 on bearish candle, IT=74/MA50

Weekly: 1st winning week following 5 straight losing weeks; bullish-engulfing candle formation; negative momentum stalled; in oversold with nascent signs of rebounding;
Daily: momentum just turned positive; solid signs of oversold rebound; indicators mixed.
** DT/SW-L2, ez=54-56.2, IDS just below 53.5, CS just below 56 on bearish candle; IT=62/64.

Weekly: outperformed the NASDAQ with an winning week; negative momentum diminishing for 4th straight week; in oversold with solid signs of rebounding; volume pattern for the last several weeks bullish;
Daily: broke out the 4 week triangle formation on rising positive momentum; MA50 is poised to cross down MA200 as they converge around 270.
** DT/SW-L2, ez=250-263, IDS just below 247, CS below 260 on bearish candle, IT=280
** DT/SW-L1 if it breaks 285 or closes above 280 on a bullish candle, IT=300


Weekly: 3rd straight losing week as the negative momentum on the rise again; stochastic crossed down and headed down; three black crows candle formation; other indicators mostly bearish
Daily: down-hill ever since closing below MA50 and the cross-down of MA50 over MA200; MAs bearish bow-tie formation; momentum negative but stalled; lingering in oversold but no signs of rebounding yet.
** DT-L3 if it spikes towards 50, IDS around 48, CS around 50 on bearish candle, IT=56
** SW-S2, ez=69.8-73, IDS just above MA200, CS just above 70 or MA50 with bullish candle; IT=65/60.

6. GS
Weekly: 6th straight losing week as the volume spiked to just shy of multi-year high; negative momentum rising for 7th straight week; in oversold with no signs of rebounding;
Daily: broke and closed below the Aug’07 bottom; MA formation in full-blown bearish posture; bullish divergence in momentum; not oversold;
** DT/SW-L3, ez=140-151.2, IDS just below 138, CS just below 150 on bearish candle, IT=165
** DT-S2 if it spikes towards 170, IDS just above 172, IT=165.


Weekly: 2nd losing week in a roll on rising volumes; momentum just turned negative; stochastic crossed and headed down out of the over-bought area; still a clear up-trender
Daily: dropped and closed below MA50 on high but retreating negative momentum; oversold rebounding on the way; MA bearish bow-tie formation in process;
** DT/SW-S2, ez=68.8-72, IDS just above 72, CS just above 70 on bullish candle, IT=62.


Weekly: a winning week snapped the 3-week losing streak as the volume rose; bullish-engulfing candle; negative momentum started retreating; other indicators mixed;
Daily: momentum poised to turn positive; reclaimed MA50; indicators overall mildly bullish.
** DT/SW-L3, ez=260-266, IDS just below 255, CS just below 270 on bearish candle; IT=300

9. MON
Weekly: an up week on high volume following 2 straight losing week; negative momentum rising for the 4th week; stochastic crossed and headed down; spinning candle showing hesitation on both bulls/bears sides.
Daily: stayed below MA50 entire week which was the first in a long time; negative momentum receding; nascent bearish bow-tie formation for MAs; ongoing oversold rebound;
** SW-CTT between 90/MA200 and 120/124
** DT-S2 if it approaches key R around 115, 120 unless it closes above MA50 on bullish candle.

Snap Calls

10. CME
** DT/SW-CTT between 420/440 and 520/540, don’t trade the mid range, weekly oversold, daily with bullish divergence in momentum.

11. CMED
** SW-S2, ez=42.8-47, IDS just above 48 or MA50, CS just above 45 on bullish candle, IT=38/MA200.

12. CROX
** SW-L2, ez=18.1-19.2, IDS just below 18, CS just below 18.6 on bearish candle, IT=24/25.

13. FSLR
** DT/SW-CTT between 174/176 and 215/216, don’t trade the mid-range, bias mildly bullish.

14. FXI
** SW-S1, ez=132.5-140, IDS just above 143, CS just above MA10 on bullish candle, IT=110.

15. RIMM
** DT-L2 if it spikes towards MA200 or 90, IDS just below 90, CS below MA200 on bearish candle, IT=97 or MA50.

Saturday, March 15, 2008

The end may be near, but for bears or bulls?

The battle for the dominance between bulls and bears turned bloody last week. The initial advance of the bears was thoroughly destroyed by the bulls who got a super shot of adrenaline when the Fed announced the 200 billion liquidity injection. But the bulls’ rising-from-the-ashes posture proved to be no more than an photo-op on the Friday when the market sold off on the Bear Stearns’ cliff-hanging news. The volatile week ended with little changes for the major indices.

On the weekly charts: for all major indices, the negative momentum little changed; volumes on the rise for the 3rd straight week to reach the multi-week high; candles formations are either doji or spinning candles, all featuring long up and low shadows, highlighting the impasse between bulls and bears; stochastic crossed over and headed down, not quite in oversold yet.
On the daily charts: for all major indices, the momentum mostly failed to turn to the positive side despite of one of the most spectacular rally on the Tuesday; overall candle formations bullish in the early part of the week but turned bearish at the end; the just-came-out-of-oversold stochastic once again poised to cross down and head down; moving averages in solid down-trend formation;
On the 60 min charts: nascent oversold-rebound signs, but most indicators stay bearish for all major indices.

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

1. There were two dramatic events occurred last week that could have profound impact on the market direction in coming weeks. First, Fed took a never-before-seen movement by inject a whopping 200 billion dollar liquidity into the market. The move made two things crystal clear: one, the Fed is willing and will continue to use whatever in its power to stop the market from further sliding, even if it comes at the cost of dying greenbacks, or the huge inflation ramification down the road, or the unknown risks from its ever deepening involvement into the credit mess; two, the credit crisis is worse than anyone thinks, AND it is still worsening.
2. Second, the collapse of Carlyle and Bear Stearns reveal for the first time the possibility of massive failure of this market.
3. For the first time in many weeks, the VIX spiked on the Friday, suggesting that the fear is finally arrived at the Wall Street. It is worth to point out that key international markets like Japan and China were breaking down last week, which could further stir up the fear.
4. The spectacular rally on the Tuesday once again warned the bears that fighting the determined Fed could be a self-destructive venture. With the FOMC meeting next week, I suspect that bears will be edgy more than ever.
5. The market now has fully priced in a 75 bp rate cut next week and many are hoping for a full 1% reduction, anything less than 75 bp could be a huge disappointment to bulls. Considering what Fed has acted lately, I myself would not be surprised at all if Fed cut the rate by 1%.
6. The market survived the initial test of the Jan’8 bottom last week, but another test could come as early as this coming Monday. Another successful testing could spell the end of the recent market decline, but a failure will mark the end of the first leg bear market movement and the beginning of the second legs down.
7. The way I see it, the market direction at this conjuncture will be decided by the battle between the FEAR of the raging credit crisis and dire macro-economic conditions and Confidence in Fed.

Will post the weekly trading calls late Sunday.

The Friday night song: "Things have changed" by Bob Dylan

One of my favorite recent songs by Bob Dylan, as usual, lyrics of vivid and live scenes and stories, and somehow it reads like what Razor's evil twin is going through in a bar tonight :)

A worried man with a worried mind
No one in front of me and nothing behind
There's a woman on my lap and she's drinking champagne
Got white skin, got assassin's eyes
I'm looking up into the sapphire tinted skies
I'm well dressed, waiting on the last train...

Friday, March 14, 2008

Bear scare? Bears scared? Or how about bears Fed up?

This has been one of the most volatile week I have seen which filled with a lot of scary and violent head-fake moves.
Bears got the week started with a big bang as the market seemed ready for a text-book bear market second legs down. Then the desperate-turning-nuts Fed stepped in with 200 billion dollar "innovative" bailout move, and bulls went on for one of the most spectacular rally in recent years. After a couple of back-and-forth day, featuring gains from such laughable commentary like the one from SP claiming the writing-down is nearly over, bulls were drooling over a sweet date with their MA50, and they were just foaming at the mouth after today's "what inflation?" report at 8:30 am. Then came the bear of all mothers, eh, I meant the Bear Sterns. This time even the Fed could not save it, and when it is over, we had yet another high volume 9-1 down day, which was the 4th (?) in the past few weeks.

Can you say bottom???

On this week's trading:
I have made a couple of oz gold this week, primary DT AAPL from both short and long side; could have doubled or more if I had Razor's sharp execution skills when I shorted both MON and MOS, instead, I got nearly choked on the fertilizers, just pitiful.

On last week's trading calls:
Last week's trading calls are probably among one of the best I have had in recent months.
I made a total of 17 calls on 15 stocks, out of which, 8 winning calls (47%); 3 losing calls (18%); 4 non-hitters (24%) and 2 near-misses (12%). The good winners including AMZN, BIDU, CRM, CTRP, GS, and ILMN. The two near-misses: FSLR and FXI, would have been very good winners, only to have the stop-loss a couple of dollars too close.

Will post the weekend notes on the market late this Saturday and weekly trading calls on the Sunday.

Enjoy the weekend!

Sunday, March 09, 2008

Weekly Trading Calls -- March 9, 2008

Overall Trading Strategy for Next Week

As I mentioned in my Weekend Notes on the Market, with the market now resuming its primary trend, the best SW should be along the direction of the primary trend. Buy-at-bottom setups can still be entertained for the stocks with strong support nearby, but profits should be taken quickly and holding time should be reduced to DT or overnight play.

Weekly: negative momentum abating for the 3rd straight week as it remains range-bound; continues to linger in the oversold area without much signs of imminent rebound; technical picture overall mildly bearish.
Daily: momentum positive but stalled, indicators mixed and overall neutral for the near-term outlook
** CTT between 115/118 and 130/132, don’t trade the mid-range for SW.
** Go along with the break-out if it closes either above 131 on a bullish candle (IT=140) or below 116 on a bearish candle (IT=110).

Weekly: on a 10 week losing streak with volumes on the rise for 3rd week; negative momentum high and still rising; both Stochastic and RSI(2) indicating deep oversold conditions but no signs of turn around yet; a spinning candle suggesting bears/bulls in-balance;
Daily: candle formations show short-term bottoming attempt (confirmed by the volume pattern); other indicators still mildly bearish for the near term.
** SW-L3, EZ=61-63, IDS just below 59.5, CS just below 62 on bearish candle, IT=67/69.

Weekly: both range and volume contracted last week as the negative momentum continues to diminish for the 3rd straight week; in oversold but not much rebound signs;
Daily: a long-running symmetrical triangle formation is getting close to the end; positive momentum stalled; indicators mildly bullish for the near future
** Trade along the movement when it breaks out from the triangle formation. The symmetrical triangle formation is a trend continuation pattern, and as it is under both MA50 and 200, and that MA50 will cross down MA200 in days, it seems it will break down further. However, its action in last several days has been quite strong in the context of the market, hmmm…

Weekly: 2nd losing week as the negative momentum rising again; stochastic poised to cross-down; candle formation bearish.
Daily: negative momentum rising; MA50 just crossed below MA200 since Aug’06; short-term MA poised to form bow-tie bearish reversal; in oversold.
** SW-S2, EZ=69.8-75, IDS just above 75, CS above MA50/200 with a bullish candle, IT=60.

Weekly: 3rd straight losing week as the volume increased; negative momentum on the rise again; stochastic poised to cross down; consecutive long shadows indicative of selling pressures;
Daily: momentum just flipped to the negative side; stuck in a down-trend channel since the post-ER gap up; indicators overall favor more downside move in near future;
** SW-S2, EZ=198-MA50, IDS just above 212, CS just above MA50 with a bullish candle, IT around 180.

6. FXI
Weekly: 3rd straight losing week on rising volume; negative momentum rising again; in oversold but heading for more oversold;
Daily: momentum flipped to the negative side; MA50 just crossed down MA200 for the first time with short-term MA in solid down trend formation; poised to break down the 6 week trading range;
** SW-S2, EZ=139-145, IDS just above 145, CS just above 142 with a bullish candle, IT around 120.

7. MON
Weekly: 2nd losing week with volume and negative momentum on the rise; stochastic crossed down; candle formation bearish; still a up-trender overall;
Daily: negative momentum rising as it closed below MA50; bearish volume pattern; indicators favor more near-term decline.
** SW-S1, EZ=108-MA50, IDS just above 117, CS just above MA50 with a bullish candle; IT=95


Snap calls

9. CRM
** DT-L2, EZ=54-55.2, IDS just below 54, IT=58
** SW-L2 if it spikes towards MA200 (50.12 now), IDS just below 50, CS near MA200 on bearish candle, IT=56

10. CTRP
** DT/SW-L3, EZ=50.5-51.2, IDS just below 50, IT=54
** SW-L3, EZ=48-49.2, IDS just below 48, CS just below MA200 (48.3 now) with a bearish candle, IT=54.

11. CMED
** CTT between 28/30 and MA200/40, bearish bias

12. DVN
** SW-S1, EZ=101-105, IDS just above 107, CS just above 104 with a bullish candle, IT=95

13. GS
** CTT between 148/150 and 170/172, bearish bias.

14. ILMN
** SW-L1, EZ=MA200-62, IDS just below MA200, CS just below 60, IT=72.

15. ISRG
** CTT between 230/MA200 and MA50/290; bias mildly bearish.

16. TRA
** CTT between 32/MA200 and 45/MA50, bearish bias

Saturday, March 08, 2008

Weekend notes on the market -- March 16 ,2008

Ready for the second legs down of the bear market?

A new round of bad news in the financial sector punched out a big losing week on the Wall Street. The decline ended the multi-week counter trend rally/consolidation as the major indices broke out the 6-week trading range and on their way to test the Jan’08 bottoms.

On the weekly charts: for all major indices, the negative momentum start to rise again after being stalled for 5 straight weeks; the stochastic just crossed and headed down; the overall volumes increased quite a bit for the 2nd week; candles formations bearish with expanding bodies; not quite in oversold yet; overall technical indicators strongly favor more decline in the coming weeks.
On the daily charts: for all major indices, the momentum not only flipped to the negative side but on the rise; just approaching oversold conditions but no signs of turn-around yet; new closing lows; NASDAQ broke the Jan’08 bottom;
On the 60 min charts: for all major indices, negative momentum receding; nascent signs of oversold rebounding; several bullish-engulfing candles coupled with strong volumes during the latest descending;

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

1. After weeks of the counter-trend rally and sideway consolidation, the market went down a notch and is now poised for the second legs down of the bearish movement that started late last year. The question now, IMHO, is no longer IF but WHEN and HOW.
2. Historically, the phase of the second leg down movement has often been smaller but faster than the first leg. Judging from the market actions in the past several weeks (strong buying whenever the market making lows), I am not so sure that this time around the second leg movement is going to be quick and straightforward.
3. It is very intriguing that there has been little fear as the technical pictures of the major indices turning decisively worse in last several days. This is best illustrated on the Friday when NASDAQ took out the Jan’08 intra-day low, and there was no significant spiking in volumes (not a lot of stop-loss orders there), as if the Jan bottom was completely irrelevant. The lack of fear is also reflected in VIX which is at a much lower level than that of the Jan. bottom. While I don’t know how to interpret it, I am certain that we won’t have a bottom of any kind until we see the fear and blood on the Street.
4. The Fed is on steroids when it comes to rescue the market. It is pumping the liquidity into the market as if there is no tomorrow. However, with the market has already fully priced in a 50 bp cut and the majority looking for 75 bp cut, you have to wonder if all Fed’s actions just prolong the eventual big decline at the best.
5. There might be some technical rebound early next week, but as the primary trend has now resumed, CTT at the top when the rebound loses steam becomes the best swing strategy.

Will post weekly calls on Sunday.

Friday, March 07, 2008

Friday night fever continues...

"Arriving Somewhere but Not Here" is one of my favorite songs by Porcupine Tree, it rocks!

Friday night fever?

Just saw an MTV clip from a Channel Frederator episode by apparently an unknown band called "Amplifico", the song is called "Yeah, you can be my muse". Somehow it just sounded intoxicating, or is it just because all the beers I am having? Check it out!

No fear, no bottom?

Bears may be in control, but bulls got no fear! Volumes were just not there, and for Pete's sake, there were not even any significant number of stop orders trigged when QQQQ breached its Jan intra-day low. Looks like it is going to be a long and painful process for both bulls and bears.

Did a couple of DT shorting MON this week, but once again proved razor's point that SW is better than DT (last one got in MON at 115.88 only to cover for a pathetic 1+ point yesterday before the drop).

Evaluation of my last weekend's weekly trading calls:
I made a total of 41 trading calls on 27 stocks; out of those, 14 winning calls (34%), 10 losing calls (24%), and 12 non-hitters (29%), and 5 near-miss (12%). Time to trim down the number of calls???

Thursday, March 06, 2008

Moment of the truth: who are you, really?

I was shocked. First, there was no last hour rally today, and the market receded like a tide, leaving many bulls standing without their pants on. Second, the votes to the last poll have been decisively bearish (almost twice as many ppl favoring bottom testing as those favoring a rally), could this be the first time that the small-time armatures like us actually get it right? Or this is just too easy?
Today's decline caused the momentum for all major indices on the daily charts flipped to the negative side. As they all stand not far away from the Jan bottoms, an ugly job report tomorrow could really drive the indices to the bottoms.
My plan -- if the market gaps up and rally in the early going on a "good" job report, I will actively casting my wabbit traps. On the other hand, if the market tanks big after the job report, I might go for a list of most DT-long setups if the market bottoms out before noon.
I know this is the moment a lot of us have been waiting for, the question is, when it finally arrives, do you know who you really are? Vote now!

Monday, March 03, 2008

Tipping point? Vote NOW!

Do you think that today's last hour rally, like the one on Feb. 22, marked another short-term bottom, and the major indices are on the way to test MA50 again? Or do you think it is too late and too little this time, and a test of Jan. bottom is in the cards? If you ask me, well, the 60 min charts favor the first scenario, but the daily charts favor the second scenario.
A tricky situation? Cast your vote on the left side of this pane.

Sunday, March 02, 2008

Weekly Trading Calls -- March 2, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”, with failed tests of their MA50 or key resistances, the major indices are poised to end the multi-week counter trend rally and resume their primary trend (down). Until that is confirmed, CTT within the 2 month trading range along the direction of the primary trend will be the most prudent overall strategy.


Weekly: an up week on good volume following 3 straight losing week; negative momentum retreating; signs of oversold rebounding; a near bullish-engulfing candle along with tweezers bottom formation; outperformed NASDAQ for the first time in a while
Daily: rising positive momentum; gapped above its MA10 on Thurs only followed by a bearish-engulfing candle on Friday; oversold rebounding on the way.
** SW/DT L2, EZ=123-125, IDS just below 121, CS just below MA10 (now near 123), IT=131
** DT-S2 if it spikes towards 140, stop just above, IT=136.

Weekly: an up week on good volume; nascent oversold rebound signals; negative momentum stalled for the forth straight weeks;
Daily: positive momentum stalled; volume pattern bullish for the past few weeks; resistance of MA200 clear; indicators mostly bullish for the near future.
** DT-L3, EZ=248-252, stop just below 248, IT=260
** SW-L2, EZ=238-245, stop just below 238, IT=260.
** DT/SW-L2 if it breaks 265 or closes above MA200 with bullish candle, IT=285
** DT/SW-S2 if it spikes towards 300/MA50, stop just above 300, IT=285.

3. CF
Weekly: a losing week on good volume; near engulfing candle; long up candle shadows for 2 straight weeks; positive momentum stalled; in overbought; strong and clear up trender
Daily: second bearish-engulfing candles in the last several days; volume pattern turning bearish; dissipating positive momentum; clear signs of overbought pullback;
** SW-S2, EZ=122-128; IDS just above 132, CS just above 128.5, IT=MA50/112
** DT-S3 (for Monday) if it breaks 121.7, stop just above 123, IT=115.

4. DHI
Weekly: a losing week on heavy volume; positive momentum diminishing; most indicators mildly bearish; bearish candle pattern for Feb.
Daily: on the verge of forming a short-term double top; bearish divergences in MACD/Stochastic in recent weeks; momentum flipped back to the negative territory; stochastic sell signal; closed just above MA50.
** SW-S2 if it breaks 13.4 or closes below MA40/14 with a bearish candle, IDS just above 15; IT=11.5
** SW/DT-S1 if it spikes towards 15, stop just above, IT=12

Weekly: the 5 week rally came to the end as a bearish-engulfing candle capped a losing week; momentum remains negative; other indicators mixed for the near future; closed at the low boundary of the 3 week trading range.
Daily: momentum just flipped to the negative side; solid short-term top around 88.5; indicators mostly favor near future decline.
** DT-L3 if it spikes towards 70, stop just below, IT=72
** SW-S3 if it closes below MA50/MA200 (currently converging around 71.5) with a bearish candle, IDS just above 75, CS just above 72, IT=65
** SW-S2 if it spikes towards 80, stop just above, IT=71
** SW-L2 if it spikes towards 65, stop just below, IT=MA50.

6. DVN

Weekly: 5th straight up week as the volume jumped to 5 month high; positive momentum rose sharply; both stochastic and RSI2 overbought but yet show signs of backing down; the up shadow gets longer for 4 straight week indicating motivated sellers as it moves higher;
Daily: steep rising continues; bearish divergences in the positive momentum stalled and RSI2; stochastic in overbought with nascent sign of pullback;
** SW-S2, EZ=112 -119, IDS just above 120, CS just above 115, IT=100

Weekly: negative momentum retreated slightly; indicators neutral
Daily: momentum is poised to turn negative; most indicators short-term bearish;
** SW-S2, EZ=212-217, IDS just above 220, CS just above MA50 with a bullish candle; IT=201
** SW/DT-S2 if it breaks and closes below 200 with a bearish candle, stop just above 201, IT=185.

Weekly: a “false” report sent the stock down a notch with volume spiked to 10 month high; negative momentum high and rising a bit; lingering in deep oversold conditions for the past 3-4 weeks;
Daily: a classical hammer candle with high volume on money may signify a near-term bottom; bullish divergence in momentum;
** SW-L2 if it spikes towards 450, stop just below 447, IT=480
** SW-L1, EZ=420-440, IT=460
** SW/DT-S3 if it spikes towards MA10/500, IDS just above 500, CS above MA10 with bullish candle, IT=470.

9. GS
Weekly: 4th straight losing week as it broke down the lower boundary of the 2-month trading range; negative momentum continues to rise slowly; in oversold but no signs of rebound;
Daily: a failed attempt to break out the tight 2 week trading range on the Thursday followed by an ominous breaking down out of the range on the Friday; momentum near neutral; indicators mostly bearish
** SW-S2, EZ=171-180, IDS just above 181.5, CS just above MA10 with a bullish candle; IT=160
** DT/SW-L3 if it spikes towards 160, stop just below 157, IT=168.

10. MA
Weekly: solidly broke its 3 week trading range as the negative momentum rising; most indicators favor more near-term decline
Daily: negative momentum on the rise; entering oversold;
** DT/SW-S2 if it spikes toward MA50 (around 199), IDS just above 202, CS just above 200 with a bullish candle; IT=170/MA200.

11. NUE
Weekly: the 5 week winning streak was snapped by a reversed hammer candle on good volume; signs of overbought pullback; positive momentum still rising
Daily: the big black candle on the Friday coupled with the 2 candles preceding it with sizable up shadow may signify a trading top; long running positive momentum is poised to flipped to the negative side; stochastic is crossing down from the overbought area.
** SW-S1, EZ=65.5-68, IDS just above 69, CS just above 66.5 with a bullish candle, IT=62

12. TBSI
Exactly the same story as DRYS
** SW-S1, EZ=35.8-37, ICS just above 40, CS just above MA200 on bullish candle, IT=MA50/30

13. WM
Weekly: 4th straight losing week as it solidly broke the 5 wk trading range; positive momentum retreating; stochastic crossed down; most indicators bearish for the near term
Daily: broke and closed below MA50 on Friday; negative momentum on the rise; approaching oversold
** SW-S1, EZ=14.8-15.8, IDS just above 16.7, CS just above MA50 with a bullish candle; IT=12.5

Snap Calls

14. AMZN
** SW-S1, EZ=67-73, stop just above 73.5, IT=60

15. BSC

** SW/DT-L3 if it spikes towards 77, stop just below 76, IT=83/MA50

16. COF
** DT/SW-S3 if it breaks 45 or closes below 46 with bearish candle or when it spikes towards 47; IDS just above 48.3, CS just above MA50, IT=40.

17. CRM

** SW-L2, EZ=56-58, stop just below 56/MA50, IT=62.

18. CTRP

** SW-L1, EZ=56.5/MA10-58.2, IT=70

19. ILMN

** SW-L1, EZ=65-66.6, IDS just below 65, CS just below MA50, IT=74

20. ISRG
** CTT between 290/300 and 255/264, don’t trade the mid range.

21. MON

** SW-S1, EZ=118-123, stop just above 124, IT=100

22. MOS

** SW-S3, EZ=113.8-116, IDS just above 120, CS just above 116 on bullish candle, IT=100

23. RIG

** SW-S2, EZ=141-144, stop just above 145, IT=MA50 (currently around 135.2).

24. RIMM
** DT/SW-L2, EZ=98-101, IDS just below 98, CS below MA50 (100.8) with a bearish candle, IT=110

25. SGR
** SW-S1, EZ=65.8-68, stop just above 69.3, IT=MA50 (59.1).

26. SOLF

** SW/DT-L3 if it spikes towards 10, stop just below, IT=14.

27. SPWR

** SW/DT-L3 if it spikes towards 60, stop just below, IT=65/70

Saturday, March 01, 2008

Weekend notes on the market -- March 1 ,2008

Are we there yet?

What a bi-polar week it was! On the wings of bond-insurer bail-out news, bulls marched on for three straight days, unfazed by the dire macro-economic news. But the mounting signs of acceleration of weakening economy AND rising inflation finally enraged bears who utterly destroyed bulls on the Friday, along with bulls hope for a winning week/month.

On the weekly charts: for all major indices, the high negative momentum mostly stalled for 5th straight week; the stochastic just turned down again; the overall volumes increased following 4 weeks of contraction; candles formations bearish with long up shadows.
On the daily charts: both DOW and SP500’s test of their MA50/Feb highs failed miserably whereas the NASDAQ barely touched EMA30; the positive momentum is waning for all indices; stochastic crossed down from the overbought conditions; Friday’s big bearish candles favor more downside move in the near future.

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

1. The Friday’s closes left major indices within short-distances of their previous lows on Feb. 7/Feb. 22; a break and close below these lows will not only confirm the end of the counter-trend rally since the mid-January bottoming but embark a test of the bottoms.
2. While last Friday is yet another 9-1 down day with volumes at the highest in over 2 weeks, I doubt the market will go straight down here without some lukewarm rebound/consolidation in the low to mid trading range of the past 2 months.
3. The prevailing outlook of the market has been that after some consolidations within the current range, the market will firm up later this year as the impact of the economic stimulus packages and rate cuts kick in, before heading for an even big decline in 2009 when the inflation starts to show its teeth. However, the raging commodities and accelerating inflation in recent weeks might altogether remove this middle up phase. Indeed, I start to see more analysis coming out in recent days that predict a much severe and outright bear market from here all the way to 2009, if not further.
4. Despite of doing everything it can, the Fed is slowly losing its impact on the market. With the market now priced in a 50 bp cut in its March meeting, Fed is kind of pushing a string here, and even that may not last much longer if the inflation continues at the current pace.
5. The way I see it, until the market moves out of the 2-month long trading range, CTT at the lower and upper boundaries remains as the best strategy. However, CTT along the direction of the primary trend (short near the upper range) should be heavily favored.

Will post weekly calls on Sunday.