Sunday, August 24, 2008

Weekend thoughts and calls -- Aug. 24, 2008

Just some quick thoughts and calls:

Major indices are at a very tricky point: they may roll over right here, or there might be another leg up before the counter-trend rally eventually ends. The movement of US dollar and oil could drive the market direction for next week or two.

We are seeing the technical rebound of the extremely oversold energy/commodity/metals sectors. The rebound is yet to run it course, consequently, for this week, any dip towards the lows of the last week can be bought with stops just below. On the other hand, it is very likely that the mid-term trend of these sectors have been reversed, therefore, short-the-rebound setups should be considered in the coming weeks.

1. ABX: S1, 38-41, IT=34

2. CF: S1, 158.5-168, stop just above 173, IT=130

3. CLF: S1, 110-116, stop just above 116, IT=100

4. CME: L2, 330-350, stop just below 330, IT=390

5. CRM: S1, 60-62, closing stop just above 62, IT=54

6. FCX: CTT between 80-100/105

7. GS: Quick-swing L2 if it spikes towards 140, closing stop just below 140, IT=160,

8. JRCC: S1, 49-51, closing stop just above 51, IDS just above 52.5, IT=40

9. MA: S1, 255-258, stop just above 260, IT=221.

10. MOS: S1, 120-128, stop just above 130, IT=100

11. POT: CTT between 166/71 and 200/205

12. USO: CTT between 88/89 and 102/105

13. WLT: S2, 99-109, stop just above 110, IT=85

Sunday, August 17, 2008

Weekend notes -- August 17, 2008

Got a few moments at hand so here we go:

Major Indices Assessment

Weekly – more upside possible, but may consolidate first.
** RSI2--clearly overbought for all
** MACD histogram: turned positive for NASDAQ, growing (3rd week) for Russell; poised to turn positive for DOW/SP500.
** Russell on 6 week winning streak with volume spike but backed off from the June high, stochastic near overbought; COT show increasing commercial shorts in Russell.
** VIX MACD histogram just flipped to the negative side.

Daily – rally overstretched but no clear reversal yet.

** Well defined ascending channel for all.
** Extended period of positive momentum for all but stalled
** Overbought for both NASDAQ/Rut, which are also over-stretched and crashing the Bollinger bands
** VIX breaking down
** MA50 and MA200 all with clear bearish slopes.

Weekly Swing Trading Calls

** Calls should be seriously reconsidered when there are major company-specific material events.
** All long calls for the energy/commodity/fertilizer sectors are primarily technical driven at this stage.
** Once again, EZ are set conservatively. Entries above the EZ can be used, but position sizes might need be reduced to manage the risks.

1. ABX: L1, 27-30, IT=35/38

2. ACI: L1, 37-44, IT=55

3. AGU: L1, 65-73, IT=88

4. CLR: L1, 37-42, or when it closes above MA10, IT=55/60.

5. CNX: L1, 50-58, IT=68/72

6. ELN: L1 if it spikes towards 12, IDS<11, CS>12, IT=18.

7. EWZ: L1, 60-66, IT=75

8. FCX: L1, 69-81, IT=90

9. MOS: L1, 82-93, IT=110

10. OIH: L1, 170-173, IT=190

11. POT: L1, 142-160, IT=183/190

12. RIG: L1, 110-121, IT=132

13. SLV: L1, 10.5-11.7, IT=13.7

14. USO: L1, 85-88, IT=95

15. X: L1, 111-121, IT=140/150

16. IWM: quick swing (1-2 wk), S1, from 76-80, IT=72

Sunday, August 10, 2008

Back from the future...

Before I knew it, I have not posted anything for like 10 days, just got too many things going on latterly

Allow me to post some of my thoughts about the market as well as some trading calls, I hope they are good for at least a week or two.

Thoughts and observations about the current market conditions and outlook for next 2-3 weeks:

1. More and more people are now in the camp of “global-recession-here-we-go”. The crowd obviously believes the “demand destruction” due to the upcoming recession, and they probably have been selling energy/commodity/materials/agriculture sectors hard. I pretty much agree with them to this point.

2. But the crowd went on to buy all other sectors and started to think that a new bull market is coming. To that, while I think the market will overall trend up in next couple of weeks, I find it is kind of amazing that one could actually put both “upcoming global recession” and “a looming new bull market” in the same sentence.

3. My target zones for the ongoing counter-trend rally: NASDAQ: 2470-2560; SP500: 1320-1400; DOW: 12000-12700. As far as I am concerned, as long as the major indices stay below these zones, the primary trend is down.

4. While I will look for short setups in tech and other rallying sectors once the major indices approach the aforementioned zones, I will start to look for long setups in the hard-beaten energy/commodity/materials/agriculture/solar sectors in coming days. The bottom fishing is mostly technical driven at this stage.

5. As for the argument that the commodity bull market is over, while I am yet to really figure it out, I will say this now: if the commodity continues to fall, Fed will lean to rate cut, and that will drive the commodity right back up.

6. I am looking for oil to pullback to around 100, which should be a likely turning point for some decent rebound for oil and other energy/commodities.

Trading calls for the next 2-3 weeks:

Unlike before, the proposed holding time for most calls could be as long as 2-4 weeks if their IT don’t get hit within the first week or two. The calls obviously don’t take possible ER/analysts/other company specific material events into consideration so be careful. In addition, many ez are set very conservatively, up-adjustments can be made if some major signals favor (watch for the end of 1st round of oil pullback).

For most setups, the lower end of the ez is for intra-day spiking down. IDS should be at most 1-3% below the lower end, while CS should be a bit higher than the lower end of ez on bearish candle/volume.

List 1—Energy/coal related sectors.

1. ACI: L1, ez=36-43, IT=55
2. APA: L1, ez=80-95, IT=120
3. ATW, L1, ez=30-35, IT=48
4. CLR, L1, ez=30-39, IT=55
5. DVN, L1, ez=70-81, IT=100
6. RIG: L1, ez=90-111, IT=140
7. WLT: L1, ez=65-75, IT=95
8. OIH: L1, ez=150-162, IT=200
9. USO: L1, ez=80-85, IT=100

List 2—Materials and other commodity sectors.

1. ABX: L1, ez=28-32, IT=38
2. FCX: L1, ez=66-76, IT=94
3. AKS: L2, ez=40-46, IT=62
4. X: L1, ez=116-127, IT=155

List 3—Agricultures/fertilizers

1. AGU: L1, ez=60-72, IT=90
2. CF: L1, ez=100-121, IT=150
3. MON: L1, ez=88-96, IT=110
4. MOS: L1, ez=72-91, IT=120
5. POT: L1, ez=135-161, IT=190

List 4—Solar and other alternative energy sectors.

1. AMSC: L1, ez=16-21, IT=30
2. FSLR: L1, ez=200-222, IT=260
3. CSIQ: L1, ez=18-23, IT=30

List 5—other long setups.

1. DRYS: L3, ez=50-61, IT=70
2. MA: L1, ez=180=211, IT=238
3. SKF: L2, ez=90-101, IT=130

List 6—Short setups

1. RKH: S2, ez=120-130, IT=105
2. LVS: S1, ez=60-70, IT=45

That’s it folks, should keep you all busy for next week or two :) Share your views, and do let me know if you make any money on any calls, otherwise, I might just take a hiatus for now.