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.

1 comment:

Anonymous said...

Thanks for the picks- great work.
made $ on the oih and fcx.
and some on lvs puts