Short these!

Yes, I am serious. As the market goes insane and the IV totally exploded, it is time to play safe. With the account going up for another 1k today (flipped CLF calls and still have winning SQNM NOV30 calls), it is time to relax a bit. Will consider shorting the following puts for the remaining of the week.

1. AAPL: Oct. 95 puts $6.5 or better
2. BIDU: Oct. 200 puts $8 or better
3. CLF: Oct40 puts, 4 or better
4. FCX: OCT50 puts 5 or better
5. MA: OCT140 puts 6 or better
6. POT: OCT120 puts 8.5 or better
7. SPWR: OCT55 puts, 3 or better
8. SQNM: OCT 22.5 puts 1.25 or better
9. UYG: OCT 15 puts 1.5 or better
10. WLT: OCT35 puts 2.5 or better
11. X: OCT 65PUTS 5.5 or better
12. CF: OCT75puts, 5.5 or better.
12. DVN: OCT80 puts, 3.5 or better
13. GOOG: OCT350puts, 12 or better
14. FSLR: OCT165puts, 11.5 or better
15. MON: OCT90puts, 5 or better
16. CME: OCT290puts, 8 or better.

And yes, I am fully prepared to end up with those shares that much cheaper than the current levels.

Save them to save us?

Well, looks like the Wall Street is only going to get a half-assed rescue for now, and with that, the major indices may spend a bit longer time at bottom searching before turning up. Right now I am only comfortable about two plays:

1. Short UYG OCT17 puts if the market gaps down at the open tomorrow.
2. Short SQNM OCT22.5 puts and start to build long positions in SQNM or buying its Jan09 30 calls.

The broad commodities are oversold and I am eyeing plays for a technical rebound, however, I might have to be patient until I see how US$ and global recession outlook affect them, right now it hurts my head trying to figure that whole thing out.

Now what?

The market may have reached momentum bottom last week, but a retest of the bottom and consolidation are likely for the next week or two before another counter trend rally can materialize with force.

Key Indices Assessment

Monthly – bearish (straight down MA10, closed below MA50), not quite oversold yet; but may bottom-fish because of uprising MA50

Weekly – the bottom might be in, but more volatile side-way chopping expected.
** MA—all closed below MA10, but they are flattening or turning up; MA50 all solidly trending down
** MACD/histogram: neutral, either way
** Candle formation: indecisive with huge up/down shadows with slightly bullish white bodies

Daily – rally facing formidable resistance
** MA—short-term MA in bearish order; all closed above flattening/curing up MA10s; all failed MA50
** Candle formations—clearly bearish despite of Friday’s historic volumes.
** Stochastic/RSI all favor more near-term upside; MACD Hist still negative;
** Lots of overhead resistance, the gap will be filled soon.
** QQQQ is the weakest of all, facing formidable resistance zone from 44-46, with MA50 around 45.2.

US$– more downside to MA50 around 76 likely before resuming uptrend?
Weekly— key resistance around 80 in play; MA10=76 and MACD/histogram bullish; stochastic points to overbought pullback in early stage
Daily-- recently reversed long term trend still intact; MA10=79, increasing MACD histogram, stochastic all suggestion more downside; but RSI2 in oversold; a test near the previous consolidate zone and MA50 (76-77) inevitable.

VIX—consolidation going forward
Weekly—more upside likely as every indicator except RSI2 are bullish.
Daily—parabolic ascending in correction, some pullback/sideway movement likely in near future.


Weekly Swing Trading Calls

Tech sector (bearish bias, Q3 ER outlook gloom?)

1. AAPL: Q-S2, 146-152, IT=135; S1, 158-162, IT=146
2. AMZN: Q-S2, 84-92, IT=72
3. GOOG: CTT, 410/430—480/510
4. RIMM: CTT, 90/92—112/116; bearish bias
5. SOHU: Q-S2, 68-72, IT=60

Coal, energy, solar sectors (watch US$ and oil movement for necessary adjustment)

6. ACI: Q-S2, 45-50, IT=38; S1, 54-57, IT=42
7. CLF: L1, 64-71, IT=84
8. CLR: L1, 33-37, IT=50
9. CNX: S2, 68-72, IT=58
10. ENER: S2, 73-83, IT=60
11. JRCC: S2, 36-45, IT=28
12. MEE: S1, 49-56, IT=40
13. OIH: L2, 158-161, IT=175
14. RIG: L1, 112-121, IT=130/132
15. USO: CTT, 78/81—89/93
16. WLT: CTT, 55/62—78/85

Metals and other commodity sectors (watch US$ movement for necessary adjustment)

17. ABX: S2, 40-45, IT=32
18. AEM: S2, 64-72, IT=55
19. GG: S2, 36-42, IT=32
20. CF: L2, 105-111, IT=130
21. FCX: CTT, 62/67-85/95
22. PCU: CTT, 20/23—30/33
23. MON: L2, 102-112, IT=122/130
24. POT: L1, 158-168, IT=185
25. X: L1, 81-92, IT=118

Financial and related sectors
26. BAC: S2, 42-45, IT=36
27. CME: L1, 345-375, IT=450
28. COF: S2, 62-70, IT=50
29. GS: S1, 144-162, IT=110
30. MA: S2, 239-260, IT=210
31. SKF: L1, 71-81, IT=115
32. WFC: L1, 32-36, IT=45; S3, 45-50, IT=38.
33. XLF: L1, 18-21, IT=25,
34. RKH: CTT, 110/113—132/138

Go finishing!

OK, now is the time for any who wants to be a bull to dig out all the fishing gear. I am going to say this tonight: I expect a short to intermediate term bottom this week, could be as early as tomorrow if the market gaps down for another 2-3%.

Good luck!

Weekend notes

Well, I got it half right in my last weekend notes: I thought most people would have held on to the belief that the decline commodity is good for the market a bit longer, guess by now many have started to see the gloomy outlook for the global economy.

As the Fed running out of the ammunition, Uncle Sam steps in this time to try make yet another artificial bottom here. The major indices will rock higher tomorrow, but I seriously doubt that rebound will have the staying power.

The precipitous drops in the last several days prompted me to get in a bunch of long positions late last Thursday (all Oct. calls), I exited half of those late last Friday (MEE, CNX, CF, WLT), and will exit the rest (QQQQ, AKS, X, FCX) on Monday/Tuesday. Have been too busy to do any trades for a while, and felt happy with this round, should all be decent winners.

Not a whole lot of setups for the next week, which will be extremely volatile, but my overall strategy is closing all the long positions into the rally, while start to look for short setups (especially in financial, retailer and tech sectors) once the rally starts to losing steam). For tomorrow, I will keep close eyes on SKF, will consider long if it can spike towards 90.

Weekend notes

The actions of the low-volume days last week did not change my overall views of the market as stated in last weekend’s note, in fact, the near-term outlook becomes even cloudier as the weekly and daily technical indicators flashing conflicting signals. However, unlike last week, in the face of several key economic reports, I expect the back-from-vacation big boys will start to make up their mind in the coming days, and all we should do, is trying our best to read whatever hands they show, and then play along.

My gut feeling is that, as US $ strengthens further and global economic outlook turns bleaker, oil will lead the energy/commodity related sectors to the second leg down, which will likely drive the rest of the market up to extend the now 8 weeks-old counter trend rally. Historically, September is the cruelest month for the bulls, and I am not sure if the election will affect that.

Really not many setups for the short week:

1. CF: S2, ez1=153-158, stop just above 160, ez2=165-172, stop just above 173, IT=128.
2. CME: L2, ez=310-322, stop just below 310 (may re-enter around 280 or 300 with stops just below), IT=370.
3. CRM: S1, ez=59.8-64, CS just above 62 with bullish candle, IDS just above 65, IT=54
4. GOOG: S2, ez=480-500, stop just above 500, IT=420
5. ILMN: S2, ez=88-91, CS just above 90 with bullish candle, IT=78.
6. WLT: S1, ez=95-100, stop just above 100, IT=84.
7. GS: CTT between 158 and 178, quick on profit taking.
8. POT: S1, ez=177-185, IT=160.