Friday, February 27, 2009

Holy smoking $#&*@# bears!!!


Right at 3:45 pm today, I was almost ready to kneel down before the almighty PPT as SP500 poised to close well above 740 if not 750, then the bears decided that they had enough of the bullshit (pun intended), and just like that, SP500 closed solidly below its Nov.08 closing AND intra-day lows. With the weekly charts now looking so ugly, and the fact that there are no distinctive close-by support levels for both DOW and SP500, any more chilling news over the weekend and we could see another waterfall type of leg down of these indices. It is unfortunate that what I wrote in last weekend's post came to the reality.

Did you notice I had some decent trading calls in last weekend's post (especially on GS, BIDU and AMZN)? If none of you have acted on them, you are not alone: I did not do that either, well, maybe a half-assed one on GS. Once again, I pretty much DT all week on GS, POT, AAPL, and was lucky to walk away with another winning week in this crazy market.

I have to say that while I admire bulls' resilience in the past week or two, I really feel that the resistance is futile :) and the sooner the bulls completely throw in the towels, the sooner we will have a real bottom. On the regard, if bulls really give up next Monday, we might be looking at a mid-term bottom in mid-March.

Until then, we might be better off just watching the hardcore bulls and bears fighting tooth and nail on the sideline.


Enjoy your weekend!

Sunday, February 22, 2009

Trading calls for the last week of Feb, 2009

Short rebound areas: SPY from 80-83; QQQQ from 29.5-31.7; DIA from 77-80.

1. AAPL: MT-L2=83-90, CS below 85, IT=95/97

2. AMZN: MT-L1=54-61, CS just below 55, IT=72/75

3. AXE: MT-L1=27-29.2, CS just below 28, IT=33/36

4. BIDU: ST/MT-L1=124-132, CS just below 120, IT=160/180

5. DHI: ST/MT-L2=6-7, CS just below 6, IT around 9.

6. FAS: speculative L2 ONLY if C/BAC nationalized, IT=8/10

7. GDX: speculative ST-S1=39-43, stop just above 43, IT around 35.

8. GS: MT/ST-L2=78-81, CS just below 79, IT=90

9. MA: MT/ST-L1=140-146, CS just below 145, IT=170/180

10. NTRS: MT/ST-L1=46-52, CS just below 52, IT=62/65.

11. SKF: speculative MT/ST-S1=220-300, IT around 140, ONLY if C/BAC nationalized.

12. TNA: speculative L2 ONLY if C/BAC nationalized, IT around 21

Are we there yet?

An accelerating downside momentum and the convincing breaking-down of DOW last week flash serious warning signals that we might see another leg down in this bear market in coming weeks. However, at this stage, I will be reluctant to be a mid/long term bears overall. Playing short-term/DT bears is not ideal either as the intra-day volatility has been incredible, and mostly hurtful to short-term/DT bears. On the other hand, with DOW making new lows, SP teetering on the edge of the cliff, and both NASDAQ/Russell2000 broke down 2.5 months trading range, I feel very uncomfortable to aggressively build long positions for mid and even long term holding, as any rebound will face stiff selling with so much overhead supply.

For next week, I do feel there will be some over-sold rebound, so I will definitely consider bottom-fishing on any big gap-down at the open. However, I will be quick to lock in profits on any of such trades, unless, both C and BAC indeed get nationalized and the market sells off in knee-jerk reactions, in which case, I will consider some aggressive mid-term long positions, even in the financials (may use FAS or TNA). Speaking of C/BAC, my gut feeling is if their issues are not clearly resolved one way or the other (actually, only one way?), the market will have a tough time to reverse the slide.

Day traded last week for the third week on a roll, mostly on GS and POT, and made another couple of grand. I really don't want to DT, but at the moment, it seems to be the better strategy.

Will post some trading calls later on if I get chance.

Thursday, February 19, 2009

Market is crashing but where is the fear?

Market is in a slow motion crashing, and the weekly charts are even more bearish than the daily's (barring a super rally tomorrow), but there is little fear (just take a look at the vix chart), in fact, more traders I know have becoming more bullish today and some of them have already started scale in long positions today. I originally had plan to bottom fish aggressively if the market gaps down big tomorrow morning, but now I am having a second thought on this plan. When there is blood on the street, yet not many has the fear, what does it really mean?

I will carefully examine my last weekend's calls to see if I should get in any of them tomorrow if I get chance.

Bears may be crazy, but bulls are just nuts!

Sunday, February 15, 2009

Trading Calls for the next week or two -- Feb 16, 2009

I am yet to have time to write down a manual of my TA and along the way really tie up everything. When that is finished, I will have to make quite a few changes about setups and trading plans. Before that, let me just pencil down some trading calls here in case those setups come to life in next 2-3 weeks, I will probably focus on DT GS/AAPL in the meantime if I ever get some time.

Some new abbreviations:
QT=quick trades, to be held from a few minutes to 2 days (including day-trading)
ST=short term trades, to be held from 2 day to 2 weeks
MT=mediate term trades, to be held from 2 weeks to 2 months
LT=long term trades, to be held from 2 months to 2 years.

1. AAPL: ST-CTT: between 90/93 on the long side (stop below 87) and 112/125 on the short side (stop just above 130).

2. AKS: SW-MT-L3=7.5-8.5, CS just below 7, IT=14/15.

3. DVN: MT-S2=55-63, CS just above weekly MA10, IT=40/42

4. FCX: MT-L2=20-26, CS just below 20, IT=40

5. GOOG: MT-L2=310-325, CS below 300, IT=380; LT-S2=420-440,CS just above 460, IT=330.

6. GS: MT-L2=80-87, stop just below 80, IT=95; LT-S1=110-140, CS just above 140, IT=80;

7. MA: MT-L2=140-145, CS just below 140, IT around 180.

8. MCD: LT-S2=58-64, CS just above 64, IT=40/45

9. POT: MT-L2=75-77, CS below 75, IT around 95.

10. SQNM: LT-L1=10-14, CS below 10, IT around 25.

11. AXE: MT-L1=29-33, CS below 29, IT around 42.

12. XOM: LT/MT-S1=76-80, CS above 80, IDS above 82, IT around 60.

I know that the MCD and XOM calls are a bit against both common sense and popular views, but my TA says that's what's likely to unfold, so we will see ....

Getting better before getting worse, or the other way around?

The market has become increasingly bipolar in the past 2 weeks, and the schizophrenia can be clearly seen on the charts of the major indices: while SP500/DOW are not only bearish both mid/near-term, but poised to break down further, NASDAQ has been unmistakeably bullish (mid/near term). At this point, the market could either break down as both DOW/SP500 overpower NASDAQ or break out to the upside as NASDAQ lifts all the boats. Another likely scenario is that the market continues its maddening and muddling way and stays within the trading range of the past 3 months for a few more weeks.

At this point, I am unsure which of the above scenario will play out, and as such, I will continue not to initiate positions (short or long) meant to be held for more than 3 days. I day-traded only (mostly on AAPL and GS) in the past 2 weeks and got some pretty good profits.

A couple of more observations and thoughts:

1. The Chinese stock market has finally broken out the multi-month range and now in pretty solid rallying mode. TA wise, I expect the rally to continue for next 2-3 months with 20-30% of gain. FA wise, I think the rally will fizzle out when people find out that the Chinese economy will not thrive on just domestic consumptions. Before that happens, however, it is possible that the Chinese rally ignites sympathetic rallies in stock markets around the world.

2. Obama administration has been really pressing hard and marching ahead with success in terms of passing important bills, but the "Yes we can" mantra will hit a iron wall pretty soon as both the Republicans and the economy are increasingly unfriendly, to say the least. If the market disappoints again next Weds when the details of the new housing bill reveal, the honeymoon may end sooner rather than later.

Might post some trading calls later if I get chance.

Saturday, February 07, 2009

I am back!

Got back last Monday, believe or not, it was the first time that I actually felt that the vacation is too long :P. Obviously was happy to see all the family members and sure enjoyed lots of good food! But it was a bummer missing the entire NFL playoff, especially the Superbowl which said to be one of the all time best. On the other hand, my Saints disappointed me again, wasting a great performance by Drew Brees was just terrible, now that they got a good defensive coordinator, I am once again superbowlish on my Saints, hehe, just never learn!

I did some trades during the vacation, mostly quick trades (all options) from the short side and enjoyed pretty good gains. Also spent time to really think about my TA system, and I thought I have cleared up a lot of issues and possibly leaped to a higher level, we shall see about that :P

Some observations and thoughts on the market:

1. TA wise, the intermediate trend is poised to turn up, led by the techs. The long term trend is still solidly down, and the talk of "bottom is in" is still premature until the major indices close above their Jan.09 highs to say the least.

2. FA wise, the ongoing rally is once again largely based on hopes not fundamentals, the deterioration of the later is actually still accelerating, which as the results will likely to put a ceiling on the counter trend rally.

3. Aside for the black holes in the US/world financial system, the biggest wild card right now is China (my home land). After spending nearly 2 months there, my conclusion is that China is at a very critical stage right now: if China can decelerate the slow-down or even hold off further sliding of its economy/housing market in next 3-6 months, the hope of its stabilization, which would really help the global economy, could become a reality. If on the other hand that it fails to do so, I am afraid that economy/stock markets of China and the rest of the world could suffer a catastrophic breakdown in the second half of 2009, and along the way pushing the eventual recovery to 2010/2011 at the earliest.

4. My personal take on the rosy scenario is 50/50 at most, which is why at this point I have been holding off any initiation of long time positions from the long side in US stocks.

I notice that there was an average couple dozens of visits to my blog every day during my hiatus, which was unexpected and I sure appreciate that! I am pretty sure that you won't be disappointed reading my future blogs, in fact, I ask you to get ready to help with my beer fund with the profits that you earn based on my trading calls, LOL!

Still unwinding down and got a lot at hands, but will try my best to start regular posting soon.

One quick question: overall, have you won or lost since early Dec.?