Will be back!

I need to take care of some business and obligations for the next 2 weeks, during which I will not be able to post my daily/weekly trading calls. Best luck to everyone! See you on the Valentine's day :)

p.s. I predict that market will stay in the range with a lot of volatility in the next two weeks, so don't be too bullish, and don't be too bearish, be sheepish is OK :)

SMA or EMA??

After further investigation, I found that the moving averages generated in Advanced Analyzer are exponential moving averages (EMA), rather than simple moving averages (SMA), in other words, I have been using EMA for all my trading calls.

The question I have now is which one is better or more commonly used? SMA or EMA? Sometimes the difference between SMA and EMA is pretty small, sometimes, it is huge, for example, right now for AAPL, SMA50=87.93, EMA50=86.5.

I am debating if I should continue using EMA or switching to SMA. I have checked many charts, and it seems EMAs act better as key S/R than SMAs. On the same subject, since Aug. 16, 2006, NASDAQ has yet to close below EMA50, but it has closed below SMA50 for a total of 5 times now.

So, what do you folks think? SMA or EMA? Thanks!

Weekly Trading Calls -- Jan. 29 -- Feb. 1, 2007

Considering the current market conditions and many import events in next week (FOMC decision, Jan employment report, big tech name Q report, GOOD, SNDK), I will try to stick with the CTT plays at key S/R levels, and try to avoid any SW trades to minimize the impact of volatility. I will change such strategy if NASDAQ breaks its key support around 2390, which would signal the end of the multi-month up trend of the market.

Focus List:

1. AAPL: CTT between the support zone=81-82.5 and resistance zone 87.5-90, bias is on the short side. SMA50=87.83, EMA50=86.5. May also consider S2 if it breaks down from the current level on Monday, in which case use 85.5 as stop reference.

2. AMZN: will report on 2/1/07. Key S/R: 34.75 (MA200), 36, 36.79 (MA50), around 38.2, around 40.4.

3. ERTS: will report on 2/1/07. Key S/R: 43.5, 44.29, 47.96 (recent 6 mo low), 52.5 (both EMA50 and EMA200), 54.5.

4. GOOG: will report on 1/31/07. Key S/R: around 452.5, around 478.1 (EMA50), around 492, 513 (all time high, tested twice).

5. SBUX: will report on 1/31/07. Key S/R: 31.5, 32.5, 33.5, 34.9 (EMA200), 36, 37, 38.

6. SNDK: will report on 1/30. Key S/R: 37.34 (52 wk low), 40.96 (recent low), 44.6 (EMA50), 49.2 (EMA200).

7. X: will report on 1/30. Key S/R: 69, 71, 72 (EMA50), around 75, around 76.6, 80.09 (recent and 52 wk high).

The Rest:

1. ADSK: SW-L2 at bottom (100 share IE, 300 share FP), entry zone=39.8-40.31, IDS=39.5, CS=40.2, IT=42. MA50=41.25.

2. ANF: speculative S3 on top (100 IE, 200 FP), entry zone 79.5-81.5, stop just above 82, IT=74.

3. BIDU: L3 at bottom if it spikes towards MA50=117.8, CS=117.5, IDS=115.5, IT=123.

4. COH: CTT between 42 and 45.5 use very tight stops, bias is neutral.

5. COST: L3 at bottom if it spikes towards 54 with stop just below SMA50=53.98, IT=56.

6. DHI: L3 at bottom if it spikes towards 26.2 (both EMA50 and EMA200) with a stop just below 26.

7. EBAY: S2 on rebound (watch out for GOOG impact), entry zone 32.5-33.5, stop just above 33.8, IT=29. EMA200=31.61, SMA200=30.05, EMA50=30.78, SMA50=30.12.

8. FFIV: speculative L3 at bottom if it spikes towards 72, stop just below 72, IT=75. EMA50=73, SMA50=74.7.

9. LRCX: S2 on top if it spikes towards 49, with a stop just above 49, OR if it breaks EMA200=46.7, IT=43.5.

10. MEDX: speculative L2 at bottom if it spikes towards 13, stop just below 12.9, IT=14.

11. MSFT: speculative SW-S2 on top (200 IE, 400 FP), entry zone 31-31.4, stop just above 31.5, IT=EMA50=29.8.

12. NTAP: S1 on rebound, entry zone=37.6-38.1, IDS=EMA50=38.6, CS=38.2. EMA200=35.8. If NASDAQ rallies, entry just below 39 with a stop just above 39.

13. NU: speculative S3 on top, entry zone 61.9-63, stop just above 63, IT=60.

14. PALM: SW-L3 at bottom, entry zone 13.81-14.11, stop around 13.5, IT=15, EMA200=15.4.

15. TXN: L2 on pullback, entry zone 30.30-30.71, IDS=29.98, CS=EMA200=30.4, IT=33.

16. YHOO: S2 on rebound (watch for GOOG impact), entry zone 28.5=(EMA200)-29.2, stop just above 29.2, IT=27.5.

On my trading performance

For the past few months, I have been able to achieve an average of 0.6% trading gain of my account value on the weekly basis. The problem is that had I always followed my trading calls, I could have had a 2% weekly gain, if not a lot more. The reason? I am having difficulties to overcome the "fear factor": I often failed to pull the trigger when a pre-planned setup arrived because of the unwillingness to accept the calculated risk, what's even worse is that I almost always exited my winning positions prematurely because of the fear of losing profits (often only obtain 20% or less of a favorable run). I know that I will never become a true winner until I can overcome this psychological hurdle, and I am struggling to find a solution. This is getting really frustrating for me!

A note on the new charting software

As I mentioned in an earlier post, I have been using the Advanced Analyzer (Ameritrade) for most technical analysis, and I was shocked and disappointed to find that its calculation of simple moving average was incorrect. I wondered if any of you who noticed the erroneous MA50/MA200 numbers that I used in all my trading calls and laughed in disbelief--Wabbit cannot even get the MA right, and he is making trading calls, what a joke! From now on, I will use Ameritrade's StrategyDesk charting problem for the trading calls, let's see it that will notably improve my trading calls.

Weekend notes on the market -- Jan 27 ,2007

Bears trumped bulls for the second straight week that featured the most wild and volatile up and down days of 2007. NASDAQ once again led the market to the downside with a weekly loss of 0.6%, which further boosted the doubt that its recent break-out was a head-fake. Interestingly, both SP500 and DOW broke out with new highs on the Weds, but the extremely bearish actions on the Thurs raised the similar doubt on the break-out. On the weekly chart, the momentum of the multi-month uptrend virtually dissipated for all major indices. On the daily charts, NASDAQ closed below its MA50, but both SP500 and DOW are in much better shape. Candle formations for all major indices are clearly bearish, with some technical indicators point to further movement to the downside.

For the second week, the pattern of the market reactions to Q reports of the tech names remain as "finding excuses to sell". Stocks were unable to hold the initial gains in cases of YHOO, EBAY and MSFT. With more NASDAQ mega names (GOOG, SNDK,AMZN) on tap next week, I will see if the pattern can be confirmed. So far, it is fair to say that for a lot of tech names, their earning reports hurt their share prices overall. One more week like this, and we may conclude with some confidence that this Q report season is shaping up as a downer for NASDAQ, and may pressure the index for the next 2-3 months.

Technically, the multi-month up trend remains intact for all the major indices as long as NASDAQ closes above the key support around 2390. With NASDAQ now under its MA50, it is possible that it will test this key support this coming week. One thing I want to emphasize is that it is too far early to become really bearish about the market right now, if anything, Friday's action clearly tells you that the bulls are far from dead. On the other hand, Thursday's action says that bears are no long in hibernation. Consider all these facts, I think the best strategy right now is playing CTT setups at key S/R levels, and try to avoid any SW trades to minimize the impact of volatility.

One wild card that could really affect the market for the coming weeks is the movement of Chinese market. It has been up dramatically in last couple of years, and the upside movement accelerated recently. However, in the past couple of weeks, its major indices have had several huge one-day drops: just last week, it had a back-to-back 4% or more loss sessions. If the Chinese market experiences 10% or more pullback, the fear could spread to other markets, and trigger a sizable correction around the world. Keep an eye on this!

Will post the weekly calls on Sunday.

What's the MA50 for NASDAQ now?

Folks, I need your help here. I have just noticed a big discrepancy of NASDAQ MA50 (simple 50 day moving average) between my chart and the one used by CBSmarketwatch. I have been using Ameritrade's Advance Analyzer for most of chart analysis, and right now, it shows that the MA50=2423.9, in other words, today's close (2434.2) is well above the MA50, but others say that NASDAQ closed below its MA50 today? Really? Please tell me what's the MA50 for NASDAQ on our charts right now. Thanks a lot!

Daily Calls -- Friday Jan. 26, 2007

Wow! Just when you think that bulls were in cruise control, the bears came out today and smacked down bulls pretty hard. Today's action erased all yesterday's gains of SP and DOW and then some, and NASDAQ was slightly better. Bearish engulfing candles formed on all major indices and lots of stocks, and just like that, things don't look bright for the near-future as far as bulls are concerned. The AH reaction to MSFT's Q4 report was favorable, but if MSFT cannot rescue the NASDAQ bulls tomorrow, things could become dire for bulls. I will only play key S/R with an overall neutral bias, unless NASDAQ breaks 2422 tomorrow on high volumes.

1. AAPL: CTT between 85.5 and 87.5/89 with tight stops, I may be attempted to go short if it breaks 85.5, but given how it behaved today and the oversold conditions, I may instead buying if it spikes towards 82.

2. BIDU: L3 at bottom if it spikes towards 120 with stop just below 119.5, IT=125.

3. DVN: speculative DT-L2 at bottom if it spikes towards 67 with a stop just below 67, MA50=67.7.

4. ENER: speculative DT-L2 at bottom if it spikes towards 32 with a stop just below, IT=34.

5. FFIV: L2 at bottom, entry zone 71-72.5 (100 share IE, 300 share FP), stop just below 71.

6. NTES: L2 at bottom, entry zone 19.51-19.81, IDS=19.3, CS=19.5, IT=22.

7. MSFT: reported Q in AH, traded mostly between 30.6 and 31.6, it quickly topped out in AH then declined steadily. Key S/R: 29.8 (MA50), 30.25, 30.45 (day close), 31.48 (day and 52 wk high), 31.6 (AH high).

Daily Calls -- Thur Jan 25, 2007

BULLS on the NASDAQ took over control today and along the way drove both DOW and SP500 to the new highs. Daily charts clearly favor further upside move, and with very positive reaction to EBAY's AH report, I think another bullish day is in store for tomorrow, and who knows, maybe even NASDAQ will break to the new high tomorrow. I will be extremely careful about any short-on-top setups, but SW-long setups should not be aggressively pursued as I have a hard time to find bullish catalyst that will further power the market up once the earning season is over.

Focus List:

1. EBAY: L2 on pullback, entry zone 32.8-33.3, stop just below 32.5. Reported Q4 in AH, market reaction was definitely positive. Key S/R: 31.6 (MA200), around 32.5, around 33.4, around 34 (recent and AH high).

2. FFIV: Reported Q4 in AH, drop to as low as 65.7 but recovered to as high as near 71, very volatile market reaction. Key S/R: 52.2 (MA200), 65.7 (AH low), around 70, 72.9 (MA50), 74.48 (day close), around 76. Consider S3 on top if it stays below MA50 around 73.

3. QCOM: reported Q4 in AH, traded mostly between 38.5 and 40.5. KEY S/R: 38.2 (MA50), 38.62 (day close), 39.5 (MA200 and AH resistance), 40, 40.5 (AH high), 41 (recent high).

4. AAPL: CTT when approaching its key S/R levels: 85.5, 86, 87.5, 90. Bias is neutral at this price level.

The rest:

1. ADBE: SW-S3 on top, entry zone 41.5-42.5 (100 share IE, 300 FP), stop just above 43, IT=38.

2. BRCM: S2 on top if it spikes towards 32 (MA50), IDS just above 32.5, IT=30.5.

3. LRCX: SW-S3 on top (100 IE, 300 FP), entry zone 48.9-50.7 (MA50), stop just above 51.

4. NTAP: S2 on top if it spikes towards 39 with a stop just above. MA50=38.7.

5. NTES: L1 on any pullback, entry zone 19.8-21, stop just below 19.71, IT=23.

Daily Calls -- Weds Jan 24, 2007

Bulls and bears battled out in NASDAQ today, and it was nearly a draw by the end of session. Daily charts for all major indices suggest a halt of the sell off, and I suspect market will attempt another rebound tomorrow with the aid of favorable AH reaction to YHOO Q report. I am interested to know if big boys will sell into strength in the final hours like they did today. Trading against major S/R is probably the safest strategy right now.

1. AAPL: L3 with a stop just below 85.5, if that support is broken, look for next support zone between around 82. May also consider S3 on top if it spikes towards immediate resistance zone between 89.5 and 90.

2. AMD: CTT between 16.2 and 17.7 with tight stops. Reported Q4 in AH, traded between 16.2 and 16.86 with solid AH support around 18.5.

3. BIDU: Consider speculative S3 on top if it spikes towards 130/134 use very tight stops. Go long immediately after it breaks 127 may also considered.

4. NTAP: S2 on top if it spikes towards MA50=38.8 with a stop just above 39.

5. SNDK: L2 if it breaks 42.9 with a stop just below 42.7, IT=44.4.

6. UNH: speculative L3 at bottom (100 share IE, 300 FP) if it spikes towards MA200=50.5, stop just below 50, IT=52.

7. VRTX: L3 at bottom, entry zone 35.7-36.3 (200 IE, 400 FP), stop just below 35.6, IT=MA50=38.2.

8. WLT: L3 at bottom, entry zone 26.5-27.1, stop just below 26.5, IT=28.

9. YHOO: Consider L3 with a stop just below 28 or 28.5 if it gaps above 28.7 in AM, IT=30. Reported Q4 in AH, drop hard to 26.2 before reversing to the upside with solid AH support above 28, and resistance around MA200=28.6. key resistance around 29.5.

Daily Calls -- Tues Jan. 23, 2007

The selling in tech sector continued today, but NASDAQ bounced off its low near its MA50. A lot of charts point to more down side, but I will wait to see market reactions to the Q report from several big leaders later this week before commit myself in any direction.

1. AAPL: S2 on top if it spikes towards the resistance zone between 89-90, L2 at bottom near key support levels at 82 and 85 may also be considered. Bias is on the short side.

2. AMD: will report Jan. 23 AH, I suspect the bad news are baked in now (like MOT), and I may take a speculative long position (300 share, 0.4 stop) if it spikes down towards 17 (stop just below 16.8).

3. BIDU: L2 on pullback (100 share, $1 stop), if it spikes towards support zone between 120-121.5, IT=125.

4. COH: will report BMO on Jan 23. Consider CTT (300 share, 0.4 stop) between 42.7 (MA50) and 47 using tight stops, S3 on top if it spikes towards 50, with a stop just above 50. Speculative L3 near 40 or S3 near 50 can also be considered (100 share, $1 stop).

5. FMCN: L3 at bottom if it spikes towards support zone between 70-71, stop just below 69.9, IT=73.

6. NTAP: speculative L3 on bottom (200 share, 0.4 stop) if it spikes towards MA50=35.8 with a stop just below 35.5.

7. SHLD: SW-S3 on top (100 share, $1 stop), entry zone 180-181.5, stop just above 182, IT=173.

8. YHOO: will report Jan. 23 AH, Key S/R: 25, 26, 27.1 (MA50), 28.6 (MA200), 29.88 (recent high).

A Saintly Sunday?

My beloved Saints have already done a lot more than I had hoped for, but it sure will make the best NFL sunday I have ever had if they win today. I don't really worried about Bears's D, but I am a bit concerned about the cold and snowy weather there. I hope Saints will overcome the adversity like they have all season long, and knock off the door to the heaven!!!

Go Saints!

Weekly Trading Calls -- Jan. 22-26, 2007

Below are the main points of my trading strategy for next week:

• Tech sector/NASDAQ: I will closely monitor the market reactions to the Q reports of the major tech names. I want to know if last week's pattern persists.
• Closely monitor the semi sector. SOX closed below MA200 for the first time in 2 months, if it fails to bounce back convincingly, NASDAQ could be really in trouble.
  
• Energy sector: I may consider some rebound plays IF the oil decline is bottomed out for the near term.
• Retailer sector: IF oil is bottomed for the near-term, I will look for speculative sell-on-top setups as the sector is at new high.
• If NASDAQ broke its MA50, avoid SW-long trades and more actively search short-on-top plays.

The Focus List:

1. AAPL: S2 on top if it spikes towards key resistance levels at 90, 92, 93 and 95. Also, consider L2 on top if it spikes towards 82, 85 and MA50=86.6. The bias is slightly on the short side. 300 share, 0.5 stop.

2. AMD: will report Jan. 23 AH, I suspect the bad news are baked in now (like MOT), and I may take a speculative long position (300 share, 0.4 stop) if it spikes down towards 17 (stop just below 16.8).

3. BIDU: L2 on pullback (100 share, $1 stop), if it spikes towards key support levels around: 113, 114.1 (MA50), 115.5, 117, 119 and 120. IT=125.

4. COH: will report BMO on Jan 23. I might look for a speculative S3 on top if it spikes towards 50, with a stop just above 50.

5. EBAY: will report Jan. 24 AH. Key S/R: 25.5, 28.6, 30.8 (MA50), 31.7 (MA200), 33.3, 34, 35.

6. YHOO: will report Jan. 23 AH, Key S/R: 25, 26, 27.1 (MA50), 28.6 (MA200), 29.88 (recent high).

7. MSFT: will report Jan 25 AH, Key S/R: 27.5 (MA200), 28.8, 29.7 (MA50), around 30.2, 31.45 (recent high).


The rest:

1. ADBE: SW-S1 on top (100 share initial entry IE , 500 share full position FP), entry zone 39.5-40.5, stop just above 40.8, IT=MA200=36.5 if it breaks key support around 37.25.

2. ADSK: L2 at the bottom (200 share, 0.7 stop), if it spikes towards MA50=40.6, IDS just below 40, CS=40.5, IT=43.

3. BRCM: S2 on top (100 share IE, 300 share FP, 0.6 stop) if it spikes towards MA200=31.9, IDS just above MA50=32.3, CS just above 32., IT=27.

4. DVN: L2 at bottom (100 share IE, 300 share FP), entry zone=64.5 (MA200)-66.33, IT=70.

5. FFIV: speculative S3 on top (50 share IE, 150 share FP), entry zone 78.5-80.5, stop just above 81, IT= MA50=72.8.

6. FMCN: L3 on pullback (100 share, $1 stop)) if it spikes towards 71 or 73, IT=78.

7. KONG: speculative L3 (500 share, 0.1 stop) if it spikes towards 8 with a stop just below 7.95, IT=MA50=8.6

8. LRCX: S1 on rebound (200 share IE, 400 FP), entry zone 48.4-48.9, stop just above 49. MA200=46.7, MA50=51.2.

9. MOT: SW-L2 on bottom (300 share IE, 600 FP), entry zone 18.81-19.01, stop just below 18.58, IT=MA50=20.6.

10. NTAP: SW-S2 on rebound (100 share IE, 300 FP), entry zone 37.5-38.8, stop just above 39, IT=35.5, MA50=39.

11. NVDA: SW-S2 on rebound (100 share IE, 300 FP), entry zone=32.5-34.9 (MA50), stop just above 35, IT=30.

12. RACK: speculative L2 at bottom (100 share IE, 200 share FP), if it spikes towards 17, stop around 15; IT=22.

13. SONS: L1 on pullback (1000 share, 0.1 stop) if it spikes towards 7 or MA50=6.5 use very tight stops).

14. STP: CTT between MA50=31.9 and 37 use very tight stops (300 share, 0.3 stop), don't trade the mid range.

15. TOMO: speculative SW-L3 at bottom (300 share IE, 500 FP) if it spikes towards 13.5 with a stop just below 13.25, IT=MA50=14.7

16. UNH: L2 on pullback (200 share IE, 400 FP), entry zone 52-52.52, stop just below 51.9, IT=54.

17. LFC: SW-S3 on top(100 share IE, 300 FP), entry zone 48.8-49.5, stop just above 50, IT=MA50=42.5.

Weekend notes on the market

Roaring bears arrived in the week featuring Q earning reports from some major tech names as INTC,AAPL, LRCX and IBM led the NASDAQ down. The over 2% loss of NASDAQ erased over 70% of its weekly gains, and in the process, raised the doubts that last ‘week’s break-put is a head-fake. On the weekly charts, a dark-cloud cover candle has formed on the NASDAQ. Both SP500 and DOW fared much better and they are nearly unchanged for the week and remain near the new high. Meantime, the up momentum for all major indices continues to dwindle.

So far, the pattern of the market reactions to Q reports of the tech names can be summed up as "finding excuses to sell". It is clear that at the current price levels, good Q4 reports are priced in, and unless the companies significantly raise the outlook for the next Q, the market will find reasons to sell. If this pattern continues next week when a lot more big tech names will report (MSFT, AMD, TXN,YHOO, EBAY) we could expect further decline in NASDAQ.

Technically, the multi-month up trend remains intact for all the major indices as long as NASDAQ closes above its MA50 (around 2421). If NASDAQ closed below MA50, the next key support is around 2390, any breach of that level will mark the reversal of the current trend. Until that happens, the buy-on-dip strategy can still be used.

Daily Calls -- Friday Jan. 18. 2007

Considering today's market action and IBM's decline in AH, I feel that the market will likely to gap down on the open tomorrow. With NASDAQ poised to test its MA50, fading the opening gap may be too risky. I will be very careful on any long-at-bottom plays -- will need to see an intra-day bottom on NASDAQ before taking any long positions. I need to be extra careful on longs of any semis, as SOXX broke down its 2-month trading range and closed convincing below its MA200. On the other hand, I am also hesitated to chase the bears tomorrow. One other note, the volatility is likely to kick up a notch in the coming days, be very nimble, and either take quick profits or raise stops when on the long side.

Focus List:

1. AAPL: DT-CTT between MA50=86.5 and 92/93 use tight stops (300 share, 0.5 stop), the bias is on the short side. It closed almost below the key 89-90 support zone, and drop to around 88.6 in AH.

2. IBM: S1 on top (200 share) if it spikes towards 95/96.5/98.5, OR if tomorrow's BM opening confirms further downside signal. The AH reaction to its Q report has been clearly bearish as it declines steadily and now even went under its MA=94.9. AH support seen around 93.3, next support zone is 91-92.

3. MOT: will release Q4 BMO tomorrow, consider CTT between 17.9 and 19.25 (2 week trading range). May also consider speculative L2 at the bottom (initial entry 200 share, $0.6 stop, 400 share full position) if it spikes down towards 17 or lower as the immediate reaction, IT=19, I suspect all the bad news are priced in by now.


The Rest:

1. ADSK: L3 at bottom if it spikes towards 41.6/40.5 (300 share, 0.5 stop), MA50=40.5.

2. BIDU: L2 at bottom (100 share, $1 stop) if it spikes towards 115.5, 117 or 119, IT=125.

3. CHINA: L2 on pullback (300 share, 0.3 stop), entry zone 9.25-9.61, stop just below 9.25.

4. FMCN: L3 on pullback (200 share, 0.5 stop) if it spikes towards 71 with a stop just below.

5. NTAP: S2 on rebound (300 share, 0.5 stop), entry zone 38-38.5, IDS=38.8, DS=38.3, IT=MA200=35.8. MA50=39.

6. RIMM: speculative L3 at bottom (100 share, $1 stop), if it spikes towards 115/118. Consider S1 on rebound if it spikes towards 127 with stop just above 128.

7. SONS: L1 on pullback, entry zone 6.81-6.91, stop just below 6.8. MA50=6.5.

8. STP: L3 on pullback if it spikes towards 32/33.5 (300 share, 0.4 stop), MA50=31.7.

9. UNH: L3 on pullback if it spikes towards 51.4 (MA50) or 52 (300 share, 0.3 stop), IT=54.5.

10. X: speculative L2 at bottom if it spikes towards 69 with stop just below 68.8 (300 share, 0.3 stop), IT=71.

11. CHRW: speculative SW-S2 on top (100 share intial entry) around 45 with a stop just above 45.5, IT=41.5. MA50=42.9, MA200=43.3.