Bulls march on!

But the parade got some down pour in the last 10 min and into AH when GOOG threw a stinky ER. Tomorrow's job report will ensure yet another high volatile day, but I suspect that with FOMC decision now being made, it no longer matters much, in fact, as the most charts are now flashing buying-every-dip signals, any weakness due to a weake job report tomorrow probably will be aggressively bought. We shall see.

Whipsawed, chopped, and trapped?

Except Razor who has an uncanny ability to make the perfect sense of what's happened today, may I assume that many of you are as confused as me? I personally was whipsawed a couple of times, but who are feeling trapped right now? Bulls or Bears?

The charts just look disheartening to bulls, and AMZN's ER in AH and beating almost start to convince me that most tech ER are going to be bad. With tomorrow's GOOG ER on tap, I feel the urge to put my bear costume back on, but then again, Razor said the Friday's job report is going to be good, hmmm..

Follow-through day or fall-apart day?

Tomorrow's FOMC rate cut decision is paramount to both bulls and bears. As I have mentioned in an earlier post, bulls need a follow-through day to confirm the capitulation bottom of last week, and tomorrow is THE day they could count on Fed's help. On the other hand, if we see a heavy sell-off following the rate decision, the feeble oversold rebound will end and the retest of the bottom becomes inevitable.

I have made two lists, one is for shorting the 50 bp cut driven rally, and the other is for buying the no rate cut induced sell-off. They obviously look absurd as the entry points are very far away from the current levels, so I am not going to waste your breath.

My gut feeling is a 25 bp cut, and that will bring a long and slow waterboarding for both bulls and bears.

Best luck!

Tuesday Real-Time Actions

Not a whole lot of setups as everyone tries to position for the FOMC decision on Weds. I might take a long position in COF if it opens down below 49 due to AXP (SW-L2, entryzone48-48.8, stop just below 48, if it breaks 50, hold for 54 or FOMC whichever comes first). Good luck and good trading!

Monday Real -Time Actions

I saw Razor and qiqiapr have been active on POT today and I figure I should have a daily post here just for any folks who might be interested in posting real time trades. I myself will be very busy with my day job for the foreseeable future, but will try to do as much as I can. So far I did a couple of quick AAPL scalping from the short side for some beer/Scotch money, just hopeless.

Weekly Trading Calls -- Jan 27, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”, I feel that the market is likely to trend up leading to Wed FOMC rate decision, which along with a few other key data/reports, will determine the extent of the on-going rebound. I expect another week of huge volatility, and to avoid the whipsaw, the soundest strategy is to be patient and act only on setups that have excellent r/r ratios.

1. AAPL – From the apple of bulls’ eye to the apple of bears’ eye?
The fallout of the disappointing outlook continued just as I predicted in my last week’s analysis.
Weekly: 4th straight losing week on heavy and rising volume, negative momentum rising rapidly, extremely bearish candles point to further near-term loss, however, long-term MA as short-term MA formation are still in uptrend postures, not quite oversold yet.
Daily: 4 straight losing day but volumes declined substantially in the past 3 sessions, negative momentum continues to rise, in oversold conditions;
** DT/SW-S2 if it spikes towards 138/140, IDS just above MA200 (near 145), CS just above 140. For DT, stop just above 141.
** DT/SW-L3 if it spikes towards 110 with a stop just below, IT=120, r/r=2:8

2. BIDU
Weekly: the 3 week decline was halted, but a classical thrusting candle formation seem to favor the on-going down trend; negative momentum continues to rise, long-term trend still solidly up
Daily: A solid successful test of MA200, negative momentum continues to diminishing; oversold rebound clearly on the way, notably stronger than other big tech names, closed above MA10 around the key S/R level around 300 on Friday, seller presence clearly seen around key R zone from 320-330. Next week’s GOOG ER will have a big impact on BIDU’s movement.
** SW-S2, entry zone 345-350, IDS just above 360, CS just above MA50, IT=320, r/r=18:28
** SW-L2, entry zone 240-246, IDS just below 237, CS below MA200, IT=280, r/r=7:35

3. DRYS
Weekly: only the 3rd up week since topping out in late Oct’07 on substantially light volume, negative momentum stalled, in oversold;
Daily: negative momentum dissipating, oversold rebound on solid footing, but down-trend still firmly in place.
** DT/SW-S2 if it spikes towards MA200+EMA30 (around 66.3)/70, IDS just above 71, CS around 70, IT=58,
DT/SW-S1 if it spikes towards MA50 (around 75.5), IDS just above 80, CS at MA50, IT=MA200.

4. EDU
Weekly: 2nd week with extreme volume but minor loss, negative momentum on the rise,
Daily: oversold rebound on the way, huge volatility
** DT/SW-S1, entry zone 66-70, stop just above 72, IT=60

5. FSLR
Weekly: 5th straight losing week on heavy and increasing volume, negative momentum on the rise
Daily: consolidating between 143 and 186 in the past 6 sessions, tepid oversold rebound
** DT: L2 if it spikes towards 143, IDS just below 140, IT=166
** DT/SW-L1 if it spikes towards MA200 (131.4 now), stop just below 130, IT=148
** DT-S2 if it spikes towards 200, stop just above 202, IT=186
** DT/SW-S1 if it spikes towards 220-225, IDS just above MA50 (225.2), IT=200.

6. GOOG – On the verge of long-term trend reversal?
It’s ER on Jan. 31 may have a huge impact on its long-term trend.
Weekly: 4th straight losing week on steadily increasing volume and negative momentum, but still long term trend still intact
Daily: triple-top trend reversal in full swing, only 4 up sessions (all on much lighter volumes) since Jan. 2; signs of big-boy jumping the ship; signs of bad ER coming.
** DT-S3 if it spikes towards 600 with a stop above, IT=580
** Speculative SW-S3 if there is an immediate post ER spiking in AH towards 620-640, stop just above 640, IT=560

7. GS
Weekly: the well defined down-trend channel in tact, but both stochastic and RSI flashing the reversal signals of the ongoing trend; negative momentum stalling
Daily: classical down-trend channeling, evident bullish divergences in MACD histograms
** DT/SW-L2 if it spikes towards 185 with stop below, IT=198
** SW-L1, entry zone 170-175, stop just below 170, IT=200.

8. ISRG
Weekly: uptrend flattening, negative momentum on the rise,
Daily: consolidation mostly between 250-280 in over 2 weeks as all are waiting for the Jan. 31 ER, the following calls are ONLY for the Jan. 31 AH immediate reactions following the ER:
** speculative S2, entry zone 320-340, stop just above 340, IT=300
** speculative L1, if there is an initial spiking down towards 200 or MA200 (near 220), stop just below those levels, IT=230.

9. MOS
Weekly: the uptrend continues following a classical bullish Three-line Strike candle formation.
Daily: parabolic both ways, huge volatility, clear strong uptrender
** CTT between 70/80 and 100/110 with stops just across the boundaries; bias is bullish, don’t trade the mid-range.

10. POT
Technical picture very similar to that of MOS, but a bit weaker than MOS.
** CTT between 150 and 115, stop just above 152 and below 108.

11. RIMM
Weekly: the 4 week slide halted, negative momentum un-abating, oversold, overall trend still up
Daily: successful test of MA200, oversold rebound on the way,
** CTT between 80 and MA50 (at 104.7 now) with tight stops, bias slightly bearish, don’t trade the mid-range

12. SPWR
Weekly: extreme and all-time high volume driven by the latest ER, negative momentum on the rise; extremely bearish candles in the recent weeks, approaching oversold
Daily: the recent slide was capitulated by the post ER high volume move, signs of over-sold rebound, negative momentum abating,
** CTT between 60 and MA200 (83.5)/90, don’t trade mid-range, bearish bias.

13. STP
Technical picture similar to that of SPWR
** CTT: between 46 and 58/65/MA50, don’t trade ranges in between, bearish bias

14. WFR
Weekly: bullish piecing candle formation, solid uptrender, but negative momentum developing
Daily: selling on good ER on Friday, but indicators mostly favor short-term moving up. In danger of developing head-and-shoulder pattern.
** DT/SW-L3 if it spikes towards 68.5/70, stop just below, IT=80,
** SW-L2 if it spikes towards MA200 (64.8 now), stop just below 63, IT=70

15. X
Weekly: it hardly budged in last week’s turmoil, clear up-trend,
Daily: the higher-low and high-higher pattern intact, indicators favor further upside movement,
ER: On Jan. 29, with conference calls at 3 pm
** Chart wise, it feels like any weakness immediately follow ER may represent a good buy opportunity, especially in the range of 91-96.5 with a stop just below 90. Keep an eye on 104 where MA50 and MA200 will converge.

Weekend Notes on the Market

Bulls saw the bottom, but do bears care? The post-capitulation struggle rages on!

What a week it was! A solid breach of the Aug’07 lows in the prior week opened the floor gate that flushed out all weak bulls along with the panicking Fed in the classical capitulation occurred in the Jan.22 and 23. The subsequent ensuring technical rebound, however, ran into a wall on the Friday.
On the weekly charts, for all major indices, the negative momentum continues to rise, but all in oversold conditions (Stochastic and RSI), with some signs of oversold rebound. It is interesting to note that since 2003, whenever both Stochastic and RSI for the major indices are in deep oversold conditions as they are now, the market always trend up for next several weeks. However, one must realize this is the first time since 2003 that market is firmly in the bear territory. It is also worth to point out that, failed to post a solid bullish meeting-line candle formation, NASDAQ has been noticeably weaker than the other two indicies.
On the daily charts, the consecutive huge white candles on both Jan.22 and 23, coupled by the extreme volumes, indicated a classical capitulation bottom. The ensuring rebound, however, was thwarted when the major indices attempted to test their Aug’07 lows on the Friday, witnessed by big bearish engulfing candles. The negative momentum continues to diminish with solid signs of oversold rebound.

Some thoughts and observations about the current market conditions and near-term outlook:
1. With a rogue French trader, the panicking Fed, and everyone else seems on the run, the market is in a deep mess with raging fear.
2. Big players have been actively repositioning themselves: there are solid signs of rotation of smart money from tech/solar/agriculture/fertilizer to retailer/homebuilder/banks and other beaten down sectors.
3. Market’s overall reactions to Q1 ER are bearish, especially on the tech names, just look at MSFT, big boys took its good ER as an opportunity to unload their long positions.
4. Even though the rebound was stopped harshly on the Friday, I expect the market to trend up next week, at least leading to the FOMC decision. The longevity of this rebound will be determined by the FOMC decision as well as a few key economic data next week.
5. Market has fully priced in additional 25 bp cut and hoping for 50 bp cut, but frankly, I am not so sure about even a 25 bp cut. My guess is that market will retest the bottom if there is no cut and will extend the rally if there is 50 bp cut.

Weekly calls will be posted later today.

Evaluation of last week's trading calls

Thought about doing this for a while now, so let me just get on to it now:

In my last weekend's "Weekly Trading Calls", I analyzed 14 stocks and made a total of 25 trading calls:

** Winning calls: 8, or 32%, for a total of 70 points (8,6,5,4,7,8,33)
** True Losing calls: 1, or 4%, for a loss of about 1 point;
** Un-materialized calls: 13, or 52%.
** Near-miss calls: 4, or 16%

The near-miss calls are those that were either barely not being hit or barely stopped out. Several of them were heart-breaking ones that would've produced spectacular profits:
1. BIDU:
The call -- "DT-L2 if it spikes towards MA200 (around 241), IDS just below 240, CS below MA200, IT=254, r/r=3:12"
The near miss -- It spiked to as low as 237 on Jan. 23, which would've stopped out the position and miss the subsequent profit of as much as 90 points.
2. ICE:
The call-- "Speculative L3, entry zone=118-126, stop just below 117, IT=MA200, r/r=9:28"
The near miss-- On Jan. 22, it spiked to as low as 126.87, therefore did not hit the order that could produce as high as 38 points.
3. SONS:
The call -- SW-L2 when a capitulation occurs in coming days, scaled entry zone 3.21-3.52, stop just below 3.2, IT=4.5, r/r=0.32:0.98
The near miss-- On Jan. 22, it spiked down to as low as 3, therefore would stop out the position that could've produce over 30% of gain in the follow sessions.

The best winning calls are on RIMM, CRM, and AAPL.

And here is the sad part: I only acted on one winning call (SOLF). While some can be attributed to the near-miss calls (I literally stared at the BIDU and SONS when they were in those ranges), the failure of acting on the winning calls are a bit disturbing. Just read a post by Dr. Brett Steenbarger titled "The Most Important Reason Individual Investors Lose Money", and one of such important reason is "failure to trade reliable, tested ideas", I need to be cured, really!

Note on this week's trading

I made a few trades this week:

1. Tuesday, AAPL: 1/3 long position from last Friday's AH at 161.11, out at 157.88 for a loss of just over 3 points. Took a chance for a pre-ER running, but that French trader ruined it!

2. Tuesday, CTRP, DT long at 40.12 and out at 44.38 for a gain of just over 4 points. As usually, a great setup and entry, but another quickie for me, think I will ever learn?

3. Tuesday, SOLF, DT long at 15.11 (the low of the day) but out at 15.88 when the Fed rate news hit the wire. Again, a very good setup ended poorly, I mean, I almost felt like a petty thief, what's the matter with me?

4. Weds to Friday: Did a few DT on AAPL from the short side, scalping from 0.2 to 1.5 points (2 stopped out and 5 winning), earned some money for weekend funs, but could not hold on to the winners for some annual vacation funds.

The above tells you a lot about the fact that why I have a full-time regular job instead of being a good trader who can make a living out of this.

Diving, jumping, spiking, and finally, bottoming!

As a half-assed bull, I liked what I see today, especially the volumes and the way indicies closed. Capitulation? Pretty much so. I expect the market to trend up for the next several days, and the earlier you go long the safer and more profitable you will be. But make no mistakes, this is no re-run of the Aug'2007 episode, that is why I am sending my bear costume to a dry-cleaner so that when I get it back a few days from now, I will look like a slick, shinning and well rested bear. Until then, I am going to march with those real bulls and may be laughing with them on their lame-ass bear jokes :)

p.s. notice the money are rotating out of tech, solar and agriculture/fertilizer names into retailers and banks?

FED blinked, but who capitulated?

My gut feeling is that bears, more than bulls, capitulated today, and I suspect that both camps are probably feeling that they are the ones who got screwed by the FED. Market is trying to put down a bottom here like it did in Aug'2007, but such bottom requires at least one follow-through day within next 3-5 days as confirmation. With AAPL down over 10% in AH on earning warning, the odds are not good for bulls to have a follow-through day tomorrow.

I am all in cash now, feeling dizzy and and a bit lost at the moment. To be a bull, or not to be a bull, this is the question!

Position update

Just exit CTRP at 44.38 for a gain of just over 4 points or 10%, I am maybe damned, but it is hard to resist the urge of taking such quick profits. Will consider re-enter around 42.

Trade Alert

Just caught another falling knife: CTRP, Long at 40.12, IT=43.88, stop just below 40.

FED threw in a monkey wrench!

Yes, I said that! The size was too big to not being seen as desperate, and the timing is just terrible because it prevented an imminent capitulation, thus prolongs the slow-bleeding. I wish it would have cut the rate after the market close today. Oh, well.

Position update:
AAPL: out when it spiked at 157.88, this 1/3 position was taken on Friday AH at 161.11.
SOLF: 1/2 position long at 15.11 but out at 15.88 with the rate cut news hit the wire.

best luck to all!

Weekly Trading Calls -- Jan. 21, 2008

Overall Trading Strategy for Next Week

As I mentioned in my “Weekend Notes on the Market”; the US market is deeply oversold, a technical rebound will occur, but no one can time the turning point, and if you make an ill-timed entry on the long side, you could be in a world of pain.
As I am writing now, the futures of major indices are down HUGE following the overnight pounding of stock markets around the world. The market is set to gap down big when it reopens on Tuesday, is this the capitulation I have been waiting? Maybe.
For next week, my overall strategies are: day-trading short the stocks that are breaking down due to poor earning report; swing long with scaled entry of strong stocks during the capitulation. Bottom line: market is in down trend, fears are rising, going long is much more dangerous that going short.


1. AAPL – From Golden to Rotten?
A lackluster presentation at the MacWorld Expo last week stoke the fear that without new revolutionary products, Apple will see slower growth ahead as it is facing rising competition and declining iPod sales. The result is a 2-day high-volume sell-off that dropped it below the key 170 level.
Weekly: A big down week on 52-wk high weekly volume, negative momentum spiking, all indicators point to more downside; long term trend still up; moving averages still in up trend formation.
Daily: decisively broke the key support around 170; bearish moving averages bow tie formation in full swing; negative momentum stalled; in oversold.
Q report: AAPL is set to report on Tue AH, while I fully expect a very strong Q report, I am really not sure about its outlook. Any signs of growth slow down will drive it to test MA200 (around 144) if not lower. My gut feeling is that without any new blockbuster products and in an extreme challenging economy, Apple’s long running up trend will pause if not completely reverse.
** Currently long 1/3 position at 161.11, stop just below 159, IT=164, will close before Q report.
** DT-L2 on Tuesday if it spikes towards 150 with a stop just below, IT=156/158, exit before Q report. r/r=1:6 or better.
** DT-L1 on Tuesday if it spikes towards 145/146 with stop just below MA200, IT=154, exit before Q report, r/r=2.5:7.5 or better,
** DT/SW-S2 if it spikes towards 180 in Tue AH or Weds opening moments, IDS just above 182, CS just above 180, DT-IT around 170, SW-IT around 160. DT-r/r=2.5:9 or better; SW-r/r=2.5:18 or better.

2.AMD – is the worst over?
Weekly: Q earning report drove the stock higher for the second week on heavy volumes; candles in the past 3 weeks post a near morning stars formation; still a clear down-trender; solid signs of oversold rebound
Daily: up volumes dwarf down volumes in recent days; closed above MA10 this week for the first time in 2 months; oversold rebound in full swing; positive momentum rising
** SW-L3 with scaled entry, entry zone=5.52-6.21, IDS just below 5, CS below 5.3, IT=MA50. r/r=1.2:2.5 or better.

3. BIDU
Weekly: a big down week with weekly volume spiked to the 4th highest since its IPO; negative momentum on the rise; extended bearish candle body and other indicators point to further downside.
Daily: a break down through key support at 300 trigged big sell-off; signs of buys step-in on Friday with a high volume hammer candle; signs of oversold rebound
** DT-L2 if it spikes towards MA200 (around 241), IDS just below 240, CS below MA200, IT=254, r/r=3:12 or better
** DT/SW-L1 if it spikes towards 220, IDS just below 215, CS below 220, DT-IT=MA200; SW-LT=260; DT-r/r=6:19 or better; SW-r/r=6:49 or better.

4. CME – Trading fear commodities?
Weekly: fourth straight down week on above average weekly volume; negative momentum spiking; long term trend still clearly up; moving averages formation still bullish; indicators favor more immediate decline.
Daily: typical sharp decline-shallow rebound-further decline pattern so far; broke and closed below MA200; signs of buyers on Friday with a bullish Harami candle formation; some bullish divergence in negative momentum; signs of oversold rebound.
** DT-L3, entry zone=511-521, IDS just below 507, CS below 520, IT=560; r/r=14:39 or better;
** SW/DT-L1, entry zone=491-502, IDS just below 490, CS below 500, DT-IT=540, SW-IT=560, DT-r/r=12:38 or better; SW-r/r=12:58 or better.

5. GS – Orderly retreating as the world crumbles!
Weekly: another down week on rising negative momentum; bearish moving averages bow tie formation in the making; approaching oversold (RSI/Stochastic); long term trend still clearly up.
Daily: the orderly declining pattern still persists; Death cross occurred this week; not oversold yet; bullish divergences in negative momentum;
** DT-L3 if it spikes towards 175, stop just below, IT=180.88, r/r=1:5.5
** SW-L2, entry zone=168-171, stop just below 168, IT=188, r/r=3.5:16

6. CRM
Weekly: 3rd straight down week on average volume; momentum turns negative for the first time since last Sept.; still a clear up-trender; more near-term downside likely
Daily: bearish moving averages bow-tie formation in the making; in oversold but seemingly unable to muster a rebound
** DT-L1 if it spikes towards 48 with IDS just below 48, CS just below MA200(48.32 now); IT=549.8; r/r=0.4:1.6
** SW-L1, entry zone=45-46.6; IDS just below 45, CS just below 46, IT=52, r/r=1.7:5.5

7. FSLR – Before sunrise or before sunset?
Weekly: 4th straight down week with weekly volume spiking to all-time high, a clear sign of distribution; Three Black Crow candle formation with bearish candle bodies expanding; negative momentum on the rise; can you say parabolic up and down?
Daily: negative momentum continues to rise; bearish moving averages bow-tie formation in place; in oversold but seemingly unable to muster a rebound; closed on Friday forming a bullish Harami candle (or inside day).
** SW/DT-L3 if it spikes towards 140 with a stop just below, IT=154, r/r=1.5:14
** SW-L1, entry zone 120-131, IDS just below 120; CS just below MA200 (at 129.11 now), IT=160; r/r=12:29 or better.
** DT-S3 if it spikes towards 200, stop just above, IT=185; r/r=1.5:14
** SW-S1 if it spikes towards 220, stop just above, IT=185; r/r=2:34

8. HMIN – Time to catch this falling knife?
Weekly: 3rd straight down week on rising but still below average weekly volume; approaching oversold conditions;
Daily: 2 week long breaking down ended on Friday with a bullish engulfing candle; signs of oversold rebound.
** SW-L3, entry zone 26-27.1, IDS below 26, CS below 26.7, IT=30, r/r=1.2:2.8 or better
** SW-L1 if it spikes towards 24, stop just below, IT=32, r/r=0.5:7.5

9.ICE – icing on what?
Weekly: a big down week on rising but still about average weekly volume; negative momentum on the rise; still a clear up trender; expending bearish candle body points to more downside move in the short term.
Daily: the Three Black Crow formation capped by a bullish Harami candle on the Friday; spiking negative momentum; oversold; decisively dropped below MA200; bearish moving averages bow tie formation in full swing
** SW-S1 if it spikes towards 165 with a stop just above, IT=MA200, r/r=1:9 or better
** Speculative L3, entry zone=118-126, stop just below 117, IT=MA200, r/r=9:28

10.RIMM
Weekly: 4th straight down week on rising negative momentum; moving averages still in clear up trend formation; approaching oversold;
Daily: attempting to form a bottom; oversold; negative momentum stalled
** SW-S2, scaled entry zone 94-99, stop just above 100, IT=88, r/r=6:6 or better
** SW-L2, scaled entry zone=75-81; stop just below 75, IT=88, r/r=6:7 or better

11. SOLF – Don’t let the sun going down on me?
Weekly: second big down week on high volume; long bearish candle body and other indicators favor more near-term downside movement
Daily: bearish all around with bottoming attempt; in deep oversold; negative momentum high but stalled; a test of MA200 (14.68 now) looming
** Speculative scaled SW-L1, entry zone 14-16.3, IDS just below 14, CS below MA200 on a bearish candle; IT=22; r/r=2.3:5.7 or better

12.SONS – Deja vu all over again?
Huge insider buys late last year cannot stop the slide, which is well in sync with Russell2000 and Telecom sector; but fundamentals appear to be intact;
Weekly: 7th straight down week with signs of acceleration (3 Black Crow candle formation); rising negative momentum; in deep oversold;
Daily: just straight down; deeply oversold;
** SW-L2 when a capitulation occurs in coming days, scaled entry zone 3.21-3.52, stop just below 3.2, IT=4.5, r/r=0.32:0.98

13. DRYS – Hanging high and dry!
Weekly: another week of high volume drop, but considerable down shadow presented for second straight week indicating the presence of buyers; negative momentum continues to rise; in oversold;
Daily: attempting to put a bottom here; signs of oversold rebound
** Speculative SW-L1 if it spikes towards 40, stop just below, IT=MA200(66 now); r/r=2:26.

14. GOOG – Find the bottom, fast and accurate?
Weekly: 3rd straight down week on rising but still relative light volume; negative momentum on the rise; candle formation and indicators favor more near-term downside move; still a clear uptrender;
Daily: selling intensifying as it testing key support around 600; negative momentum stalled; in oversold;
** SW-L2, scaled entry zone=560-568, IDS just below 560; CS just below MA200(near 568 now), IT=620, r/r=18:52 or better.