AKAM ER Play

Just got in for the ER play, neutral to slightly bullish bias, doubt it would move a lot after ER, but I guess I need to learn something here, so here it goes:

Long Straddle Strategy
** Bought 5 May 35 put -$750 ($1.5)
5 May 35 call -$1200 ($2.4)
Total risk: -$1950

we'll see....

FOMC decision

I was a bit surprised that the Fed actually expressed their concerns on inflation, and I think that could put a cap, at least temporarily, on the 6 week long rally.
Took at DT-short on AAPL at 177.88, and covered at 175.11. Also glad to got out the BWLD play earlier. May consider some SW-short position on some tech names, such as AAPL and BIDU since the stops are not that far, we will see...

Position update

BWLD straddle play: Closed with a net gain of just over $1400. Feel a bit weird as I was like day-trading option now, but an overnight 92% profit is just irresistible. The funny thing is that for the second time, had I taken the approach that I played MA the day before (sell May 30 put and buy May 20 put), I still would have made a decent profit (close now for a few hundreds or hold to May expiration for bigger the initial credit) even though it broke out to other extreme of what was expected, hmmm...

Thought about placing some short positions as the market is rallying before the FOMC decision, but decided to wait and see..

Ever seen a blind cat caught a dead mouse?

Well, folks, that was what happened to me today as the PRICELESS moment turned into a WORTHLESS one, well, almost! Thanks to MA's big move to the upside, I actually have a decent chance to pocket the $460 initial credit by the time the May options expire. So much for my gut feeling!

Learned my lesson and took a long straddle on BWLD today for its ER play:
** Bought 5 May 25 put -$750 ($1.5)
** Bought 5 May 75 call -$850 ($1.7)
** Total risk: -$1600
We'll see how this one fares today as it jumped over 10% in AH following the ER. While I am on the topic, with tomorrow's FOMC, today actually could be an idea day to play straddles, but frankly, and I got a bit scared of the idea that I might make some easy money just like that, say, anyone has a "when a perfect straddle play went wrong" story to share?

Some nightly thoughts:

** FOMC decision: I think there will be a 25 bp cut, especially if tomorrow's GDP number is weaker than expected. I don't think Fed will say anything close to "inflation is gaining traction" even if they know so, and as the result, the market may rally after the rate decision, which might provide a short-window for short plays.

** The high fliers of the commodities universe, such as AGU, APA, DVN, FCX,ACI, WLT could be shorted if they rebound towards MA10, but also could be longed if they spike down towards MA50+other key support.

** POT: I shorted just above 210 last week, and covered the next day just above 190 for 20 point gain even though I planed to cover near 180/185 so I would have a trade comparable to Razor's drys trade, but it is not even close. Where is the gut feeling when I need it?

** PXP and RIG are worth a shot from the short side if it rebounds tomorrow.

Waiting for Godot?

Well, I am waiting for my PRICELESS moment tomorrow, better not turn out to be a crappy one that ruins my cup-of-joe time! Some nightly thoughts here:

** AKS: not sure if anyone acted on my weekly call, if you did, you are 5-6 points in green. I missed it in my hectic Monday morning ritual, but if it rebounds again tomorrow on X's ER, might take a shot at it.

** AUG, MOS, POT: they are now formally on my topping-watch list now.

** DVN, APA: on my tradable-top list now.

** ANF: probably worth a take a shot on the short side if it spikes towards 80 before close (ER in AH).

Since my gut feeling is something money cannot buy....

Cost of last weekend's fun: $110
1 MA May 250 put: $1680 (sold)
2 MA May 230 put: $1220 (bought)
The initial credit: $460
Max potential profits: unlimited (yeah, right)
Max potential losses: too busy to figure that out (duh!)
The way I would feel about my gut feeling looking MA charts If MA drops after its ER tomorrow:
PRICELESS

and oh, "Wherever it takes you, the future takes Visa" and V is down in AH after its ER :)

Normally I will never play ER, but just cannot help it this time :P

Weekly Trading Calls -- April 27, 2008

Overall Trading Strategy for the Next Week

As I stated in my “Weekend Notes on the Market”, technically, the path of the least resistance is now up. However, the market fundamentals as well as the inter-mediate term direction could be changed next week by such major events like the FOMC rate decision on Weds and Q1 GDP/April job report later in the week. These key events, along with continues pouring of ER, will bring a lot of volatility next week. It is prudent to establish SW position later in the week when the market direction/underlying fundamentals become clear.


1. AAPL: CTT between 158/160 and 190, bullish technical bias;

2. ACI: SW-S2, ez=59.8-63, stop just above 63, IT=55

3. AKS: SW-S2, preferably ez=68.5-69.50 with stop just above 70, but could enter at higher level on daily chart over-bought conditions. IT=MA50.

4. CF: SW-S2, ez=154.5-159, stop just above 160, IT=MA50/130

5. CTRP: speculative SW-S3 if it spikes towards 63, IDS just above 64, CS just above 63 on bullish candle, IT=58.

6. FCX: SW-S3, ez=119.8-123, stop just above 124, IT=MA50

7. FSLR: SW-S3 if it spikes towards 300, stop just above 310, IT=265/MA50

8. ISRG: It is trying to bottom here, but if it breaks/closes below 270, it may quickly run down to 250/230.

9. MA – ER on April 28 (V’s ER on April 27): for reason I stated before, I may consider a speculative put position if it runs close to 250 or higher before ER, IT=220.

Weekend notes on the market -- April 26 ,2008

Hidden bear crunching bull?

With most of ER came in no worse than expected, bulls bought every dip and along the way not only defended last week's big gains but also posted the second winning week.

On the weekly charts: all major indices posted highest close of 2008; positive momentum on the rise; most indicators bullish for the near term; overall volumes remain light for 5th straight week; candle body length/weekly ranges at the lowest in nearly 2 months;

On the daily charts: momentum stalled but remained positive; short-term MAs in bullish trend formation; both stochastic and RSI(2) in/near overbought; candle formations for the past few days reveal both overhead resistances and clear presence of buyers below;

Thoughts and observations about the current market conditions and near-term outlook:

1. The psyche of the market has turned very bullish last week as buyers came in on every dip. The prevailing view that the worst is over and the second half recovery is in the cards are gaining tractions in light of overall ER picture of the past week. Given that, it seems that the path of the least resistance is now up, and all major indices are poised to challenge their MA200.

2. The counter-trend rally since the mid-March bottom has been five weeks long now. While the gains are pretty decent, they came in on light and diminishing volumes. The lack of big boys' active buying will make the on-going rally increasingly vulnerable to sizable profit-taken pullback or even trend-reversal as the market continues to climb and further stretched to the upside.

3. Next week's FOMC rate decision will be paramount to the market direction in the coming months. Right now, the market has basically priced in a 25 bp cut AND the signals of rate-cut pause in the future. I think the key will be Fed's view on the inflation picture. If the small-cut and pause are primarily out of the inflation concern, I suspect that the market will have a hard time to further rally, to say the least.

4. Next week's Q1 GDP and more importantly the April job report are critical to fundamental views of the market's inter-mediate term direction. If both come in much worse than expected, the fear that this is going to be a deeper and prolonged recession could put a top on the ongoing rally.

Crunch time, but for bulls or bears?

I bet you that you feel it: bulls are really pushing it, and they got really close (SP500 near 1398) before some sell-off in the last hour or so. With MSFT down over 5% after its ER in AH, we will find out how strong bulls are tomorrow. Some random thoughts:

** APA: SW-S2, ez=135.8-137.8, stop just above 138, IT=128/MA50.

** BEXP: SW-L2, ez=8-8.55, stop just below 8, IT=9.5/10

** BIDU: not a lot of volume/action after ER in AH, might consider CTT between 320 and 380.

** CF: dropped nearly 6% after ER in AH, boy, which I had acted on my gut feeling when it was near 160 earlier this week. May consider DT-L2 if it spikes towards 120, or SW-S2 if it spikes towards 144/147, stop just above 149.

** DRYS: SW-L2, ez=70-76.2, stop just below 70, IT=88

** FCX: DT-L2 if it spikes towards 105, stop just below 104, IT=110.

** GS: SW-L1 if it spikes towards 182/183 in the early going, stop just below 179, IT=MA200.

** MA: I have a funny feeling about it, it has been crawling up in the last 4-5 weeks as volumes become lighter and lighter, and little bullish enthusiasm as it slowly breaking to the new highs, a very good ER next Tuesday? just suspicious. I might take a small put position if it spikes towards 250 or higher tomorrow!

** MOS: DT/SW-L2 if it spikes towards 110/MA50 in the early going tomorrow, stop just below 110, IT=120

** POT: DT-L2 if it spikes towards 180 with a stop just below; SW-S2, ez=109-205, stop just above 207.

Position update

Just covered ACI at 55.22, POT at 190.22, still holding FCX, and will re-enter if ACI, AGU, POT etc. rebound here. Pretty happy about the over 20 point gain on POT, but then it again, still not close to what Razor does, and if it tanks to 185 today, I will feel like a jerk again.
All the high flying commodity names are rolling over, finally.....

Conviction needed!

Bulls have been hanging tough just under the key resistance zone, they are looking for new catalysts or fuel to break through because they don't really have the conviction here. Ditto for the bears! Some random thoughts:

** AAPL: huge amount of calls bought today before ER, if it is indeed that big boys wrote most of the calls, AAPL will have a tough time to stay at the current level, let alone go up. I am looking at CTT between 145/152 and 175/180, no mid-range play here.

** Many hot commodity names, such ACI, POT, AGU, FCX, are flashing topping signs. Many have had ominous bearish engulfing candle on pretty strong volumes either today or yesterday. I look for an initial pullback to at least their MA10s. Obviously too early to call any real inter-mediate term tops here, but if the pullback volumes really spike, bears will feel more comfortable when they rebound.

** AKS: SW-S2, ez=66.7-69.5, stop just above 70, IT=MA50

** AMZN: DT-L2, ez=70-72.2, stop just below 70, IT=76

** BX: SW-L2, ez=17.5-18.05, IDS just below 17, CS just below 17.5 with a bearish candle, IT=20.

** DRYS: will keep an eye on 88.5 level, maybe it will pullback here to even form a cup-n-handle formation before eventually break out?

** FSLR: bulls are tired but bears may be too scared, watch for a bearish close below MA10 on good volume.

Tradable overbought pullbacks?

Took several initial short positions (1/4 of full size) earlier this morning:
FCX at 120.88,
POT at 210.88,
ACI at 58.88,
stops all just above the 2-day high.
All these stocks have seen a lot of gains in recent days and signs of short-term topping are developing. Obviously I have not learned much from the pain of shorting the tops, there are just too many lines of evidences suggesting at least some kind of tradable short-term tops/overbought pullbacks. Of course if FED goes easy with the rate cut next week, we might see some sizable pullback in the commodity sectors..

(Minor league?) bulls marching on!

Big boys mostly continue to sit tight (though once again there were some serious sell-into-strength going on in SPY for the second day in a roll), while retailer bulls are momo-traders are having their day in the sun for sure. Some random thoughts:

** AAPL: looks like it may really hit 175 before the ER, and if it does happen, it will be tempting to take a put against the ER.

** AIG: might be a good short here, every time when it has a bearish-engulfing candle at the tops, it goes down for 10% or more, think the tide has turned now it has broken the down-trend channel?

** BIDU: If it hits 380/400 before ER, you got to take a shot with a put here.

** CF: over 50% rise in 3 weeks? I am curious what kind of ER surprise it needs in order not to have a post-ER sell-on-news?

** CME: It will either hit 480 or 580 after tomorrow's ER, my guessing...

** COIN: used to be a momo darling, and has been acting very poorly lately, another oversold rebound maybe around the corner, but short near MA50 might be a good play.

** WLT: a busted call on me, lesson? when the market gets this bullish, no topping signs are reliable, and that's why you would need a stop!

Weekly Trading Calls -- April 20, 2008

Overall Trading Strategy for the Next Week

For the reasons I stated in my “Weekend Notes on the Market”, while technically it may be the time to trade from the long side for the next few weeks, entry on the pullback makes more sense, which could occur early next week.

1. AAPL – ER on April 23
Last Friday’s action completed the “cup-n-handle” formation, but its ER could smash this nice cup or make it into a text book example. I am expecting it to either test 175/180 or 145/140 after its ER.
** Might consider a small option play right before the ER, still undecided on which direction to bet on, but if it spikes towards 175 or higher before ER, might consider 150/160 puts.

2. BIDU – ER on April 24
** Might consider a small put position right before ER IF it spikes towards 380.

3. GS
For the first time, it closed above the well-defined 6-month long downtrend channel that started last Nov.
** SW-S3, ez=170-173, IDS just below 170, CS just below 171 with a bearish candle, IT=190/MA200

4. ISRG
** SW-S1, ez=295-310, IDS just above 316, CS just above MA50 with a bullish candle, IT=MA200 (near 267 now)

5. SPWR
** CTT between 71/MA50 and 95/100, don’t trade the middle range.

6. WLT
** SW-S3, ez=70-72, IDS just above 73, CS just above 72 on bullish candle, IT=62.

Weekend notes on the market -- April 19 ,2008

Bulls in marching order, finally?

By shrugging off the continuously dire economic news and embracing better than expected ER from tech heavyweights INTC/IBM/GOOG and other major companies, the bulls rallied for the week to not only recover all the losses of the previous week, but also push the major indices to their upper boundaries of the 2008 trading range.

On the weekly charts: all major indices posted a bullish Marubozu Candle; momentum turned positive for the first time since last November; MACD crossed up and turning up for the first time since last November; Stochastic in full swing of over-sold rebound process; MA10s curved up; overall volumes remain relative light for the forth straight week.

On the daily charts: for all major indices, momentum once again turning positive after a short sting in the negative side; candle formations overall bullish for recent days; RSI(2) in short-term oversold; MA10 pointed up while the short-term MAs forming bullish order; overall volumes continue the light pattern started since the rally off the Mid-March bottom.

Thoughts and observations about the current market conditions and near-term outlook:

1. Both momentum and MACD changes on the weekly charts since last November may signify a significant turning point for major indices, putting down a high probability of overall uptrend for the coming weeks.
2. As of the Friday’s closes, DOW led the market with a close above the Feb/March highs, while both SP500 and NASDAQ just inches below their 2008 highs. While it becomes increasing clear that the market has seen its inter-mediate term bottom, the ongoing rally has to take out the heavy resistance zone just above before any talks of new bull market can be substantiated.
3. The big boys have been sitting tight ever since the Mid-March’s huge rally off the bottom, and that remained unchanged in the first week of high ER season. The impact of their lukewarm participation in the ongoing rally can also be seen in the post-ER run of some major companies with better than expected results/outlooks (INTC/IBM/GOOG). Additionally, there are signs of big-boys selling in to strength.
4. While technically, it becomes compelling to join the bulls march, as long as the inflation/housing pictures remain dismal and big-boys sitting tight, the rally will be choppy and vulnerable to profit-taking whenever there are not-so-great ERs from major companies.
5. As the major indices at the top of the 2008 trading range with 2 gaps-up this past week, I expect the market to take a breath in early part of the next week before any further meaningful movement.