Intel's disappointing Q report and outlook, on the heals of another heavy losing day, ensures a test of the long-held Aug'07 lows tomorrow. Judging from AH reactions of many big stocks, the Aug'07 lows will be breached, at least in the opening moments. I suspect that bears will finally become aggressive given the important implications of Intel's disappointing Q report and outlook. While I fully expect market will rebound/rally into FOMC rate cute meeting later this month, I will suspend many long-side trading calls in the last weekend's note or significantly lower the entry zones. Don't catch the following knives unless you are really good at it or you know when exactly FED will issue an emergency rate cut.
Tuesday, January 15, 2008
Position Update
AAPL: just covered all position at 167.12, damn, I really should not be day-trading here. May consider swing short if it spikes to 170, and long at 160/162 if it spikes down.
The market is approaching the Aug'07 lows, but judge from the volumes, I doubt bears are doing most of the work here, and big boys are sitting tight, no?
Trade Alert
AAPL: Just add another half position at 171.48, stop just above 173, IT=168. Cannot believe I am day trading again, but....
Trade Alert
AAPL: Just shorted half position at 174.4, stop just above 176, IT=170.2. So far not much out of the MacWorld...
Saturday, January 12, 2008
Weekly Trading Calls -- Jan. 14-18, 2008
Please refer to my earlier posts on "Next Week's Overall Trading Strategy and consideration of rising volatility" and "Weekend Analysis on the Market".
A. Buy-at-bottom or CTT setups
1. AAPL
Held solid support around 170, but will next week's MacWorld event trigger a pre-Q report bull run to a new high or the decline on the heavy volumes signaling the start of the end of this long up trend?
Weekly: still a clear uptrender, but momentum became negative for the first time in 3 months with volume at 1 year high, indicators mostly favor more downside movement.
Daily: 5 losing sessions in the last 6 days, all on heavy volumes, downside momentum stalled as the support around 170 withstood multiple testing; stochastic points to oversold rebound.
** CTT when it spikes towards 169/170 or 182/183 use 168/184 as stop, IT near the opposite end of the 170/182 trading range. Don't trade the middle range.
** S3 if it breaks 168/169 on good volume, stop just above 170, IT=161.
** L3 if it spikes towards 160, stop just below 158, IT=168.
2. AKS
Long uptrend in reversal, but money still can be made from both sides
Weekly: downside momentum increasing, indicators point to more downside
Daily: broke down MA200 and failed to reclaim it, moving averages in clear downtrend formation, stochastic points to oversold rebound; key support at 36 held,
** L2 if it spikes towards 32 use a tight stop, IT=36
** S2, entry zone 40-42, IDS just above MA50, IT=36,
3. AMZN
On the verge of trend reversal?
Weekly: A big down week on above average volume, in danger of forming a double top with plenty of bearish divergences, but overall it is still a clear uptrender.
Daily: triple top formation in process; negative momentum on the rise, bearish moving averages bow tie formation in process, approaching oversold conditions
** L1 if it spikes towards MA200 around 76.5, IDS just below 75, CS just below MA200, IT=81.
4. BIDU
Weekly: a sizable losing week on rising volume, in danger of forming a double top with plenty of bearish divergences, but overall it is still a clear uptrender.
Daily: rising negative momentum, bearish moving averages bow tie formation in process, oversold conditions,
** L2 if it spikes towards 300, IDS around 295, CS around 300, IT=330.
4. CME
Weekly: a hammer candle formation on very heavy volume, momentum turning negative, most indicators favor more downside
Daily: oversold rebound well on the way
** CTT between 575 and 650/MA50 with a $5 stop.
** S2 on any bearish-engulfing candle from this point further with stop just above the high of the previous day.
5. CRM
refer to "last week's trading calls"
** L1 if it spikes towards 50, stop just below, IT=57
6. CTRP
Refer to "last week's trading calls"
** L2 if it spikes towards 48 with a stop just below, IT=54.
** L1 if it spikes towards MA200, IDS just below 45, CS below MA200, IT=54.
7. DRI
Will this be the exception of oversold rebound?
weekly: another high volume sell-off week pushes it deeper into oversold region, the volume and the Black Marubozu candle formation point to more downside movement in the near future.
** Daily: strong bearish movement with signs of abating negative momentum, in oversold conditions for a while now.
** Speculative L2 if it spikes towards 18/20, IDS below 18, CS below 19, IT=25.
8. FSLR
Parabolic, up AND down?
Weekly: the evening star formation gets following through with a big down week on heavy volume, indicators favor more downside
Daily: negative momentum on the rise, bearish moving averages bow tie formation in process, approaching oversold conditions,
** L2 if it spikes towards 200 with a 2 point stop, IT=220.
** speculative S3 on top if it spikes towards 255, IDS just above 260, IT=200.
9. GRMN
Pinpoint your way down?
Weekly: spiking volume and heavy losses extending the losing week streak to 5 in a roll now, negative momentum increasing, approaching oversold
Daily: solid transformation of a long up trend, and analysts sure know the perfect timing for down/up grade;unabated negative momentum, but oversold rebound may be on the way.
** S2 if it spikes towards 80 with a tight stop, IT=75.
** S1 if it spikes towards MA200, IDS just above 90.
** speculative L2 if it spikes towards 60, stop just below, IT=70.
10. HMIN
Weekly: a big down week but volume is low, more immediate downside likely, approaching oversold
Daily: downside move accelerating, in oversold
** L3 if it spikes towards 28, CS around 28, IDS around 27.
** L1 when a bullish engulfing candle forms here, IT=32
11. ISRG
can an analyst change its long running uptrend?
Weekly: A big losing week on high volume resulting from an analyst downgrade; momentum turns negative for for first time in nearly a year; bearish divergences continue to develop, indicators point to more down side movement in the near future
Daily: a head-and-shoulder pattern in the working; unabated negative momentum, bearish bow tie moving averages formation in process, in oversold conditions,closed in the key support zone 258/265
** S2 if it spikes towards 288/300, IDS just above MA50, IT=265
** L2 if it spikes towards 235, IDS just below 230, CS around 230, IT=260
** L1 if it spikes towards 220, IDS just below MA200, CS below 220, IT=260.
12. MA
The subprime mess finally caught this high roller.
Weekly: a big losing week on very heavy volume, extending losing streak to 4 weeks, big bearish candle and other indicators favor further sliding
Daily: last Friday's high volume drop extended losing streak to 8 days!, increasing negative momentum, bearish bow tie moving averages formation in process
** L3 if it spikes towards 170, stop just below, IT=185
** L2 if it spikes towards 160, IDS just below MA200, CS around 160, IT=185
** S2 if it spikes towards MA50, IDS just above 200, CS just above MA50, IT=180
13. RIG
Weekly: a clear and strong uptrender, diminishing positive momentum, candle formation and indicators point to more near term decline
Daily: 7 losing sessions in the past 8 push it near oversold, negative momentum rising.
** L2 if it spikes towards MA50(currently near 133), IDS just below 130, CS just below MA50, IT=145.
** L1 whenever a bullish engulfing candle forms in the coming days, IT=145
14. RIMM
Trend reversal confirmed?
Weekly: a big down week on high volume, negative momentum continues to rise, indicators favor more downside movement
Daily: broke and closed below key support around 95, confirming the reversal of the long up trend, in oversold conditions
** S3 if it spikes towards MA10, IDS just above 105, IT=95
** S1 if it spikes towards MA50/110, IDS/CS just above, IT=95,
** L2 if it spikes towards 85 use MA200 as stop reference, IT=95.
15. SGR
Weekly: highest volume in 18 months failed to push it down much, downside momentum stalled, still a uptrender
Daily: strong support zone from 54-57, indicators mildly bearish
** L3 if it spikes towards 55, stop just below 54, IT=MA50
** L2 if if spikes towards 52, stop just below MA200/51.8, IT=MA50/60.
16. SOHU
Weekly: 5th straight losing week on relatively light volumes, momentum turns to negative for the first time since last summer, indicators favor more downside movement, uptrend still intact; noticeably stronger than its peers such as SINA
Daily: low volume slow bleeding continues, signs of firming up near key support around 47, oversold rebound signs.
** L3, entry zone 47-48, stop just below 47, IT=50
** L2 if it spikes down towards 40/42, stop just below 39, IT=47
B. Short Setups
1. BSC
Weekly: a hammer candle formation on very heavy volume plus extreme oversold conditions translate to a strong technical rebound,
Daily: rebound well on the way, but the steep down trend questions the possible v bottom.
** S2 if it spikes toward 90, IDS/CS just above MA50, IT=82.
** S1, entry zone 99-104, stop just above 105, IT=90
2. CMG
If the restaurant sector is doomed, it is only a matter of time before this goes down hard.
Weekly: second down week as the volume rose, indicators favor more downside
Daily: unabated negative momentum, signs of oversold rebound on the way.
** S1 if it spikes towards MA50, CS just above MA50, IDS just above 135, IT=MA200
3. DRYS
Boom to bust, just like that!
Weekly: a week of heavy loss and now under MA200, in oversold, but so what?
Daily: down trend in firm place but some oversold rebound may come
** S3 if it spikes towards 70, CS just above 70, IT=60.
** S2 on any bearish engulfing candle formation along the rebound.
4. GS
refer to analysis on BSC. keep in mind that GS is the strongest in this sector.
** S2 if it spikes towards 208 with a stop just above 210
** S1 if it spikes towards MA200/MA50 use a tight stop, IT=185
5. STP
The end of a parabolic up trend?
Weekly: a huge down week on heaviest weekly volume EVER, the huge volume+huge black candle may be indicative of fundamental changes of perspectives by the big institution holders, indicators favor more slide
Daily: 4 high volumes losing session in the past week, negative momentum continues to rise, in oversold,
** S2 if it spikes towards MA50/75, IDS just above 76, CS above MA50 with a bullish candle, IT=56.
** L3 if it spikes towards 55, IDS just below 53, IT=70.
If you think my analysis makes sense to you and would like to keep a track of my future trading calls/analysis, you can subscribe the feed to my blog using the RSS widget on the top left.
On overall trading strategy for the coming weeks
As I mentioned in my Weekend Analysis on the Market, despite a losing week, bulls showed increasing resistance and so far the Aug.07 lows of the major indices remain intact. Given all these, shorting aggressively at this level has a poor risk/reward ratio, to say the least. On the contrary, going long here to catch a quick rebound has a much better risk/reward ratio, that is if you know "How to catch falling knives"! Technically, the most sound swing trading strategies at this point are either shorting aggressively if the market breaks down the Aug.07 lows or waiting for the rebound to fully run its course and then establish short positions using key resistance levels as stop loss points.
On volatility and my last week's trading calls
Market volatility increased notably in the recent months, and according to this excellent analysis by Dr. Steenbarger, the volatility will continue to increase.
The increasing volatility probably contributes to the fact that while many of my Last Week's Trading Calls were on the money, some missed by inches (such as AAPL long call with a stop at 179), some missed by a mile (such as CME, though I made a good real-time adjustment and ended up a trade with 26 points gain). In light of this, I will try to take rising volatility into my trading calls, which will translate into wider entry zones and stop-loss ranges. To compensate for such changes, I will either use smaller position sizes or be more active on real-time adjustments.
I will post my weekly trading calls on Sunday Jan. 13.
Weekend notes on the market -- Jan 12 ,2008
Hesitating bears vs. cornered bulls, who will blink first?
Bulls endured another losing week while bears got no satisfactions as the Aug'07 lows for all major indices still stand firm.
On the weekly charts, volumes for major indices spiked to 2 month high, but the bearish candle bodies are substantially smaller than those of the prior week with considerable down shadows, indicating bulls' rising resistance. Moving averages formation are in the early stage of trend reversal, while all technical indicators point to more downside movement.
On the daily charts, bulls were able to not only keep the Aug'07 lows intact, but also stall the downside momentum. While the moving averages now in solid down trend formation, stochastic show clear signs of oversold rebound.
Some thoughts on the market direction for the coming weeks:
1. At this stage, it appears that subprime related bad news may not be enough to push the major indices down below their Aug'07 lows.
2. With the determined support from FED, bank/finance sector may stage a rally into FOMC meeting, which in turn, should help bulls. Check out this excellent post on the banking sector.
3. With FED impact diminishing (just look at this week's reaction to big Ben's rate cut pledge), I think the upcoming Q1 report season will decide the market direction for the next 2-3 months. The market obviously has already discount the weak Q1 report season, however, if the outlook for the come Qs are overall lower than expected, the market will break the Aug. 07 lows and possibly extend the sliding all the way to the summer if not further. On the other hand, if Q1 report season turn out to be better than expected, the major indices will rally, but I doubt they will be able to resume the uptrend by at least reclaiming their MA50.
4. I have a feeling that burned badly by FED/bulls a couples of times last year, bears are actually very disciplined so far this year, I wonder if they are waiting for FOMC rate cut to be over or clearer signals from the Q1 report season before showing their claws.
Interested in analysis on some stocks? Check out the "Trading Calls for this week".
On last week's trading
I made four trades last week:
1. CME: long at 576.11, exited at 598.8 and 604.8 for an average gain of nearly 26 points.
2. FSLR: long at 211.21, exited at 228.8 and 229.8 for an average gain of 17.5 point.
3. AAPL: daytrading, long at 176.02, stopped out at 175.4 for a loss 0.62 point.
4. AAPL: reversed to short after stopped out at 175.48, covered at 171.61 and 172.52 for an average gain of nearly 3.5 point.
A note on my posting
I went a bit hog wild last week as I posted my real time alerts on trades and positions. This has been the first time for me and I will continue to do so. However, I will avoid day-trading, instead, focusing on very short swing trading (holding time 2-5 days).
Whenever possible, I will continue to post my weekend note on the market and weekly trading calls either on Saturdays or Sundays.
For the real time trade alerts/position update, I will try to do post within minutes after a trade being made, but may take longer sometimes as I do have a fulltime job :)
For those who are interested in my real time alerts, I recommend that you subscribe my blog feed with the AddThis link on the left, which works with all major web-based RSS feed readers.
I welcome any comments and suggestions.
Friday, January 11, 2008
Position update
AAPL: just covered the remaining position at 172.52 for a gain of about 3 points. Did so because it felt like squeezing blood out of a stone. Given the light volume, probably not much left on the downside.
The light volumes have held me back from pulling triggers on my RIMM call earlier today, oh well...
Position update
AAPL: just covered half of the position at 171.61 for a gain of nearly 4 points, stop at 173.11 for the remaining position. Will consider cover all short and go long if it spikes towards 169/170 with a stop just below 168.
Position update
AAPL: long position stopped out at 175.4, reversed position short at 175.48, stop just above 177, IT=172.11.
I actually don't want to daytrade, but got a little bit time on hand today. Probably not going to open new positions if the volumes stay light.
Intraday note
The market is doing a slow motion crash just like 2 days ago this time, and there are just no volumes, which prevented me acting on some short setups (such as NVDA, S2 when breaking 27.7, stop around 28.2; RIMM, S2 when breaking 98, stop just above 101,IT=94). Since it is Friday, may be it is best to take a break.
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