No rally no bottom?

Last Friday's Feb job report was in very sense the climax of the month long bad news flood, yet the market's reaction was nothing but an anticlimax. This may not be surprising as the major indices extended their losing streak to 4 weeks with a cumulative losses near 20%, a dramatic and lengthy drop that could well exhaust bears' fuel tank for now. With relatively light economic reports/earning events on the plate for this coming week, it is very likely that bears will pause to catch their breath so they can gather the strength for the final push.

The 60 min charts suggest a likely initial rebound of 2-3% in all major indices, possibly occurring in the early part of the week. However, I have serious doubts that the major indices will be able to challenge the key technical levels that they lost lately: SP500-- 740/750, DOW-- 7100/7400, NASDAQ--1350-1390 as the weekly charts show no signs that the slide is ending. For that matter, I won't look for a tradeble intermediate bottom until the weekly stochastic dips into oversold area, which likely needs at least another week or two. With that in mind, for next week, besides more day trading from both long/short side, I will consider short-term positions on the short side once the major indices approach those key resistances or when their 60 min charts become overbought.

Last week ended as the best week I have ever had, which actually triggers a grave concern: will the triumph leads to a sense of euphoria that in the past inevitably leads to serious drawbacks if not outright debacles? Wabbit might be a natural-born runner, but can he really fly high like an eagle without breaking all the natural laws? May God have mercy on me!


1. AAPL: ST-CTT between 80-83 (IDS below 78, CS below 80) and 90-93 (IDS above 93, CS above 91).

2. AMZN: MT-L1=52-58, CS<54, IT around 66.

3. AXE: MT-L1=24-25.5, stop just below 24, IT=30/33

4. BIDU: MT/ST-L1=140-148, CS just below 140, IDS just below 136, IT=180.

5. CME: MT/ST-L1=172-177, stop just below 170, IT around 220.

6. DHI: MT-L2 if it spikes towards 6, stop just below 5.7, IT around 8.

7. FCX: MT/ST-L1=28-33, stop just below 28, IT=37/40

8. FDX: speculative L3=30-33, stop just below 30, IT around 44

9. GOOG: MT-L2=280-300, stop just below 280, IT around 330.

10. GS: MT-L2=60-70, stop just below 60, IT around 87; ST-S3=85-90, stop just above 90, IT=78/80.

11. LEAP: MT/ST-L1=26-29, IT=35, CS just below 26.

12. MA: MT-L2=130-141, CS below 135, IDS below 128, IT=165.

13. MON: MT-L2=65-70, stop just below 63, IT=80.

14. NTRS: speculative L2=39-44, stop just below 39, IT around 54.

15. POT: CTT between 54/64 and 78/80,

16. SKF: speculative S1=280-350, stop above 360, IT=180/200. the possible strategies include shorting March 350-400 calls, or bear put spread, or alright puts (May strike).

17. SQNM: MT-L1=10-12.5, stop just below 10, IT=18/20

18. USO: ST-L1=23.5-26.5, IT=31/34

Good luck all!

The bulls: down and out?

Certainly a bloody week for the bulls this week thus far.

As planned , I have pretty much just day traded GS, POT and AAPL since this Monday and some how am having one of the best week in my entire freaking trading life.

The market so far has been acting pretty much like what I wrote in last weekend's post, and we will see if it keeps that way tomorrow. Bought in some April calls in GS (when it was around 80.6) and AAPL (when it was around 88.5) late in today's session because I feel that with such a precipitous drop, the market has priced in a very very bad Feb job report tomorrow, and I might lay down a few small chips just for fun. On the other hand, should the market have a bloody Friday, I will start to move my retirement account back into SPY500 index fund, 15-25% a time, starting at SP500 around 660 all the way down to 500, hehe.

Oh, I have been keeping eyes on SKF, may start to build puts between 250-300 range.

best to all,

Is the hell about to break loose?

Well, the monthly, weekly and daily charts favor such trending scenario, especially for SP500 and DOW. There is little doubt that after the 3.5 month of consolidation, the market is once again in the bottom-searching mode.

This coming week is crucial for bulls: if SP500 fails to close above 750 by the end of the week, it will be extremely hard from the TA point of view that the market can halt another precipitous leg down. The scary thing is that if you look at the SP500 20 year monthly chart, there are not much meaningful support until the 420-480 area. There is a little bit of support between 600-660, which could serve as an initial target for the first pause. On the other hand, all major indicies may reach a rare multi-time frame oversold (monthly, weekly, daily) conditions in next 2-4 weeks, depending on the speed of dropping, and it seems worthwhile to position for an oversold rebound some point during the mid/late March. However, at this stage, I am unsure how long the March bottom could hold.

One theme that is becoming very clear lately is that while we all expect more bad macro-economical news, the actual news have been overall worse than even the most gloomy estimates, and I suspect that this Friday's Feb employment report is no exception. The bottom line is that as long as the global economy continues to deteriorate at a faster-than-expected rate, hoping a sustainable bottom in the stock markets is nothing more than a pipe dream.

Speaking of this Friday's Feb employment, my gut feeling is that if it comes in with less than 700k job loss and below 8% unemployment rate, the market may have a relief rally IF it goes down hard in the early part of the week. We shall see.

Given the current TA picture, I will once again try to avoid initiating any long positions that are meant for mid term (1-8 weeks) or long term (1-12 months) holding, in other words, I will once again focus on DT instead. However, I might consider some short term (1-10 days) long setups when the risk/reward ratios become very attractive.

1. AAPL: ST-L2=79-85, CS just below 80, IDS just below 78, IT=90.

2. AEM: MT-S1=32-35, CS just above 36, IT=26

3. AMLN: MT-L2=6-7.5, CS just below 6, IT=12

4. AXE: MT-L2=26-28.2, CS just below 26, IT=33

5. BIDU: MT-L2=130-141, CS just below 130, IT=165/180

6. FCX: MT-L2=26-28.5, CS just below 26, IT=37/40

7. FSLR: MT-S1=110-125, CS just above 125 with a bullish candle, IT around 95.

8. GS: MT/ST-L1=80-85, CS just below 80, IDS below 78, IT=93, OR when it closes above 93 with a bullish candle, IT=98/100, stop just below 90.

9. MA: MT-L1=140-147, CS just below 140, IT=170/180; DT-L2 if it spikes towards 150, stop just below, IT=160/165.

10. POT: MT-L2=76-80, CS just below 77, IDS below 76, IT=86/95

11. SNDA: MT-ST-L1=28-31.5, stop just below 28, IT=37/40

12. SQNM: LT-L1=10-12.5, stop just below 10, IT=18/20

13. USO: ST-L2=23-25.2, stop just below 23, IT=28/30

I know, I know, there are quite a few MT or LT long setups here despite what I said earlier, I don't know, the charts are making me calling them.

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

Wow!

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.

Seriously!

Enjoy your weekend!

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.

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!

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.

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.?

Best!

Happy Holidays!

I have been busy preparing for a long-waited home trip next week that would last for nearly TWO months. All my accounts are back to cash now and which most likely would stay that way till I am back.

As for the market, the major indices might continue trending up to test their weekly MA10 in coming days if the shopping season is not worse than anticipated. I also tend to think that the market could continue its counter trend rally in next 2 or even 3 months, along the way to test their MA50 or even Mid-Oct08 highs. But such rally is likely to be choppy as it pins mostly not on the fundamentals but on the hope that the Obama administration would quickly turn the economy around, which obviously will be crushed. Looking into the longer time frame, the market is now pricing in the possibility that the global economy bottoms in late 2009 or early 2010, if this scenario gains traction, we might see the ultimate bottom in summer 2009.

Finally, a word of caution: for the next 2 months, regardless you trade long or short, you will be better off if you are not greedy and quickly lock in your gains because the market will not have any strong and lasting trend, one way or the other. The only things you can count on are volatility and choppiness.

If I don't get chance to post again till I am back, here is my best wish to everyone for a great holiday season!

Does this scare the crap out of you?

I got a chance to watch the clip below regarding US national debt, and while I did not shit my pants, it did send chills down to my spine and made me started to think about the years yet to come.

This could be the best 30 min you can spend.

Could someone tell me this is really some liberal/conservative scare tactics, or some deeply flawed junk, or indeed the Sword of Damocles high above this nation?

What you don't know cannot kill you, can it?

A Momentary Lapse of Reason or FEAR?

Biting my fingernails all afternoon last Thursday, but finally decided to move all my 401/403 accounts back into the index fund in the closing minutes instead of waiting for a possible Friday morning gap-down. So far so good.

I have gone through all kinds of charts on all major time frames over the weekend, and they all point to a fledgling counter trend rally, well, maybe except the key financial such as C and GS, whose charts gave me a chilling sensation. I will keep eyes on last week's lows and may consider to pull out at least 2/3 of the funds if the major indices close solidly below those lows. The current initial profit target is around MA50s of the major indices on their daily charts.

Yes we can!

What an incredible, transforming and historical night it was last night!

Besides listening to the gracious and the uplifting post-election speeches last night, I paid close attentions to the reactions of the ordinary people on the TV, especially their facial expressions. What I saw once again reaffirms my belief that USA is one of the greatest nations on the earth. As for the American people, sure there are scumbags, jerks, idiots, nuts, and fanatics among them, but overall, they are the most admirable folks in this world with their passionate, genuine, and kindhearted spirits. Their unyielding pursuit of dreams, unwavering optimism, and above all, their innocence make them truly the seeds of the promising future of the mankind, and there will be many fruitful seasons to come!

Yes we can!

Now, where was I? Oh, yeah, back to aggressively shorting both calls and puts for the NOV OE. I shorted a bunch of FSLR NOV195 calls yesterday, made a bundle despite of exiting too early. I am hoping for some sizable pullbacks for the rest of this week, especially this Friday, before re-positioning my retirement accounts for a multi-week counter trend rally.

Rally on?

While my long term view of the market remains firmly bearish, my bias on the short and intermediate term trend is turning bullish. The chance is decent that the recent low will be held throughout 2008. As we are moving within 3 weeks of the NOV OE, my primary strategy for the coming days will continue to be shorting naked calls and puts. In any case, I will try to hold back fire until the election is over.

Vote!