Biding my time......

This whole thing is getting scarier by the day, and with all the uncertainties, it is the bulls who are hibernating. However, nature (or should I say the human nature) rules ultimately, by saying that I mean the bears will go hibernating, maybe sooner than you thought.

I flipped 1/3 of my retirement account (moved to money market since Oct. 2007) a couple of times between money market and Spartan 500 index in the last several days, netting just over 10% and moved back in last Thursday. May flip that out again mid this week. Will consider moving all in if the market could get a quick 10-20% down from here for a multi-week, possibly a year-end rally, we shall see.

After sitting tight for 4 days, I shorted OTM puts for X, WLT and MON last Friday, all with 1/3 position size, and may consider close out the positions in X and WLT tomorrow ahead of their ER. I probably won't aggressively short the OTM puts until we are through the election, which for some reasons, is making me really nervous.

Be careful out of there!

Bouncing market, leaping wabbit!

Shorted a bunch of ISRG OCT140 and 135 puts this morning, and now looks like your wabbit will pock some decent profits tomorrow even if GoldmanSucks strikes again!

As the market bouncing around violently, booking quick profits is the only way you can play. I am still waiting for a new price low following this Monday's momentum low to really build up swing long positions. In the meantime, a quick short around MA10 or MA20 should work for most stocks, the key here is QUICK!

Good luck all!

Now, that's history!

Ok, it is official: history does repeat itself (from the 1930's crash), and people never change! Good thing that I made out fine and kicking, despite some sub-par executions last week AND today that burnt a big chunk of the expected profits. Closed all positions except the short WLT OCT25 puts, which I collect every penny of it.

The market rallied nicely today, but with volumes so light, the bulls will run out of steam as early as tomorrow. Unless you DT, now is the time to be a bit patient, long or short.

Is it time to not believe everything you know about human nature?

The insane market, whose decline was underestimated by about 10% on my side, and the **&#$&^ GoldmanSucks, who promptly downgraded FSLR, AKS and X this week, are leaving your wabbit in some hot water (not simmering yet). Had chance in each of past 3 days to get out with a couple grand of profits, but no thanks :P In the hindsight, I should've chosen shorting calls instead, but then again, not one foresaw a drop of this magnitude (and I know quite a few top traders).

More and more people are throwing in towels everyday, but my belief in human nature (driven by extreme emotions) is still in tact, though a bit shaken. I will get my IRA accounts ready shortly and there better be a real crash, soon!

Good luck all!

Steel balls!

Well, for almost 3 hrs, I thought my steel balls were going to be crushed by the bear claws :) Shorted OCT puts of X ($55), AKS (15), FSLR (125), WLT (25), and FCX (35), and did not cover. I did chicken out on AAPL, MA, DVN, MON, and APA, well, you just cannot win them all. The only question now is if I should lock in some profits tomorrow or hang in tough to let all options expire. Make no mistake, it is still a bear's country....

Be greedy when everyone else is fearful!

All major indices are sitting around 3% above their major support levels, but weekly charts suggesting more trending down in next 2-4 weeks, and another crash of 10% is totally possible. Nonetheless, when the panic is thickening, and everyone else is fearful, it is time to get greedy. Considering the high IV and only 2 weeks left for OCT OE, I will continue focusing on shorting the puts of many near-death stocks (mainly in the broad commodity sectors). That strategy brought me some decent profits last week, and should offer more rewards. Too busy to write more, just let you know that my focus list includes the names like: AKS, FCX, X, ENER, WLT, JASO, APA, AAPL, BIDU, SQNM, DYRS, MA....

Control your risk and good luck!

Short these!

Yes, I am serious. As the market goes insane and the IV totally exploded, it is time to play safe. With the account going up for another 1k today (flipped CLF calls and still have winning SQNM NOV30 calls), it is time to relax a bit. Will consider shorting the following puts for the remaining of the week.

1. AAPL: Oct. 95 puts $6.5 or better
2. BIDU: Oct. 200 puts $8 or better
3. CLF: Oct40 puts, 4 or better
4. FCX: OCT50 puts 5 or better
5. MA: OCT140 puts 6 or better
6. POT: OCT120 puts 8.5 or better
7. SPWR: OCT55 puts, 3 or better
8. SQNM: OCT 22.5 puts 1.25 or better
9. UYG: OCT 15 puts 1.5 or better
10. WLT: OCT35 puts 2.5 or better
11. X: OCT 65PUTS 5.5 or better
12. CF: OCT75puts, 5.5 or better.
12. DVN: OCT80 puts, 3.5 or better
13. GOOG: OCT350puts, 12 or better
14. FSLR: OCT165puts, 11.5 or better
15. MON: OCT90puts, 5 or better
16. CME: OCT290puts, 8 or better.

And yes, I am fully prepared to end up with those shares that much cheaper than the current levels.

Save them to save us?

Well, looks like the Wall Street is only going to get a half-assed rescue for now, and with that, the major indices may spend a bit longer time at bottom searching before turning up. Right now I am only comfortable about two plays:

1. Short UYG OCT17 puts if the market gaps down at the open tomorrow.
2. Short SQNM OCT22.5 puts and start to build long positions in SQNM or buying its Jan09 30 calls.

The broad commodities are oversold and I am eyeing plays for a technical rebound, however, I might have to be patient until I see how US$ and global recession outlook affect them, right now it hurts my head trying to figure that whole thing out.

Now what?

The market may have reached momentum bottom last week, but a retest of the bottom and consolidation are likely for the next week or two before another counter trend rally can materialize with force.

Key Indices Assessment

Monthly – bearish (straight down MA10, closed below MA50), not quite oversold yet; but may bottom-fish because of uprising MA50

Weekly – the bottom might be in, but more volatile side-way chopping expected.
** MA—all closed below MA10, but they are flattening or turning up; MA50 all solidly trending down
** MACD/histogram: neutral, either way
** Candle formation: indecisive with huge up/down shadows with slightly bullish white bodies

Daily – rally facing formidable resistance
** MA—short-term MA in bearish order; all closed above flattening/curing up MA10s; all failed MA50
** Candle formations—clearly bearish despite of Friday’s historic volumes.
** Stochastic/RSI all favor more near-term upside; MACD Hist still negative;
** Lots of overhead resistance, the gap will be filled soon.
** QQQQ is the weakest of all, facing formidable resistance zone from 44-46, with MA50 around 45.2.

US$– more downside to MA50 around 76 likely before resuming uptrend?
Weekly— key resistance around 80 in play; MA10=76 and MACD/histogram bullish; stochastic points to overbought pullback in early stage
Daily-- recently reversed long term trend still intact; MA10=79, increasing MACD histogram, stochastic all suggestion more downside; but RSI2 in oversold; a test near the previous consolidate zone and MA50 (76-77) inevitable.

VIX—consolidation going forward
Weekly—more upside likely as every indicator except RSI2 are bullish.
Daily—parabolic ascending in correction, some pullback/sideway movement likely in near future.


Weekly Swing Trading Calls

Tech sector (bearish bias, Q3 ER outlook gloom?)

1. AAPL: Q-S2, 146-152, IT=135; S1, 158-162, IT=146
2. AMZN: Q-S2, 84-92, IT=72
3. GOOG: CTT, 410/430—480/510
4. RIMM: CTT, 90/92—112/116; bearish bias
5. SOHU: Q-S2, 68-72, IT=60

Coal, energy, solar sectors (watch US$ and oil movement for necessary adjustment)

6. ACI: Q-S2, 45-50, IT=38; S1, 54-57, IT=42
7. CLF: L1, 64-71, IT=84
8. CLR: L1, 33-37, IT=50
9. CNX: S2, 68-72, IT=58
10. ENER: S2, 73-83, IT=60
11. JRCC: S2, 36-45, IT=28
12. MEE: S1, 49-56, IT=40
13. OIH: L2, 158-161, IT=175
14. RIG: L1, 112-121, IT=130/132
15. USO: CTT, 78/81—89/93
16. WLT: CTT, 55/62—78/85

Metals and other commodity sectors (watch US$ movement for necessary adjustment)

17. ABX: S2, 40-45, IT=32
18. AEM: S2, 64-72, IT=55
19. GG: S2, 36-42, IT=32
20. CF: L2, 105-111, IT=130
21. FCX: CTT, 62/67-85/95
22. PCU: CTT, 20/23—30/33
23. MON: L2, 102-112, IT=122/130
24. POT: L1, 158-168, IT=185
25. X: L1, 81-92, IT=118

Financial and related sectors
26. BAC: S2, 42-45, IT=36
27. CME: L1, 345-375, IT=450
28. COF: S2, 62-70, IT=50
29. GS: S1, 144-162, IT=110
30. MA: S2, 239-260, IT=210
31. SKF: L1, 71-81, IT=115
32. WFC: L1, 32-36, IT=45; S3, 45-50, IT=38.
33. XLF: L1, 18-21, IT=25,
34. RKH: CTT, 110/113—132/138

Go finishing!

OK, now is the time for any who wants to be a bull to dig out all the fishing gear. I am going to say this tonight: I expect a short to intermediate term bottom this week, could be as early as tomorrow if the market gaps down for another 2-3%.

Good luck!

Weekend notes

Well, I got it half right in my last weekend notes: I thought most people would have held on to the belief that the decline commodity is good for the market a bit longer, guess by now many have started to see the gloomy outlook for the global economy.

As the Fed running out of the ammunition, Uncle Sam steps in this time to try make yet another artificial bottom here. The major indices will rock higher tomorrow, but I seriously doubt that rebound will have the staying power.

The precipitous drops in the last several days prompted me to get in a bunch of long positions late last Thursday (all Oct. calls), I exited half of those late last Friday (MEE, CNX, CF, WLT), and will exit the rest (QQQQ, AKS, X, FCX) on Monday/Tuesday. Have been too busy to do any trades for a while, and felt happy with this round, should all be decent winners.

Not a whole lot of setups for the next week, which will be extremely volatile, but my overall strategy is closing all the long positions into the rally, while start to look for short setups (especially in financial, retailer and tech sectors) once the rally starts to losing steam). For tomorrow, I will keep close eyes on SKF, will consider long if it can spike towards 90.

Weekend notes

The actions of the low-volume days last week did not change my overall views of the market as stated in last weekend’s note, in fact, the near-term outlook becomes even cloudier as the weekly and daily technical indicators flashing conflicting signals. However, unlike last week, in the face of several key economic reports, I expect the back-from-vacation big boys will start to make up their mind in the coming days, and all we should do, is trying our best to read whatever hands they show, and then play along.

My gut feeling is that, as US $ strengthens further and global economic outlook turns bleaker, oil will lead the energy/commodity related sectors to the second leg down, which will likely drive the rest of the market up to extend the now 8 weeks-old counter trend rally. Historically, September is the cruelest month for the bulls, and I am not sure if the election will affect that.

Really not many setups for the short week:

1. CF: S2, ez1=153-158, stop just above 160, ez2=165-172, stop just above 173, IT=128.
2. CME: L2, ez=310-322, stop just below 310 (may re-enter around 280 or 300 with stops just below), IT=370.
3. CRM: S1, ez=59.8-64, CS just above 62 with bullish candle, IDS just above 65, IT=54
4. GOOG: S2, ez=480-500, stop just above 500, IT=420
5. ILMN: S2, ez=88-91, CS just above 90 with bullish candle, IT=78.
6. WLT: S1, ez=95-100, stop just above 100, IT=84.
7. GS: CTT between 158 and 178, quick on profit taking.
8. POT: S1, ez=177-185, IT=160.

Weekend thoughts and calls -- Aug. 24, 2008

Just some quick thoughts and calls:

Major indices are at a very tricky point: they may roll over right here, or there might be another leg up before the counter-trend rally eventually ends. The movement of US dollar and oil could drive the market direction for next week or two.

We are seeing the technical rebound of the extremely oversold energy/commodity/metals sectors. The rebound is yet to run it course, consequently, for this week, any dip towards the lows of the last week can be bought with stops just below. On the other hand, it is very likely that the mid-term trend of these sectors have been reversed, therefore, short-the-rebound setups should be considered in the coming weeks.

1. ABX: S1, 38-41, IT=34

2. CF: S1, 158.5-168, stop just above 173, IT=130

3. CLF: S1, 110-116, stop just above 116, IT=100

4. CME: L2, 330-350, stop just below 330, IT=390

5. CRM: S1, 60-62, closing stop just above 62, IT=54

6. FCX: CTT between 80-100/105

7. GS: Quick-swing L2 if it spikes towards 140, closing stop just below 140, IT=160,

8. JRCC: S1, 49-51, closing stop just above 51, IDS just above 52.5, IT=40

9. MA: S1, 255-258, stop just above 260, IT=221.

10. MOS: S1, 120-128, stop just above 130, IT=100

11. POT: CTT between 166/71 and 200/205

12. USO: CTT between 88/89 and 102/105

13. WLT: S2, 99-109, stop just above 110, IT=85

Weekend notes -- August 17, 2008

Got a few moments at hand so here we go:

Major Indices Assessment

Weekly – more upside possible, but may consolidate first.
** RSI2--clearly overbought for all
** MACD histogram: turned positive for NASDAQ, growing (3rd week) for Russell; poised to turn positive for DOW/SP500.
** Russell on 6 week winning streak with volume spike but backed off from the June high, stochastic near overbought; COT show increasing commercial shorts in Russell.
** VIX MACD histogram just flipped to the negative side.

Daily – rally overstretched but no clear reversal yet.
** Well defined ascending channel for all.
** Extended period of positive momentum for all but stalled
** Overbought for both NASDAQ/Rut, which are also over-stretched and crashing the Bollinger bands
** VIX breaking down
** MA50 and MA200 all with clear bearish slopes.

Weekly Swing Trading Calls

** Calls should be seriously reconsidered when there are major company-specific material events.
** All long calls for the energy/commodity/fertilizer sectors are primarily technical driven at this stage.
** Once again, EZ are set conservatively. Entries above the EZ can be used, but position sizes might need be reduced to manage the risks.

1. ABX: L1, 27-30, IT=35/38

2. ACI: L1, 37-44, IT=55

3. AGU: L1, 65-73, IT=88

4. CLR: L1, 37-42, or when it closes above MA10, IT=55/60.

5. CNX: L1, 50-58, IT=68/72

6. ELN: L1 if it spikes towards 12, IDS<11, CS>12, IT=18.

7. EWZ: L1, 60-66, IT=75

8. FCX: L1, 69-81, IT=90

9. MOS: L1, 82-93, IT=110

10. OIH: L1, 170-173, IT=190

11. POT: L1, 142-160, IT=183/190

12. RIG: L1, 110-121, IT=132

13. SLV: L1, 10.5-11.7, IT=13.7

14. USO: L1, 85-88, IT=95

15. X: L1, 111-121, IT=140/150

16. IWM: quick swing (1-2 wk), S1, from 76-80, IT=72

Back from the future...

Before I knew it, I have not posted anything for like 10 days, just got too many things going on latterly

Allow me to post some of my thoughts about the market as well as some trading calls, I hope they are good for at least a week or two.

Thoughts and observations about the current market conditions and outlook for next 2-3 weeks:

1. More and more people are now in the camp of “global-recession-here-we-go”. The crowd obviously believes the “demand destruction” due to the upcoming recession, and they probably have been selling energy/commodity/materials/agriculture sectors hard. I pretty much agree with them to this point.

2. But the crowd went on to buy all other sectors and started to think that a new bull market is coming. To that, while I think the market will overall trend up in next couple of weeks, I find it is kind of amazing that one could actually put both “upcoming global recession” and “a looming new bull market” in the same sentence.

3. My target zones for the ongoing counter-trend rally: NASDAQ: 2470-2560; SP500: 1320-1400; DOW: 12000-12700. As far as I am concerned, as long as the major indices stay below these zones, the primary trend is down.

4. While I will look for short setups in tech and other rallying sectors once the major indices approach the aforementioned zones, I will start to look for long setups in the hard-beaten energy/commodity/materials/agriculture/solar sectors in coming days. The bottom fishing is mostly technical driven at this stage.

5. As for the argument that the commodity bull market is over, while I am yet to really figure it out, I will say this now: if the commodity continues to fall, Fed will lean to rate cut, and that will drive the commodity right back up.

6. I am looking for oil to pullback to around 100, which should be a likely turning point for some decent rebound for oil and other energy/commodities.


Trading calls for the next 2-3 weeks:

Unlike before, the proposed holding time for most calls could be as long as 2-4 weeks if their IT don’t get hit within the first week or two. The calls obviously don’t take possible ER/analysts/other company specific material events into consideration so be careful. In addition, many ez are set very conservatively, up-adjustments can be made if some major signals favor (watch for the end of 1st round of oil pullback).

For most setups, the lower end of the ez is for intra-day spiking down. IDS should be at most 1-3% below the lower end, while CS should be a bit higher than the lower end of ez on bearish candle/volume.

List 1—Energy/coal related sectors.

1. ACI: L1, ez=36-43, IT=55
2. APA: L1, ez=80-95, IT=120
3. ATW, L1, ez=30-35, IT=48
4. CLR, L1, ez=30-39, IT=55
5. DVN, L1, ez=70-81, IT=100
6. RIG: L1, ez=90-111, IT=140
7. WLT: L1, ez=65-75, IT=95
8. OIH: L1, ez=150-162, IT=200
9. USO: L1, ez=80-85, IT=100

List 2—Materials and other commodity sectors.

1. ABX: L1, ez=28-32, IT=38
2. FCX: L1, ez=66-76, IT=94
3. AKS: L2, ez=40-46, IT=62
4. X: L1, ez=116-127, IT=155

List 3—Agricultures/fertilizers

1. AGU: L1, ez=60-72, IT=90
2. CF: L1, ez=100-121, IT=150
3. MON: L1, ez=88-96, IT=110
4. MOS: L1, ez=72-91, IT=120
5. POT: L1, ez=135-161, IT=190

List 4—Solar and other alternative energy sectors.

1. AMSC: L1, ez=16-21, IT=30
2. FSLR: L1, ez=200-222, IT=260
3. CSIQ: L1, ez=18-23, IT=30

List 5—other long setups.

1. DRYS: L3, ez=50-61, IT=70
2. MA: L1, ez=180=211, IT=238
3. SKF: L2, ez=90-101, IT=130

List 6—Short setups

1. RKH: S2, ez=120-130, IT=105
2. LVS: S1, ez=60-70, IT=45

That’s it folks, should keep you all busy for next week or two :) Share your views, and do let me know if you make any money on any calls, otherwise, I might just take a hiatus for now.