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Tuesday, December 19, 2006

Charts, Charts, Charts

A string of merger deals pushed the indices higher yesterday, but there were no follow through. Eyeballing the past 3 years chart on the 3 major indices, the week preceding X'mas is positive gains at Wall Street on lower than average volume. More specifically, last year, the gains were made 3 days before the X'mas holiday, although I would add that technically the 3rd day is really more of a flat day as most traders are either absent from the trading floor or their mind is somewhere else already.

A couple of charts to share:

NVDA was on my watchlist. As said, the stock is trading at all time high and closed on very strong volume last Fri @ $37.5 (right on strike, not sure any pinning here as I didn't take note of open interest). See the spike on price & volume half hour before market closed last Fri. There is likely to be institutional buying and true enough, BMO on Mon, I see this from Briefing.com:
Before the open, Nollenberger initiates NVDA with a Buy and a $43 tgt. Firm says NVDA is executing on all cylinders with momentum in virtually all target mkts and product areas, in their opinion. They believe NVIDIA will gain another 10% points of graphics market share by the end of 2007, a dynamic that the Street may not yet be factoring into its expectations.

I noticed TEX because it gapped up today, due to analyst initiating a BUY rating. Upon taking a closer look at the chart, this stock is trading near all time high and see how volume spurt towards close last Fri. The second last bar of last Fri was bullish engulfing and signalled potential reversal. And it gapped up today. Pretty similar to NVDA, it's the big guys out there buying ahead of an upgrade or buy rating.

There is also a NRB entry after stock consolidation above OR high and supported by 5 EMA. Richard from movethemarkets traded this setup.

Google, our good friend, took a dive today, which is not surprising, from a technical point of view. After we traded a bull put spread on GOOG last Fri on expiration day itself due to good risk/reward ratio, I reviewed the chart again over the weekend. I saw a descending triangle formation, which is bearish. My entry would be break of $477 and target $470. Lol, this is how I would have played it if my account allows me to or if it is nearer to expiration. GOOG options at the start of new month is too pricey for my liking and I have to stick to my money management rules, although the setup looks real tempting. I was thinking of entering a bear call spread at $520/$530 strike when market opened. This is way OTM and according to the probability calculator, there is only 15% chance it will cross over $520 from now to Jan expiration. But as you know, I'm not really keen on spreads play, especially now the new month has just started and especially it's GOOG we are talking about. Well, I figured if I did enter the trade, I would have made some $ on the spread in just 1 day alone.

GOOG is now resting on $460 support. If it's not able to hold this level, high chance of it breaking down and filling the gap. Watch for it.


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