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Tuesday, August 28, 2007

Busy

I'll be busy for the next 2 weeks and posting will be minimal. I'll still be updating MY del.icio.us. Check that out and meanwhile, trade well.

Monday, August 27, 2007

Week Ahead: 27/8 - 31/8

This is the last week of August. Can the market stage a month end rally or was it a bear flag (on lower volume) that we saw last week?

Mon: Existing Home Sales, ECB President Speaks

Tue: Consumer Confidence, FOMC Minutes
Notable earnings: BGP

Wed:
Notable earnings: BIG, CHS, CWTR, ENER, JOYG,PSS

Thurs: GDP
Notable earnings: DELL, HRB, VIP

Fri: Core PCE Inflation, Personal Income, Personal Spending, Chicago PMI, Fed Chairman Bernanke Speaks


Thursday, August 23, 2007

ESRX, MOS Range Bound?

MOS: This former nice uptrending stock appears to be in range bound mode recently. Trading in the range of $34-$41 for the past 3 months. It is nearing resistance. Considering the market sell-off, the stock has held up relatively well trading in a range. Watch closely to see how stock reacts at the resistance. Could breakout or trade back down.

Will post the ESRX chart later. Blogger having problem uploading this chart.

Edit: After several days of trying, finally managed to get this chart up. Similar to MOS, ESRX is also a former uptrending stock that is trading in a range of $48-$55. Keep a close watch as it nears resistance.


Monday, August 20, 2007

End of Volatility After Rate Cut?

Another wild ride last week. Some good readings on Fed's action on MY DEL.ICIO.US at the left column. Also check out other good readings I've read and gathered from blogs/ websites.

There is not much economic data coming out this week and earnings report has been winding down. But there is a batch of retailers reporting earnings this week and it would be interesting to see what their earnings/ guidance say about consumer spending. This could throw some light on the growth of economy.

Mon:
Notable earnings: LOW

Tue:
Notable earnings: AEO, ACS, TGT, DKS, BJ

Wed: Japan Interest Rate Annoucement
Notable earnings: ANF, BCSI, BHP, GYMB, TOL

Thurs:
Notable earnings: ARO, BKS, BEBE, GME, PLCE

Fri: Durable Orders, New Home Sales
Notable earnings: ANN

Btw, does anyone of you think the Fed discount rate cut would bring an end to the volatility in the market for good? I have my reservations.


Anatomy of OIH Intraday

Had problems posting pictures for the past few days, so this is a delayed post on OIH on 16/8, Thursday. OIH intraday presented several textbook style plays - first to the downside, then up. Classic!


The above is 15 min chart. Green dotted lines represent potential support/resistance areas. The 1st two bars printed long upper tails with resistance at 5EMA. After breaking down, it tested the opening range low (ORL) with a bear flag. Unable to break, it then continued its fall steadily, reaching the 38.2% & 50% Fibonacci extension price target


Zooming into the 5 min chart above, if you hadn’t taken profit at the Fibonacci extensions, hammers appearing at the key level $155 would have prompted you to do so. Hammers at key levels are good indication of reversal.

Although this PUT option trade turned out nicely, there were 2 drawbacks:
1) Then entry point is not low risk, as the stop is placed at high of the 1st 2 bars, meaning a risk of $2 move on the OIH
2) The Natural Gas data which is released every Thurs at 10.30am ET (there was delay yesterday, released about 11.13am ET from Briefing.com) may have impact on OIH. That was the point where we see a test of ORL. It could have gone the other way and break back up of ORL

A nice reversal opportunity if you spotted it just before the 1.10pm ET bar as it broke the down trend line and also a resistance. Coupled that with the hammers I mentioned earlier, this is a high probability trade. It is always good to partial take just before round number, in this case $160. See that it did stalled at about $159.7 between 1.35pm ET to 2.10pm ET – this also happened to be where the 20EMA on 15 min chart is located. Always look at 2 different time frames when having day trades. OIH then went on to test the ORL again.


Friday, August 17, 2007

Indices Take A Breather

As I mentioned yesterday, I wouldn't be surprised to see a rebound soon given the massive continuous selling. And a rebound did we see during the afternoon session, especially during the last hour of trading. All 3 major indices closed above the key level that I talked about in earlier post. See below intrday chart of Mini S&P 500 Index (ESU7) futures. (I'm using this as a gauge as I'm not able to see intraday volume of the actual indices) Note the buying volume before end of trading day.


We have been seeing heavy selling pressure recently before the close and its refreshing to see a change. Institution action comes in during the last hour of trading and momentum typically carries through to the start of the next session. Let's see how far this short term rebound can bring us to.


Thursday, August 16, 2007

Are You A Contrarian?

Question: Is the worst of the market selloff over?

Almost half of the respondents are bearish and think the market will go lower. Recall there was a similar poll by CNNMoney after the 24/7 selloff. At that time,about 2/3 of the respondents expected the market to trade sideways or right back up. What a contrast in sentiment a few weeks make!

With the general public turning pretty bearish, is it time for the smart money to go contrarian? What do you think? I don't have a crystal ball, but in my opinion, I think not yet. As the extent of credit crisis is still unclear, another bomb may drop anytime, so any recovery will be shaky, unless the Fed steps in to take drastic moves. So I'm not calling for a bottom here, but I wouldn't be surprise to see a retracement bounce soon. The indices have had monstrous selling for the past few days and are reaching key round levels soon:

S&P 500: 1,400
DOW: 12,800
Nasdaq: 2,450

The indices made a new low yesterday and as I'm writing now, the U.S. futures point to a lower open, with world wide markets from Australia, Hong Kong, Japan and Europe all taking a dive. Let's see what the market presents us today...

Monday, August 13, 2007

Volatility Ahead

Credit crunch, Credit squeeze, Credit tightening, Credit turmoil... these have been the headlines over the past few weeks.

With credit crunch acting as overhang and together with options expiration this Friday, be ready for more volatility ahead this week. Here's a look at the 5 year weekly VIX chart:


I'm no expert in the VIX. But just by looking at this chart, the VIX is now located outside the upper bollinger bands and last week, it has broken out of a key 5 year resistance. What does this means? Remember, the VIX represents the fear index. I recommend you to go over to VIX and More if you want to go in depth into VIX. Bill's entire blog is dedicated to VIX discussion.


Mon: Retail Sales, Business Inventories
Notable earnings: NTES

Tue:
PPI, Trade Balance
Notable earnings: HD, UBS, HAR

Wed: CPI, NY Empire State Index, Industrial Production & Capacity Utilization
Notable earnings: DE, CRM, PETM

Thurs: Housing Starts, Building Permit, Phil Fed
Notable earnings: ADSK, HPQ, JCP,JWN, KSS

Fri: Options Expiration, Michigan Sentiment


Wednesday, August 08, 2007

Top 100 Trading Blogs

CurrencyTrading.net recently listed Simply Options Trading among the top 100 Day Trading Blogs. This is not really a day trading blog, but thanks for including it.


Monday, August 06, 2007

Fed Day to Make or Break the Market

I'm writing this with a sense of deja vu. Those who have been monitoring the market know what I mean. Seems like no stopping on the sea of red. If you have been trading PUT options, especially on the homebuilders and financial sector, well done and congratulations!

Right now the S&P500 is the weakest major index, having closed below the 200MA as well as retraced more than 61.8% of the swing from Mar low to Jul high. Both the Nasdaq and Dow still above 200MA, with Nasdaq having retraced more than 50%, while the latter retraced about 38.2%. The late Feb correction this year took about 2 weeks to recover and we are now at about the 2 weeks juncture into the sell-off.

Tuesday is Fed Day. I don't recommend initiating new swing positions ahead of this important day. Keep an eye on how the market response. This is a pivotal week and it could make or break the market.


Mon:
Notable earnings: JCOM, NVTL, WYNN

Tue: Nonfarm Productivity, FOMC Policy Statement
Notable earnings: CAR, CSCO, CREE, HET, FLR, EXPD, MVL, MLM, TAP, PZZA, PACR, PCLN

Wed:
Wholesale Inventory
Notable earnings: FWLT, HANS, INSP, TOL

Thurs:
Notable earnings: NVDA, URBN, ZOLT


Jim Cramer Meltdown?