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Monday, December 24, 2007

Merry X'mas & Happy New Year!

The X'mas rally that we've all been waiting for finally arrived during the last few trading sessions. I wish all of you a Merry X'mas & a great new trading year in 2008, bagging loads of cash like this Santa!

This will be a light trading week, with only a few economic data on Thurs & Fri.

Thurs: Durable Orders, Consumer Confidence

Fri: Chicago PMI, New Home Sales

I'll be taking these few days to reflect upon 2007 and see how I can improve and make things work better in 2008. You should do the same too!

Monday, December 17, 2007

Big Banks Results This Week Will Determine The Swing

The markets are now sitting at the edge and its a make or break week. The S&P 500 is sandwiched between the 200 MA and 20MA. The 20MA acts as a support and if the index breaks the prior swing low (1460), then we'll see more gloomy days ahead. Aside from technicals, this week is also critical as we see 3 big banks (GS, MS, BSC) announcing their earnings results and what they say about their subprime exposure, will in my opinion, largely determine the direction of swing for the year end.

Mon: NY Empire State Index
Notable earnings: ADBE

Tue: Building Permits and Housing Starts
Notable earnings: BBY, GS, HOV

Notable earnings: ACN, CMC, MS, JOYG, NKE, KMX, PAYX

GDP, Leading Indicators, Phil Fed
Notable earnings: BSC, FDX, COGN, JBL, RIMM

Personal Income, Personal Spending, Core PCE Inflation, Michigan Sentiment
Notable earnings: CC, WAG

Tuesday, December 11, 2007

Random Musing On Capital Injection...

Do you think the credit crisis that has rocked the financial sector these few months has finally seen some light?

UBS AG (NYSE: UBS) writes down another $10B, BUT receives $11.5B injection from outside investors, of which my government (yes, The Government of Singapore Investment Corporation - GIC) made its single largest investment ever. The GIC expresses confidence in the long term prospects of the bank and GIC's managing director commented that this move is a marked departure for GIC, whose practice has been to take relatively small public equity stakes for portfolio diversification.

In my opinion, UBS is smart to announce the write-down TOGETHER with news of capital injection, hence preventing a hit in its stock price. Next, for the also very smart and usually cautious GIC to have made such a bold move says alot about this deal.

The troubled mortgage insurer, MBIA Inc. (NYSE: MBI) also announced yesterday that it sees Q4 mark-to-market loss significantly more than Q3, yet the stock rallied. Why? Because of the $1B investment from Warburg Pincus. Earlier on, Citigroup Inc.(NYSE:C) sold Abu Dhabi Fund $7.5B Stake.

While many may argued that these banks must be in dire states to resort to selling it self (ok, or more positively, get capital injection), there is always another side to the coin. Put in this way: The investors who provide these huge capital are not stupid. They must have seen value in these business and feel the price is right before taking the plunge.

While this doesn't mean that we won't see more write-downs to come (as I'm writing this, we've got Washington Mutual, Inc.(NYSE:WM) taking a $1.6B write down, I think we are starting to see some light at the end of the tunnel.

Oh and a lesson to be reminded to all companies out there who plan to announce write downs: Be sure to have an announcement ready about capital injection from who-&-who, if you want to protect your stock price.

Watchlist Feast

A number of stocks on my watchlist here while waiting for Fed's announcement. A few has broken out, but most have not. Click on chart for bigger view. Self-explanatory.

Apple Inc. (Public, NASDAQ:AAPL)

Cameron International Corporation (Public, NYSE:CAM)

Focus Media Holding Limited (ADR)(Public, NASDAQ:FMCN)

Goldman Sachs Group, Inc. (Public, NYSE:GS)

United Therapeutics Corporation (Public, NASDAQ:UTHR)

Gold Feb'08 e-mini Futures. Gold stocks like GOLD, GG, have already broken out.

Monday, December 10, 2007

X'mas Rally to 1550 in S&P 500?

The bulls staged a huge rally last week and while the volume was not very impressive, it appears that the S&P 500 has formed a bull flag on even lower volume last Monday-Tuesday. Based on the technicals of bull flag and a measured move, it is possible the index may rally to 1550 level soon.

Markets are now waiting for the Fed rate announcement on Tue. As of last Friday, the 30 day Fed Funds rate are pricing in a 59% chance of 0.25% cut and a 41% chance of 0.5% cut. Will the Fed announcement be the catalyst for the S&P 500 to rally to 1550 or otherwise? We'll see...

Mon: Pending Home Sales

Tue: Wholesale Inventory, FOMC Policy Statement

Wed: Trade Balance

PPI, Retail Sales, Biz Inventories
Notable earnings: COST, JOSB, LEH

Fri: CPI, Capacity Utilization, Industrial Production

Wednesday, December 05, 2007

Day Trade Example: LDK Solar Co., Ltd. (NYSE: LDK)

The above is a 15min chart of LDK, one of the solar companies that is flying recently. It is a classic example of day trending stock. (Note green dotted lines are daily support/resistance levels)

1.Stock gapped up and printed 3 solid bullish bars on heavy volume

2.Retrace and consolidate on low volume to 38.2% Fibonacci level, which is also a daily support zone, together with 5EMA support.

3.Break out of base at $38

4. Initial Stop set at prior bar low. Target the 3rd bar high and followed by subsequent round numbers.

Below is the 5min version of the chart, which you can see more clearly the double bottom.

Monday, December 03, 2007

S&P 500 At Major Resistance

We had a great rally last week and the S&P 500 is facing huge resistance overhead at 1490 and the 200 MA. Watch this level closely.

Mon: ISM index. Treasury Sec Paulson to speak at Housing Forum
Notable earnings: GES

Notable earnings: AZO, CHS, PSS

Wed: OPEC Press Conference, Non-farm Productivity, ISM Service, Factory Orders

Thurs:UK and Europe Interest Rate Announcement, ECB President Trichet speaks
Notable earnings: TOL

Unemployment, Non-farm payroll, Michigan Sentiment