Simply Options Trading

Personal Update: Hiatus

2009-03-20T14:04:00.000+08:00

Dear readers, thanks for dropping by my blog. I'm currently expecting and will be due anytime from now :) Much as the market is in some exciting times, nothing will beat the joy and excitement on the arrival of our little junior. I will be taking some time off the market as well as blogging. But I'll be back...suggest you subscribe to my blog and once I'm back in action, you will be notified & updated. Meanwhile, all the best in trading. Take care!

US Dollar and Gold Looking Weak

2009-03-12T14:07:00.003+08:00

The US Dollar index has been consolidating at 89 and confirmed hanging man yesterday, which is bearish. It has also closed below support and trendline. Next level of support for US Dollar index is 86.

Gold hit $1000 mark in Feb. Now it is sitting right at the trendline and horizontal support. We have a potential head and shoulder formation. If it closes below this critical support, we are likely to see a measured move down to $800.

How Low Can They Go? - C, AIG, BAC

2009-03-05T14:59:00.005+08:00

American International Group, Inc. (NYSE:AIG), Citigroup Inc. (NYSE:C), Bank of America Corporation (NYSE:BAC) have been in the news day in day out. How much deeper is the hole? How much more money they do still from the government? How low can their stock price go? Frankly, I have no idea and I don't think anybody knows for sure. But looking at their charts, its not difficult to see where their next few level of support are.

Citigroup Inc. (NYSE:C) levels of support: $1.0, $0.8, $0.45

Bank of America Corporation (NYSE:BAC) rebounded from strong support at $2.5 on 20 Feb. Next level of support is around $2.0, followed by $1.32.

American International Group, Inc. (NYSE:AIG) has tested its all time low of $0.38 on 24 Feb this year. Basically, as you can see from the chart, there is no other support below. Yikes!

Forex and Options Trading

2009-02-26T10:35:00.003+08:00

I talked about venturing in Forex trading last Dec. If you would like to dip your toes into Forex AND Options, here are a few Forex options by ISE you can consider:

YUK: ISE Yen FX Index
EUI: ISE Euro FX index
CDD: ISE Canadian Dollar FX Index
BPX: ISE British Pound FX Index
AUX: ISE Australian Dollar FX Index
SFC: ISE Swiss Franc FX Index

But do note that AUX has very wide bid-ask spread.

Of course there are also the currency shares trust by NYSE exchange which are also optionable:

Euro: FXE
Yen: FXY
Swiss Franc: FXF
Canandian Dollar: FXC
Australian Dollar: FXA

Despite the chaos in the US financial market, the USD/JPY is rocketing up towards 100 after forming a double-bottom. Here's a closer look at the USD/JPY by the MarketClub.

Weekend Learning- Free Videos & Book

2009-02-21T10:47:00.003+08:00

Together with MSN, Andrew Horowitz is offering his book: The Disciplined Investor: Essential Strategies for Success for free download. Grab this free book by 21 Feb'09 before its gone!

Now on to some educational videos. Below is a series of five free educational videos by Adam from MarketClub that shows viewers how to trade in five different markets.

5 Markets & 5 Ways To Improve Your Trading Profits In ‘09:

Learn how to trade Crude

Learn how to trade Futures

Learn how to trade Stock

Learn how to trade Forex

Learn how to trade Gold

Market Breakdown, Financial Sector All Time Low

2009-02-18T15:56:00.007+08:00

Nearly 2 weeks ago, we talked about the market being range bound and waiting for it to "show hand". Well, it finally did break down yesterday, printing a bearish bar. Next target will be for it to retest Nov low of 75 for S&P 500 Spyders (AMEX:SPY)

Above chart shows the VIX, which is a measure of fear gauge. It shot up yesterday and broke above the recent range. After some period of complacency, is the market suddenly awaken by the "real" reality?

The KBW Bank Index is at an all time low as well, breaking the 25 level support (see chart above). Same goes for Financial Select Sector SPDR (NYSE:XLF). During this whole crisis period, the financial sector

Sector Performance Since Jan 2009

2009-02-10T12:53:00.003+08:00

Only 3 sectors managed to stay positive since start of the year, and they barely made it actually. Utilities, healthcare and technology. The rest all had negative returns.

This chart above is similar to the one on top, only difference is the base line is S&P 500. Sectors like Financials, Consumer Discretionary, Industrial and Consumer Staples has since underperformed relative to S&P 500.

I would like to take this chance to recommend a few excellent blog posts from Dr Brett and Trader-X. These posts are already bookmarked under MY DELICIOUS at the left hand column, but in case you missed it, here they are:

How to Identify and Trade Trend Days to the Upside

Recognizing Range Days in the Stock Market

A Life Lesson From Trading

How I Trade - revised Feb 09

Enjoy!

Stock Market Still Stuck In a Range

2009-02-05T11:13:00.003+08:00

The above chart speaks for itself. I had thought the market will have a clearer direction after the Fed meeting. But it was otherwise. The S&P 500 Spyders (AMEX:SPY) shown above is confined in a triangular range. It will continue to be a directionless market until the upper/lower range is broken.

Mixed bag of earnings releases after hours:

- Cisco Systems, Inc.(NASDAQ:CSCO) is down 4.4%
- Prudential Financial, Inc. (NYSE:PRU) down 1.5%
- Akamai Technologies, Inc. (NASDAQ:AKAM) up about 7%
- Visa Inc. (NYSE:V) up 7.9%

Watchlist: UNP, V, EOG, ABX

2009-01-28T11:05:00.004+08:00

I caught the flu bug (yet again) and the last few days was busy with Chinese New Year and getting as much rest as I can. But I reckon I didn't miss much action in the stock market as it was pretty much range bound the last few sessions. Today, we'll have the FOMC policy statement and the market should have a clearer direction after this.

No charts today for this post, but here's some stocks you can watch out for:

-Union Pacific Corporation (NYSE:UNP): Approaching horizontal resistance at $45-$46. This level also coincides with the 50% Fibonacci retracement from prior swing high to low.

-Visa Inc. (NYSE:V): Recorded a new low in recent session. Looking like a bear flag. A successful break & close below $42.5 would indicate another leg lower.

-EOG Resources, Inc. (NYSE:EOG): Higher lows and support at $60, making of a descending triangle. Watch for break of $60 for confirmation

-Barrick Gold Corporation (NYSE:ABX): If you're still liking gold, wait for a pullback to about $32.5-$35 in this stock before considering dipping into the uptrend channel.
Edit: Here's 2 complimentary videos from MarketClub:
-ABX Barrick Gold Analysis
-All Wound Up Over Gold

As you know, we're in the midst of the earnings seasons, so please do check earnings date for swing stocks.

Economic Recovery Plan

2009-01-20T10:31:00.003+08:00

In case you haven't seen it, here's the Stimulus Package rolled out by the Democrats
Beneficiaries include renewable energy producers, home builders and mortgage lenders; losers include those receiving TARP (Troubled Assets Relief Program) money e.g Banks, Automakers etc. Read here for more details. Investors should take note of sectors being boosted by Obama's team as focus will shift with the incoming team.

Obama's Inauguration is today (Tue). Let's see how the market reacts...

A Look At Apple Inc. (NASDAQ:AAPL) Daily and Intraday

2009-01-16T12:07:00.004+08:00

Apple Inc. (NASDAQ:AAPL) has been in the news lately due to CEO Steve Jobs's health. On the daily chart above, AAPL has been making lower highs and it tested recent low at around $80 yesterday on news that Steve Jobs is taking medical leave of absence until June. The chart is bearish looking until it can carve out a higher high. If it breaks and close below $80, look to $70 for the next line of support.

On a intraday basis, it gapped down yesterday and bounced from recent low and round number $80. It then went on to re-test it again, printing long lower tails on the 4th and 5th 15min bar, confirming support. It consolidated and broke out with the 12.45pm ET bar. That would be a good entry. With the Fibonacci placed between opening range low and previous day high, look to target 61.8% Fib and 50% Fib. If you did not exit at 50% Fib, a break below 5 min shooting star (not shown) at 2.10am ET would have you out of the trade as well with the downward sloping 50SMA (in orange) acting as substantial resistance. Trader Jamie has a good post here on how to place your Fibonacci for day trades.

Watch for Pullbacks in Energy Stocks

2009-01-07T10:44:00.005+08:00

A Happy New Year to all! I was sick over the new year, hence the inactivity in my blog. But other than this minor hiccup, I look forward to an even more wonderful year ahead!

Energy Select Sector SPDR (NYSE:XLE) was coiling in a symmetrical triangle formation and broke out on the 1st trading day this year. However, I would caution going long or buying a call option on it now. It has been marching north for the last few sessions and it printed a shooting star at resistance (about $52.5) after gapping up yesterday. If it breaks below previous day low, I expect to see retracement and then it maybe a good time to enter. You can place fibonacci level over previous swing low to the high yesterday to see where the 38.2%, 50% and 61.8% retracement levels are.

Above is a chart of United States Oil Fund LP (NYSE:USO). Basically telling the same story. Broke out of downtrend channel with good volume but now facing resistance near $40.

So what we can do now is to monitor XLE, USO and oil related stocks closely for possible retracement, set your alerts and then time for lower risk entry.

Watchlist Stocks - JOYG, MA, GS, SUN, NUE

2008-12-22T15:54:00.006+08:00

Nucor Corporation (NYSE:NUE) - Broke out of double bottom formation and now pulling back to support area between $42.5-$40. It has also pulled back to a short term uptrend line. Wait for a day or two for a bullish candle for confirmation successful retest.

MasterCard Incorporated (NYSE:MA) - Broke out of downtrend line. Now trading above 50SMA and resistance $150. Next target @ $170.

Goldman Sachs Group, Inc. (NYSE:GS) - Still in the formation of ascending triangle pattern. If it is able to breakout with good volume and sustain above 50SMA overhead, next target would be $100.

Joy Global Inc. (NASDAQ:JOYG) - Broke out of ascending triangle on earnings announced a few days back. It has cleared a downtrend line that formed since Sep. Now retesting former resistance now support at around $22.5

Sunoco, Inc. (NYSE:SUN) -In an ascending triangle breakout and now hovering around 200SMA. It has retested former resistance, now support @ $40. But the the move up could potentially stall at $45, which doesn't make it a very good risk/reward candidate.

The VIX has fallen by about 50% from the peak at 80 and bad news seems to have been well cushioned by the market. While we can start dipping our toes back into swing trading, it is advisable to still trade lightly with smaller position size because trading volume will start to dwindle this week till year end as we approach the holiday season. Well, if possible, stay away from the market these 2 weeks and enjoy your holidays!

Fed Cuts Rate, US Dollar Falls

2008-12-17T10:53:00.000+08:00

After a 0.75% rate cut on Tuesday to 0.25%, US now officially has the lowest interest rate amongst major currencies. This marks the first time the target rate has been below 1.00% in 50 years. The FOMC is said to be targeting a fed funds rate ranging from 0.00% to 0.25% and. It looks to be following the foot step of Japan? Table above from dailymarkets.com

The aggressive rate cut has sent the US dollar diving, although technically speaking, the chart was already showing a rounded topping pattern around late Nov / early Dec when it is unable to break resistance @ 88 and MACD showing negative divergence. There is potential support at around 80. If it breaks further, next support level to look out for would be 76.

I have been monitoring the Forex market lately due to the high implied volatility in options and also due to personal reason, I've not been able to trade the US market at night (in Singapore) as much as I'd like to. Don't be surprise if you start hearing more about forex from me. For those interested, here's a free forex video on how to approach both trends and market timing in the forex markets using the EUR/USD as an example.

Free Trading Videos

2008-12-12T11:10:00.002+08:00

I have 2 free trading videos from MarketClub to share with you this weekend.

1) How to determine the trend in any market?
- How to determine a downtrend.
- How to determine an uptrend.
- How to determine when a market is making a change of direction.

"One of the key components I look for is how a market closes on a Friday or the last trading day of the week. This is when traders have to decide what they want to do with their positions. It also tells you with a high degree of probability which way the market is headed for the upcoming week. I learned this trading secret on the floor of the exchange in Chicago and it is one I would like to share with you today. I feel that this technique has a lot of validity, particularly in light of today's volatile markets."

Watch free video here.

2)Rule of 50 and Pullbacks

Adam from MarketClub - "I can honestly say that 30 years ago I learned how to trade the markets in the pits of Chicago. It was there, in one of those sweaty, tumultuous, in your face trading pits, that I learned one of the most valuable trading secrets in the world. This one trading secret opened my eyes to why things happen in the markets. This trading secret, which is over 800 years old, is one of the most monumental mathematical discoveries of all time."

Watch free video here.

Which Direction Will the Stock Market Break?

2008-12-11T10:28:00.000+08:00

SPDR Trust, (AMEX:SPY) printed 2 consecutive inside days on Tue & Wed with low volume as the market awaits the auto industry bailout approval. With 2 inside days, the market is now like a coiled spring. Expect a big move coming. It is now facing the 50 day moving average and also a downward trendline overhead. Having said that, it is also in a inverse head and shoulder pattern, which is a bullish pattern. In fact, many of the charts are in the same pattern as the SPY, i.e. facing overhead resistance, but also forming a bullish pattern. Which way will the market break? We should have an answer end this week or early next week with the FOMC policy statement on 16 Dec.

The Market Vectors Agribusiness (NYSE:MOO), which is the ETF for agri stocks like AGU, POT, MOS, is also in a similar pattern as SPY, but more bullish as it has already broken above the downward trendline and 50 day moving average. You may wish to keep some agri stocks on your watchlist.

Intraday Action of Research In Motion Limited (NASDAQ:RIMM)

2008-12-04T11:09:00.000+08:00

Research In Motion Limited (NASDAQ:RIMM) gapped down on Wednesday on issuance of downside guidance, ahead of its earnings report to be announced on 18 Dec. However, it managed to close up the gap, probably in part due to the general market strength.

On 15 min chart above, it broke resistance @ $37.5 and after printing 3 solid bullish bars, it stalled at the downward sloping 50 SMA. Placing Fibonacci retracement from day's low to swing high of the day, the retracement found support at around 50% Fib level. At 2pm ET, it formed a inside bar just below resistance @ $37.5. A good entry would be long on break of inside bar high, which is also a break of the resistance. By then, the 50SMA slope has also become flattish and converging with the 5EMA & 20EMA. Place stop just below inside bar low and partial profit at previous swing high. As it approaches round number $40 and also 38% fib extension, take final profit or keep a tight stop.

Note: There are 2 reasons, in my opinion, why the earlier break of resistance @$37.5 at around 10.45am ET is not such a good entry for going long:

-It is just about less than $1 away from the downward sloping 50SMA, where the upmove may potentially store. And especially if you're trading options, this is not a very favourable reward to look at.

-If you look at the 5min chart below, before the break of resistance @ $37.5, it made many consecutive bullish bars without any consolidation. It is higher risk setup if you enter here as price could pullback / consolidation anytime.

Gold on the Go

2008-11-26T11:36:00.001+08:00

Just a quick update here on the SPDR Trust (AMEX:SPY) chart. As mentioned in my recent post, if SPY breaks Oct lows, expect to find support at 75. We have the SPY rally over the last few days when it found support at 75. With a shortened trading week due to Thanksgiving holiday on Thursday, expect volume to be thin. The indices are likely to consolidate the recent move; or if there is any headline news, given the thin volume, we'll see exaggerated move.

Gold broke out of consolidation mode last Friday. See above chart of SPDR Gold Trust (NYSE:GLD). This sector may interest you. Watch for stocks like AEM, ABX, NEM etc. But wait for pullback before going long. You may also be interested to see this free video by MarketClub on gold.

Free Trading Tools & Resources

2008-11-18T21:18:00.001+08:00

Another great Free stock screener that I've been using for sometime is the screener at FINVIZ.com. You can screen for trading patterns like double bottom, head & shoulders, cup & handle etc. To top that off, you can filter it with price range, whether stock is optionable or not, volume requirement etc. The stock screener enables you to see many charts at one glance, hence a time saver! This adds to my list of Free stock screeners here

On the other hand, INO TV is giving FREE access to 4 full length seminars by Jack Schwager, John Murphy, Jake Bernstein, and Ron Ianieri. These 4 are well recognised experts in their fields. Click here for the access.

Will Hedge Fund Redemptions Sink the Market Lower?

2008-11-13T20:29:00.001+08:00

Two weeks ago, I discussed about the positive divergence in SPY chart. I said that we could be looking at a more sustainable rally in the bear market. Indeed, we managed to sustain the rally for about 1 week. We never have one for more than 3 days in a long long time. I also caution about resistance at 100 level. The SPDR Trust (AMEX:SPY) turned down from there and we are now close to retesting the Oct's low. If we do break these lows, next level of support would come in around 75. See monthly 10 year chart below.

Are the selling these few days related to hedge fund redemptions? According to a slightly dated article from MarketWatch:

"Many hedge fund investors can withdraw money on Dec. 31. Some funds require that redemption requests be submitted 90 days ahead of time. That means requests have to be in by Tuesday. Other funds require 45 days notice, so there may be another round of withdrawal requests toward the middle of November."

Here's a recent one talking about Nov 15 (this sat) being the hedge fund redemption deadline

First Solar, Inc. (NASDAQ:FSLR) Intraday Trade Setup

2008-11-06T10:20:00.000+08:00

After several days of rocketing upwards after its earnings announcement, First Solar, Inc. (NASDAQ:FSLR) gapped down today. See 15min chart above. After gapping down, it tried to retrace on lower volume, but stalled at the downward sloping 20EMA, printing a shooting star. It was also unable to close above S1 of pivot point at about 169.37 (not shown). A good entry to go short or buy Put options would be at the break of the shooting star low. While the 50SMA appears just right below the shooting star, it is not of a big concern since its slope is pretty flattish.

Good to partial take profits at round number $160 or as it approaches a former resistance (see black line). That proved to be quite a strong support and the trade would have been shaken out by bullish bar formed at 12.45pm. After some consolidation, FSLR breakdown once more and eventually hit the 61.8% fibonacci extension from previous day high to today's ORL (opening range low)

Positive Divergence in SPY Chart

2008-10-30T11:02:00.000+08:00

I seldom use technical indicators, and even when I do, I don't use them for oversold/overbought purpose. As you all can see in this market, oversold can remain oversold for a long time or get even more oversold. When I do use them, its for the purpose of identifying divergence. Here's a look at the SPDR Trust (AMEX:SPY) chart. I'm using the SPY chart because it reflects the gapping action (see the empty spaces in between candlesticks), unlike S&P 500 index.

The SPY printed a new low on 10 Oct and a few days back, it tested that low and held. At the lower panel, we see the MACD printing higher lows. This is positive divergence. While this could be the first signal that may point to a more sustainable rally, bear in mind that we are still in a downtrend and bear market. This could well be one of those violent bear rallies. Remember: The trend is your friend until it is broken. Until we see higher highs and higher lows, the current trend is still intact. Next resistance I see is at 100, then 110 (gap fill).

Such volatile market can be highly rewarding for day traders, but nightmare for swing traders. If you must hold overnight, please keep your position size small such that even 100% loss is well within your risk tolerance. Another reason why I don't recommend holding options overnight is also because Implied Volatility (IV) is sky high now, meaning options are very expensive. A 10% drop in IV overnight can easily wipe off your gains and more even if the stock moves in your direction.

There are some very good day traders out there and I recommend you read MY DEL.ICIO.US on the left panel to see how they day trade in such markets. There are many gems in this bookmark.

Cup & Handle Pattern Example - Transocean Inc. (NYSE:RIG)

2008-10-22T10:40:00.000+08:00

Above is a 15min chart of Transocean Inc. (NYSE:RIG) on Monday. It gapped up, retraced and found support at opening range low and 20 EMA. It then developed a Cup & Handle chart pattern. Notice the handle part of the pattern is on low volume, which is a feature of this pattern.

Below is a 5min close up of the chart. While one would typically enter on break of the cup's high at the 1.25pm ET bar, it would be prudent to wait for consolidation in this case as it has printed several consecutive bullish bars prior to breakout. This is a useful tip shared by seasoned day trader, Trader Jamie. Price tends to pullback on consolidate after 3 consecutive bullish/bearish bars. So best to wait out. Indeed, RIG consolidated around $76 before moving up again. Stop loss can be set on trigger bar low. Target is usually set at 100% fibonacci extension from bottom of cup to high of cup & handle pattern which was reached near the very end of the trading session. Of course, given the volatility of market these days, it would be wise to take partial profit at the 61.8% fibonacci extension, which is also near round number $78 and tightened up your stop.

Crude Oil - Glide and Slide

2008-10-17T10:29:00.000+08:00

Adam from the Marketclub made a free new video on the "Glide and Slide" of crude oil. Crude oil has been hammered from highs of almost $150 per barrel in July to intra-day dip of below $70 on Thurs due to forecast of lower demand as a result of recession fears. The Energy Select Sector SPDR (XLE) and US Oil Fund ETF (AMEX: USO) mirror the moves of crude oil. So if you are interested in trading the crude oil using options, you can use XLE and USO as alternative vehicle. Below is a comparison chart of USO (in blue) and XLE. Unfortunately, the charting tool is not able to reflect crude oil. You can refer to this site for free crude oil chart.

As Adam rightly pointed out, it is always faster to slide than to glide, i.e. faster to fall than to rise. Just look at the S&P 500 index. It took just 10 months for it to lose the gains it accumulated from the past 5 years.

Ok, enough said. It has been a wild wild week and hope you traded safely. Have a good weekend ahead.

Overseas Stock Market Up, Can US Sustain?

2008-10-13T17:04:00.000+08:00

As I'm writing now, overseas stock markets are up. The Hang Seng is up by more than 10% (Nikkei is closed today) and the major European markets are up by at least 4%. The S&P 500 low on Friday was about 40 points away from the 800 support level I mentioned in Where is the Market Bottom?. Its still early to rejoice on this positive market move, but if the US stock market can sustain it and close in the position territory for the first time in many days, then we are one step closer to a possible bounce.

This is an important week with many bellwether stocks announcing earnings and we've also got some key economic data being released.

Mon: Assistant Treasury Sec Kashkari speaks about implementation of economic stabilization Act

Tue:
Notable earnings: CSX, INTC, DNA, JNJ, USNA, PEP, GWW

Wed: PPI, NY Empire State Index, Retail Sales, Fed's Beige Book, Fed Chairman Bernanke to speak about economic outlook & financial market
Notable earnings: ABT, EBAY, JPM, PJC, NVLS, STJ, LUFK, KO, STLD, VMI, WFC

Thurs: CPI, Initial Claims, Capacity Utilization, Industrial Production, Phil Fed
Notable earnings: AMD, APH, BBT, C, COF, CY, CAL, GOOG, GILD, HWAY, ITW, RS, PH, IBM, ISRG, MER, NOK, NUE, SPWRA, TXT, SHW, UTX, ZION

Fri: Options Expiration, Building Permits, Housing Starts, Michigan Sentiment
Notable earnings: HON, CMA, SLB

Where is the Market Bottom?

2008-10-10T14:12:00.002+08:00

I mentioned in my last post that we are possibly close to a near term bottom, but we need further supporting evidence on the chart to confirm. Well, the market is still continuing its free fall and it seems that no government intervention can put a stop to it at the moment. The above 10 year weekly S&P 500 chart shows that it has broken the 950 level support. Since its a weekly, chart, we will need to see if it can close below 950 on Friday to confirm it has indeed broken. But chances are high that it will now retest the lows we see in 2002 - around the 800 region. Because if it can't defend the 61.8% Fibonacci, it will usually retrace all the way back. Don't attempt to catch a falling knife. Wait for confirmation before going long.

VIX at New High and More

2008-10-07T10:56:00.000+08:00

From the above volatility table (courtesy of briefing.com), we can see that VIX is now at unprecedented highs, surpassing those experienced during the 2002 bear market, 9/11 and even the Long Term Capital Management (LTCM) crisis. The same goes for VXO, a volatility measure which has been around for a longer time than VIX, except it has not yet matched the highs of the 1987 stock market crash. At that time, the VXO is almost 3 times higher than the highs we see in VXO today. We certainly do not wish to see that happening though. The market has moved from bearish mode to panic mode now. After aggressive sell-off throughout the day, we saw a good rally into the close on Monday, resulting in long lower tail candlestick printed in many charts. All these point to a possible close to a near term bottom, but we need further supporting evidence on the chart to confirm.

For those who are interested to find out more about VXO, you can read up here. But basically, the main differences between VIX and VXO are summarized below:

1) Different Index Base
VIX - calculated based on S&P 500 options
VXO - calculated based on OEX 100 options

2) Different Strike Prices used
VIX - all strikes prices are used, but weighted. ATM strikes have the most weightage
VXO - used only near the money strikes for calculation

Tue: FOMC Minutes
Notable earnings: AA, AYI, YUM

Wed: Pending Home Sales
Notable earnings: COST, MON

Thurs: Initial Claims, Wholesale Inventories

Fri: Trade Balance
Notable earnings: GE, INFY

Bailout Plan Fails, Go for Gold

2008-09-30T08:56:00.001+08:00

The market plunged following the failure to get the bailout bill passed. Economics aside, I think there is also alot of politics being involved in this whole deal. The House would reconvene only on Thursday to vote on a revised bill. I'm not an economist or politician. I don't really know or care what the outcome will be on Thursday. I'm a trader. All I want is for the market to settle down. But I do like what I see on the VIX on Monday. More on that next time.

Back to the market on Monday. Not many stocks were able to hold up, with the exception of Gold, which is the flight to safety haven during such turmoil times. The chart above shows SPDR Gold Trust (ETF) (NYSE:GLD) breaking out of bull flag today with good volume as the market tumbled. A good looking chart, but watch for resistance around $92.

You'll see similar looking bull flag charts in Barrick Gold Corporation (USA)(NYSE:ABX) and Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), but these two have not broken out yet.

Mon: Personal Income, Personal Spending

Tue: Chicago PMI, Consumer Confidence

Wed: ADP Employment, Construction Spending, ISM Index
Notable earnings: MOS

Thurs: Initial Claims, Factory Orders
Notable earnings: GPN

Fri: Non Farm Payrolls, Unemployment Rate, ISM Service
Notable earnings: FDO

More of Bernanke and Paulson This Week

2008-09-23T10:26:00.000+08:00

We did see a quick and sharp bounce in the market last Friday after the VIX printed a bearish reversal bar on Thursday. I talked about the VIX here. However, the market gave back all of its Friday's gain on Monday. Only consolation is that volume during the sell-off on Monday is low. The market is very event driven right now and gyrates wildly in either direction. Remember to trade small and staying in cash is also a position to take.

Lately, you've been hearing alot of Bernanke and Paulson. This week, be ready to hear more from them as they testify on Tue and Wed on the recent economic and financial mayhem

Tue: Fed Chairman Bernanke to testify on US financial markets
Notable earnings: LEN

Wed: Existing Home Sales, Fed Chairman Bernanke to testify on US economic outlook, Fed Chairman Bernanke and Treasury Sec Paulson to testify credit bailout plan
Notable earnings: BBBY, NKE, PAYX

Thurs: Durable Orders, Initial Claims, New Home Sales
Notable earnings: ACN, RIMM

Fri: GDP, Michigan Sentiment
Notable earnings: JBL, KBH

VIX at Extreme

2008-09-18T10:55:00.001+08:00

The VIX has hit 36 today, a level not seen since mid Mar this year during the Bear Sterns saga. In the chart above, I annotated the recent last 3 times where VIX hit this high. As we all know, the VIX is a fear gauge and usually when it is at extreme, the market is likely to reverse.

But I'm not calling for a bottom right here right now. The major indices have broken new lows and closed with wide range bearish bars today. Also, notice how the VIX bar closed today is different from the last 3 times. It closed with bullish engulfing bar, different from the bearish upper tails or bearish bars it closed the previous 3 times when it hit 36 level. So while the level 36 is a resistance, the market doesn't look like its about to turn around, yet. Watch for market capitulation, bullish candlesticks at support areas for the major indices and the VIX turning down for confirmation of turn around. It could be happening quite soon...

MER, LEH, AIG - Same Looking Charts, But Different Fates

2008-09-15T11:09:00.000+08:00

This coming week will be a historical one in the financial sector. Bank of America Corporation (NYSE:BAC) has agreed to buy Merrill Lynch & Co., Inc. (NYSE:MER)for about $44 billion, or around $29 a share. Come Monday when market opens, the stock will gap up to $29 from where it closed at almost $17, which is a 70% premium. I'm not sure why BOfA is willing to pay such high premium at such times.

Lehman Brothers Holdings Inc. (NYSE:LEH), on the other hand is not so lucky. BofA, which was earlier in talks with Lehman has now ditched Lehman for Merrill. Other potential buyers have also pulled out of talks. Will Lehman have to file for bankruptcy or a last minute white knight will appear?

Question is will American International Group, Inc. (NYSE:AIG) be the next to get into trouble and end up like Merrill or Bear Sterns? AIG is also reported facing liquidity crisis and seeking help from Federal Reserve.

Notice all 3 stocks have been printing lower highs the past few months and formed descending triangle which broke down last week, shaving off much of their market capitalization. While Merill is lucky to have BofA offer to buy it at 70% premium, Lehman's fate is still hanging in the air, though chances are slim if the Fed doesn't step in. As for AIG, this week could prove to be critical as we have the FOMC policy statement and also major banks like Goldman Sachs and Morgan Stanley announcing earnings. Keep your eyes open...

Mon: NY Empire State Index, Capacity Utilization, Industrial Production

Tue: CPI, FOMC Policy Statement
Notable earnings: GS, ADBE, BBY

Wed: Building Permits, Housing Starts
Notable earnings: MS

Thurs: Initial Claims, Leading Indicators, Phil Fed
Notable earnings: FDX, ORCL

Fri: Options Expiration

Watch for Potential Bear Flags Formation

2008-09-08T10:55:00.000+08:00

We saw the high volume sell-off in the markets last week. So what's next? I believe the next few days will see consolidation or some retracement of the sell-off, so now is not the time to go short or buy put options. I would watch the following sectors for potential bear flags formation in this coming week:

-Agriculture
-Dryshippers
-Steel
-Energy
-Coal
-Metals
-Technology
-Utilities

Here's a few charts to show the near vertical down move accompanied by high volume- characteristics of potential bear flags:

Research In Motion Limited (NASDAQ:RIMM)

DryShips Inc. (NASDAQ:DRYS)

Peabody Energy Corporation (NYSE:BTU)

Exelon Corporation (NYSE:EXC)

Quite a quiet week ahead in terms of economic news.

Tue: Pending Home Sales, Wholesale Inventories

Thurs: Initial Claims, Trade Balance, Treasury Budget

Fri: PPI, Retail Sales, Business Inventories, Michigan Sentiment

Chop Chop Chop!

2008-09-03T10:40:00.000+08:00

What have we got here? Nothing but choppy markets! From the chart above, the S&P 500 has been contained in a 40 point range (1260-1300) since August. The 1300 level mark is a tough nut to crack, given it is the longer term down channel resistance and also a recent horizontal reistance. We will need to see a clear break of either 1260 (downside) or 1300 (upside) to have a better sense of direction.

Tue: ISM Index, Construction Spending
Notable earnings: ACH

Wed: ADP Employment, Factory Orders, Fed's Beige Book
Notable earnings: JOYG, SNDA, HOV

Thurs: Initial Claims, Productivity, ISM Service, FOMC member Fisher speaks about US Economic challenges, UK rate announcement
Notable earnings: TOL, COO

Fri: Non Farm Payroll, Unemployment

What's Next for Energy Sector?

2008-08-27T09:48:00.000+08:00

Last week, I talked about expecting a quick rebound in energy. The next day, Energy Select Sector SPDR (AMEX:XLE) broke through $70 support but closed above it, washing out existing buyers who had stops at $70. It then staged a strong rebound, up almost $7 in 3 days, gapping up 2 of the 3 sessions. I hope you have taken advantage of this rebound. Energy (& commodities) are always very volatile, and it is best to take profits especially with such a good move over such short period of time. On top of that, we are trading against the downtrend.

I would not initiate any new trades on energy sector at this point as I noticed the pullback last Fri and this Mon was on much lower voluume and its possible there could be another leg up. When in doubt about the direction or the trade, DON'T TRADE. There are always better opportunities out there.

Expect a Quick Bounce from Crude Oil?

2008-08-18T16:17:00.000+08:00

Crude Oil

XLE
USO
Crude oil ended the last session with a hammer candlestick near the 200 simple moving average. $110 appears to be a support level, if you look back at April/May this year. The last few sessions also saw the crude unable to close below $110.

Energy Select Sector SPDR (AMEX:XLE) is also finding support at $70. See the the longer tail of several candlesticks in recent sessions near $70. If it breaks and close below $70, then all bets are off. Likewise, United States Oil Fund LP (AMEX:USO) at the round number $90 and approaching the 200 simple moving average.

So don't be surprised you see a bounce soon in the energy sector. But the general trend is still down and the bounce should be short-lived.

Earnings season is rounding up soon and there is no major economic data this week.
Mon:
Notable earnings: BHP, LOW, TSL

Tue: Building Permits, Core PPI, Housing Starts
Notable earnings: ADI, HD, HPQ, MDT, NVTL, SOL, TGT

Wed:
Notable earnings: BYI, BJ, EV, GYMB, LTD, ROST, PVH, STP

Thurs: Initial Claims, Leading Indicators, Phil Fed
Notable earnings: ARO, BKS, BEBE, BCSI, CYBX, DKS, FRO, GME, GPS, ZUMZ, PLCE

Fri: Fed Chairman Bernanke to speak about financial stability

How to Go Through Your Stock Watchlist

2008-08-11T11:24:00.000+08:00

I took slightly longer than expected for me to settle down and adjust to the time zone, hence no blog post last week.

Today, I'll like to talk about how to go through your stock watchlist. Many traders often wonder where to start. With so many stocks available for trading, even after filtering for respectable stock prices, volume and whether its optionable, the list is probably in the thousands. How is it possible to go through them without spending too much time?

Step 1:
I like to do a top down approach when looking through my watchlist, i.e. I go through a lists of key Spyders sectors like XLF, XLE, XLB, XLU, XLK, XLI, XLV, XLY and XME. Non spyders sectors that I also watch are SLX, MOO, KOL, TAN etc. If you're wondering what these symbols stand for or what specific stocks are held in these ETFs, a good source is ETF Investment Outlook.com. Type in the ETF symbol at the top right corner and then select holdings to see specific stocks under ETFs. While MSN Money also has similar function, it only gives the stock company names and not the ticker symbols. ETF Investment Outlook.com shows both the company names and ticker symbols. Here's a sample of SLX holdings (not full list)in Investment Outlook.com:

Step 2
After going through the sector charts, the process gives me a flavour of what's weak and strong. I also look out if certain sectors are forming patterns like bear flags, ascending triangle etc. I will take of these in my notebook. Then I will zoom in on the stocks in these sectors. Most of the time, you'll see that they are showing similar trends or patterns as well.

Step 3
Next step is to go through my own personal watchlist of stocks. This could be gathered from stocks with huge gaps in recent earnings report and you watch them closely for follow through actions, or they could be stocks which you obtain from screeners base on your own set of criteria.

*TIP: If you have many stocks in your watchlist, I recommend going through them with thumbnail charts, i.e you're able to view several charts in one screen, instead of 1 chart per screen. This helps to save alot of time and also aid in seeing patterns across sectors in a glance. If you're using thinkorswim prophet charts, you can use the grid chart funtion which allows you to view 4 charts in a screen.

Step 4
Having gone through the lists of stocks, you would have a shortlist by now. I usually have a "HOT" list which is ready to take execution as the pattern has confirmed. Another "WARM" list is for watching closely in the following days as pattern or setup could confirm soon.

Hope this will give some of you a better idea of how to go through stock watchlist and feel free to drop any comments if you have other ideas to share.

Here's the week ahead:

Mon:
Notable earnings: EXM, FLR, LDK, MDR, PBR

Tue: Treasury Budget
Notable earnings: CREE, FOSL, JASO, NVDA, MBT, UBS

Wed: Retail Sales, Business Inventories
Notable earnings; CTRP, DE, NTES, NTAP, LIZ

Thurs: CPI, Initial Claims
Notable earnings: ADSK, CCJ, WMT, EL, KSS

Fri: NY Empire State Index, Capacity Utilization, Industrial Production, Michigan Sentiment, Options Expiration
Notable earnings: ANF, JCP

Absence

2008-07-28T08:14:00.000+08:00

I'll be busy packing and leaving U.S this week. Blogging is likely to resume late next week. Meanwhile, check out my del.icio.us for some good readings and as always, good trading!

The Disciplined Trader: Developing Winning Attitudes

2008-07-24T09:13:00.000+08:00

During such difficult and volatile trading times like now, I thought it was a good idea to read The Disciplined Trader: Developing Winning Attitudes by Mark Douglas. As the author rightly puts it, successful trading is 80% psychological and 20% methodological. This book is all about managing your emotions in the ups and downs of the stock market and acquiring the mental skills needed to stay in the market. If you're looking for technical indicators or trading strategy, look elsewhere.

His books is structured into 4 parts:
Part 1: Introduction
Part 2: The Nature of Trading Environment from a Psychological Perspective
Part 3: Building a Framework for Understanding Ourselves
Part 4: How to Become a Disciplined Trader

He listed 10 typical trading errors that have specific cause rooted in thinking methodology that can be changed. Of those 10, I can identify with 3 of then:

-Not acting on your instincts or intuition
-Planning for a move or feeling of one building, but finding it hard to execute, thereby denying self of opportunity to profit
-Focusing on price and monetary value of a trade

Obviously, my key problem lies in self-confidence and self-trust. So how to overcome these problems? One very good solution is to place the order in the market ahead of the anticipated move. This will keep me from having second thoughts about the entry since its placed in advance in the system.

A few chapters in this book is not so easy to read as they are all about psychology: association, memory, beliefs, but I think Mark Douglas puts it there for a purpose - he wants us to go back to the very root of these psychological issues and understand how they are being formed.

One very outstanding phrase from this book which I like very much is this: "Mistakes don't exist. They just point the way to something we haven't learned yet and obviously need to know". Wow, positive thinking! Mark Douglas emphasizes alot on this as he believes that positive energy is expansive.

On a final note, I have to add that this book is not recommended for those who have just started out trading, because most likely you have not gone through the ups and downs and will find it hard to understand. For those who have been trading for some time, I'm sure the themes discussed in this book will strike a chord with you and you will find it useful to apply the techniques for effecting change in your behaviour / attitude towards trading. I highly recommend you read at least this book or Mark Douglas's other book - Trading in the Zone. Do not underestimate the power of psychology on trading.

Keep An Eye on XLF, XHB, XLY and XLE for Rally Strength

2008-07-21T23:51:00.000+08:00

We discussed about the VIX and I gave my opinion that the market could turn last week. For the last few days, we've been seeing rallies in the market, especially in the weak oversold sectors like Financials, Homebuilders and Consumer Discretionary. We've also seen continued sell-off in Coal and Steel sectors after brief spell of consolidation. As I said on 9 Jul, watch for a retest to go short or get some Put Options. It retested and broke down again last week, hope you caught some of the action.

What about the week ahead? The major trend is still to the downside and watch for resistance at 1270 for the S&P 500 index. Also watch the Financials (XLF), Homebuilders (XHB), Consumer Discretionary (XLY) and Energy (XLE) sectors closely to see how long this rally can go.

Mon: Leading Indicators
Notable earnings: AAPL, BAC, CNI, EXP, SNDK, QLGC, STLD, TXN

Tue: FOMC member Plosser to speak on economic outlook
Notable earnings: BHI, BJS, BRCM, CAT, CE, CERN, CPO, CME, DD, HAL, ILMN, LXK, LMT, OXPS, PNRA, UPS, USNA, VMW, UAUA, WB, YHOO

Wed: Fed's Beige Book
Notable earnings: AEM, ARG, APD, ATI, AMZN, ABFS, GSK, CMG, CNH, COP, EMC, WIRE, FFIV, FDG, GD, WFR, NTGR, NIHD, OSIP, PFCB, BTU, PEP, PFE, QCOM, RC, R, RYL, VAR

Thurs: Initial Claims, Existing Home Sales
Notable earnings: MMM, BUCY, BG, BNI, COG, CENX, RIO, CYMI, ELN, LLY, ECA, FTI, FXL, ESV, GMT, GPN, GR, IBKR, ESI, LTM, NEM, SBNT, OXY, POOL, POT, RSH, RVBD, SIRF, SII, HOT, SYT, TZOO, TRMB, TMO, TRA, UNP, VDSI, UNP, VSEA, WYNN, YRCW, ZBRA, ZMH

Fri: Durable Orders, Michigan Sentiment, New Home Sales
Notable earnings: ACI, BEC, BDK, CVH, NFLX

Week Ahead: 14 Jul - 18 Jul

2008-07-15T05:10:00.000+08:00

We are heading into the earnings season and we've got many Tech and Financial bellwether stocks reporting this week. Add that to loads of economic data as well as Options Expiration week, its going to be very interesting. As always, be sure to check for earnings date when you're holding overnight positions.

Mon:
Notable earnings: PNRA, NVLS

Tue: PPI, NY Empire State Index, Retail Sales Business Inventories
Notable earnings: CSX, ETN, INTC, JNJ, JBHT, USB, GWW, STX

Wed: CPI, Capacity Utilization, Industrial Production, FOMC Minutes
Notable earnings: ABT, EBAY, GCI, LUGK, STJ, WFC, YUM

Thurs: Building Permits, Housing Starts, Initial Claims, Phil Fed
Notable earnings: Notable earnings: HOG, JPM, MER, MSFT, EDU, NUE, NOK, PNC, UTX, AMD, COF, CMA, CAL CY, ESLR, FHN, GILD, GOOD, KO, ZION, VMI

Fri: Options Expiration
Notable earnings: C, HON, SLB

VIX - The Fear Gauge is Up Sharply

2008-07-12T00:24:00.000+08:00

Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) nose dive more than 50% within these 3 days as the market has been intensely focused on them along with the financial sector. Talks of them being possibly insolvent and plans of placing them in a conservatorship continue to put the market in a tail spin. Placing them in conservatorship would means that stocks of FNM and FRE be worth very little or nothing. It will also put the burden of providing mortgage access and liquidity on to the shoulders of taxpayers, which I believe nobody would ever want that to happen.

With all these pessimism, is the market in panic mode and capitulating? Here's a look at the VIX:
As I'm writing now, the VIX has moved up sharply close to 30. During the last 2 market bottoms in Jan and March this year, we hit a high of 35 before the carnage subsided. While we are still some distance away from 35, the VIX move today point to significant fear in the market. With bellwether stocks reporting earnings and Options expiration next week, it could be a turning point.

Coal & Steel Sectors Breakdown - Wait for Retest

2008-07-09T10:12:00.000+08:00

Alcoa Inc. (NYSE:AA) officially kicked off the earnings season today and is up almost 3.5% after hours. All eyes are on earnings & guidance report card this quarter. Will the high commodities cost and economic slowdown affect company guidance to a much greater extent than analysts expect? Or are expectations already so low on the street and the pessimism set in that market will actually turn for the better?

As you already know, we are now in a bear market. But be prepared to expect some relief rally this week as the market rallied strongly in second half of Monday session and today. This is the first bear market I've encountered in my trading experience and it is a tough market to trade because of the sharp brief rallies that could stop you out of a good trade and then go your way again. Be highly selective in choosing your trade candidates and be sure to manage your risk wisely.

I mentioned in my last post that commodities and energy sectors were good places to be long in or have Call option position in the last quarter. How quickly that has changed! Steel, Coal and Energy stocks were the most beaten up over the last few days. These sectors, which have the strongest uptrend, have since broken down with very high volume. Here's a look at Steel and Coal:

Market Vectors-Coal ETF (NYSE:KOL)
There is good support and consolidation at 47.5 right now. I expect a retest of the 52.5 region. When retest and fail, be ready to load up on Put options either in KOL itself or coal stocks.

Market Vectors - Steel ETF (AMEX:SLX)
Another former market darling, this sector has been showing signs of weakness with lower highs printed and officially broke down on 2/7. Its too late to enter Put options now in my opinion, at least from a risk/reward perspective. Wait for a retest near the 100 region.

Wed:
Notable earnings: SGR

Thurs: Initial Claims, MPC Rate Statement, Paulson & Bernanke to testify on financial regulation

Fri: Trade Balance, Michigan Sentiment
Notable earnings: GE, FAST

Sector Performance in Q2 and June

2008-07-01T22:22:00.001+08:00

Above is a chart of sector performance in June. Only sector above water was Energy. And that sector, along with commodities should be about the only places to have some call option positions. Needless to say, Financial sector was the worst hit, with waves of rumours and write-downs tearing this sector apart. Technology, Consumer Discretionary and Industrial sectors were also not spared the hit.

This one is Q2 sector performance. Energy is clearly leading the way. While there has been talk that Energy could be topping soon, until it stops printing higher highs and higher lows, I think the trend is still up. However, the outlook for general market is grim as some major technicals have been broken in June.

This is a short week due to Independence Day on Friday. Enjoy yourself and battle the bears when you are back.

Mon: Chicago PMI, Michigan Sentiment

Tue: Construction Spending, ISM Index
Notable earnings: APOL

Wed: ADP Employment, Factory Orders
Notable earnings: FDO, AYI

Thurs: Nonfarm Payroll, Unemployment rate, ISM Service

Fri: Markets closed.

Market Awaits The Fed

2008-06-24T05:06:00.000+08:00

I'll be away rest of the week and will update the blog next week. Meanwhile, check out MY DEL.ICIO.US, which has some very good readings. On the trading front, expect range bound action until Fed policy statement on Wed.

Tue: Consumer Confidence
Notable earnings: JBL

Wed: Durable Orders, New Home Sales, FOMC Policy Statement
Notable earnings: MON, BBBY, NKE, ORCL, RIMM

Thurs: GDP, Initial Claims, Existing Home Sales
Notable earnings: PAYX, LEN, ACN

Fri: Personal Income, Personal Spending, PCE Core Inflation
Notable earnings: LEN

Google Breaking Out

2008-06-20T04:44:00.000+08:00

Above chart of Google Inc. (Nasdaq: GOOG). Since its gap up after earnings, it has been coiling. It is currently sandwiched between the major moving averages and also in triangle formation. A breakout should be coming soon, set your alert at around 550 and 575.

Watchlist For The Week

2008-06-17T20:07:00.000+08:00

We have some financial heavy weights reporting this week and they could be market moving if surprises are in store. Not forgetting this is options expiration week.

Mon: NY Empire State Index
Notable earnings: ADBE, LEH

Tue: Building Permits, PPI, Housing Starts, Capacity Utilization, Industrial Production
Notable earnings: BBY, FDS, GS

Wed:
Notable earnings: CMC, KMX, FDX, HWAY, MS

Thurs: Initial Claims, Leading Indicators, Phil Fed
Notable earning: CC

Fri: Options Expiration

Watchlist for the week:
Lots of potential breakouts and flags forming. Keep a close watch and always remember to best wait for confirmation with good volume for breakouts.

Bullish: MFLX, GMXR, HP, EV, MON, CNX, HP, TDW, STLD, FLS

Bearish: BNI, LMT, ESRX, PPH, RIO, PNRA, DRYS, CBG, DVA

Triangles: NUE, SNP

More Stock Screeners

2008-06-12T10:24:00.000+08:00

An update on stock screeners which I talked about early last year. Here's 2 additions to the list:

- Stockcharts.com: For the free version, it is a pre-defined scan, such as Bullish 50/200-day MA Crossovers, Bullish Engulfing pattern etc. It scans for technical indicators, candlestick patterns and P&F patterns. To create own scan, you need to pay a fee.

-Tradewithform.com: Able to scan for bull flag and bear flag, Narrowest Range in 7 sessions (NR7) etc. Also pre-defined scan that is free of charge.

Triangle Patterns Aplenty!

2008-06-06T00:42:00.001+08:00

I'm seeing lots of triangles forming right now and be prepared for a breakout in these stocks:

Franklin Resources, Inc. (NYSE:BEN)
Franklin Resources, Inc. (NYSE:BEN) - Ascending triangle with breakout point at $105. Look for around $10-$12.5 move if it confirms breakout with good volume.

Family Dollar Stores, Inc. (NYSE: FDO)
Family Dollar Stores, Inc. (NYSE: FDO) - Ascending Triangle that is breaking out. Gapped up above 200MA this morning.

Sigma-Aldrich Corporation (NASDAQ:SIAL)
Sigma-Aldrich Corporation (NASDAQ:SIAL) - A symmetrical triangle looking to breakout. But watch for a few resistance overhead, with most immediate one being $60

Apple Inc. (NASDAQ: AAPL)
Apple Inc. (NASDAQ: AAPL) - Another symmetrical triangle looking to breakout. Look for around $13 move.

Amylin Pharmaceuticals, Inc. (NASDAQ:AMLN)
Amylin Pharmaceuticals, Inc. (NASDAQ:AMLN) - Not really a triangle, but more like a cup & handle or inverse head & shoulder. Breakout point $33. Looking at at least $3 move. If it can fully complete the extension, then we are looking at about $6 move. But that will probably be over a longer time frame.

Remember that symmetrical triangle can break either way. Wait till near end of trading session to confirm if it can close above these breakout point (or below if its a breakdown). I prefer it to be accompanied with high volume.

SPDR Gold Trust (GLD) Is Now Optionable

2008-06-04T07:58:00.000+08:00

Starting from today, 3 June 08, SPDR Gold Trust (ETF)(Public, NYSE:GLD) is optionable. Here's the press release from CBOE.

Below is a chart of GLD. Its been range bound for the past 2 months or so and appears to be forming a triangle-like pattern. For now, I don't see great opportunities for GLD until it breaks out. Unless you want to consider the bounce up to the top of the triangle as a short term Call play.

Where To Get Free Live Crude Oil Charting

2008-05-31T06:31:00.000+08:00

Sorry for the absence here. Took advantage of the long weekend to go on a short trip. Hope you all had a good rest and good trading week.

In my earlier post, I talked about Solar & Airline Sector Vs Crude Oil. With oil and gas being in the focus everyday and its negative impact on the equities market, those who are day-trading will find it useful to follow movement of crude oil. While I understand thinkorswim is planning to have the crude oil futures data soon, they gave no time frame as to when it is expected to be release. Not wanting to sit around to wait especially with oil moving inversely to the market, I went around looking for FREE live oil data charting. I found one at livecharts.co.uk and it has served its purpose pretty well. Do take note that the timing of their charts are based on UK time. If you know of another source to get free live oil charting, please leave a comment here and I will compile a list for readers. Thanks!

Economic calendar for next week:

Mon: Construction Spending, ISM Index

Tue: Factory Orders
Notable earnings: GES, TOL

Wed: ADP Employment, Productivity, ISM Service
Notable earnings: HOV, VIP, PSS

Thurs: Initial Claims, ECB Press Conference
Notable earnings: FMCN

Fri: Non Farm Payroll, Unemployment, Wholesale Inventories

All eyes will be focused on the payroll and unemployment data on Fri. Market will be looking for signs of recession. If the data come in better than consensus, then this rally is likely to have legs.

Amazon.com, Inc. (NASDAQ:AMZN) Gaining Momentum

2008-05-20T03:51:00.001+08:00

Here's a technical analysis of Amazon.com, Inc. (NASDAQ:AMZN) chart. It is gaining momentum and looks like it is going to break out soon. It gapped up strongly today and closed above 200 days simple moving average with nice volume. Prior to this, in the last two months or so, it has also printed higher lows. A close above $82.5 with good volume would be a good breakout. But you'll need to measure your risk/reward to see if you prefer to trade the breakout or wait for the pullback.

At the moment, other stocks that I'm watching closely are: BEN, UTHR, SNDK, WYNN and ACI

Earnings reporting is coming to an end soon with the retailers rounding up the loose ends this week.

Mon: Leading Indicator
Notable earnings: EXM, LOW

Tue: PPI
Notable earnings: MBT, AZO, ADI, CSUN, HPQ, HD, TGT, SKS, PVH

Wed: FOMC Minutes
Notable earnings: BJ, EV, GYMB, NTES, SOLF, CRM, PETM

Thurs: Initial Claims
Notable earnings: ARO, ANN, BKS, DKS, GME, GPS, STP, PLCE, ZUMZ

Fri: Existing Home Sales

Solar & Airline Sector Vs Crude Oil

2008-05-17T03:05:00.002+08:00

Crude oil price has been setting record highs almost every day. Other than energy stocks, there are also 2 other sectors that are correlated to crude oil prices.

1) Solar sector
This sector is red hot! It is a beneficiary of high oil prices as everyone looks to alternative energy. Here's a 6 month chart of Oil Service HOLDRs (AMEX:OIH) vs First Solar, Inc. (NASDAQ:FSLR). Left scale for FSLR, right scale for OIH. Blue line represent FSLR, black line is OIH. See how they move in tandem. Positive correlation.

Other stocks in this sector includes CSIQ, SOL, JASO, LDK, STP, SPWR etc. TAN is recent ETF for this sector. But note that within this solar group, there are some stocks that exhibit relative strength than others. Example of stronger solar stocks include FSLR, CSIQ, SOL.

Today, Goldman Sachs raised their crude forecast for the second half of the year to $141 from $107 based on supply constraints, If this is materialize, solar stocks could be in for another ride up. But on a personal note, I do hope this will not come true. Here in the U.S gas stations, I've already started to see it cross the $4/gallon mark!

2) Airline sector
Oil is a big part of this business and their margins are getting squeezed by the surging oil price. Needless to say, it has a negative correlation to oil prices. See
Oil Service HOLDRs (AMEX:OIH) vs Continental Airlines, Inc. (NYSE: CAL) chart below.

Left scale for CAL, right scale for OIH. Blue line represent CAL, black line is OIH. Observe how these two usually moves in opposite direction. From what I know, CAL, SKYW and UAUA are the only 3 optionable airline stocks still trading above $10. But if oil prices continues to rise at such rate, its a matter of time these 3 stocks sink below $10 as well.

Recent Sector Rotation

2008-05-06T02:15:00.001+08:00

Very interesting sector moves I observed recently. The last two weeks see money flowing heavily into previously weak sectors like Financials, Consumer Discretionary and Technology (see above). On the other hand, previously strong sectors like Energy, Materials and Consumer Staples see outflows.

Now the tide seems to have turned again based on last two days (see above). Energy and Materials regained their momentum while Consumer Discretionary and Technology lost steam. The question is can Energy and Materials continue to hang on to their lead? Or will Technology, Financials and Consumer Discretionary finally take over? Watch these sectors closely and let your trades follow the money flows

Earnings reporting is winding down and there are not many key economic data this week

Mon: ISM Service
ARG, ANR, APC, CECO, CLF, HLF, TDW, VMC, WTW, WLL

Tue:
Notable earnings: ACLI, NILE, EXP, JCOM, LAZ, MGM, TAP, NYX, PZZA, PCP, PEG, GOLD, REG, EL, JOE, UBS, UPL, VCLK

Wed: Non Farm Productivity, Pending Home Sales
Notable earnings: BBBB, FWLT, FTO, RIG

Thurs: Wholesale Inventory
Notable earnings: AEM, AIG, ATW, CELG, NVDA, OMG, PDC, PCLN, TBSI, TSO, TM

Fri: Trade Balance

FOMC Takes Centre Stage This Week

2008-04-29T07:52:00.000+08:00

The market is in a critical junction now. S&P 500 is near 1,400 level, which is an important resistance level. If you can break and follow through, there is a good chance of uptrend continuing. Let's see how the market reacts this Wed on FOMC statement.

Mon:
Notable earnings: V, BEAV, CVD, FMX, IHP, MTH, RSH, SOHU

Tue: Consumer Confidence
Notable earnings: ACE, AG, ADM, BYD, BNI, CRS, DVA, DB, FORM, ESRX, GPI, JLL, MHS, MA, NETL, PNRA, UA, X, VLO

Wed: ADP Employment, GDP, Chicago PMI, FOMC Policy Statement
Notable earnings: GRMN, GVA, IR, PRU, MUR, NOV, NVT, OI, PG, SLAB, SBUX, SUN, SYMC

Thurs: Personal Income, Personal Spending, PCE Core Inflation, Consumer Spending, ISM Index
Notable earnings: EYE, AOC, CAM, CPHD, CEPH, CHK, CI, DNR, DRIV, BOOM, XOM, HOLX, ITG, MRO, OSK, PDE, FAF, WBSN

Fri: Unemployment, Non-farm payroll
Notable earnings: AIV, EOG, ICE

A Look At Visa's Technical Picture

2008-04-22T03:55:00.000+08:00

Recently, I talked about why I like Visa Inc. (NYSE:V). Now, almost a month later and with more data points, we have a clearer technical picture of it. It cleared $67 resistance and last Friday, traded above $69, its first trading day high as well as all time high since IPO, supported by very heavy volume. Today, it touch the tip of the uptrend channel before pulling back slightly intraday. This paints a bullish picture of Visa, but now may not be a low risk entry point. Wait for a pullback or after earnings on 28 April. Take note that Visa is now optionable.

This coming week is filled with earnings reports and more earnings reports. Here's the calendar for the week.

Mon:
Notable earnings: AMLN, ACI, BAC, CNI, GCI, HAL, NVLS, NFLX, STLD, TXN, USNA

Tue:
Notable earnings: AKS, T, BHI, CME, CREE, CERN, ECA, DD, ILMN, LMT, MICC, BTU, PPDI, SIAL, TUP, UAUA, UNH, VMW, XL, YHOO, YUM, MCD

Wed: Existing Home Sales
Notable earnings: APD, ACL, AMZN, ABK, AAPL, BIIB, CMG, GD, TEX, LRCX, MCO, NE, NTRI, PFCB, QCOM, R, RYL, BA, UPS, VAR, ZBRA

Thurs: Durable Orders, New Home Sales
Notable earnings: MMM, AET, BIDU, BDK, BUCY, BG, CENX, COP, CS, DO, GR, FLIR, HME, IBKR, KLAC, LLL, LTM, MDC, MEE, WFR, MSFT, TRA, UNP, ZMH, YRCW, VSEA, SYNT, SYNA, MOT, OXY, POOL, POT, RVBD, HOT, SIRF, NTGR

Fri: Michigan Sentiment
Notable earnings: CVH

Options Expiration Tips

2008-04-18T04:08:00.000+08:00

Yesterday, Tom Sosnoff from thinkorswim discussed some interesting nuggets about Options Expiration and Earnings. He highlighted 10 tips, and here are some of them:

-Market usually gets a huge move on Tue or Wed during the week of expiration and then remain rang bound for rest of the week

-If there is alot of buying pressure during expiration week, trend is likely to continue into the following week. Same applies for selling pressure

-Wed-Fri of Options Expiration week has buy side pressure historically. About 66%-75% of the time is bullish

-Monday after Options Expiration week is most liquid day

-April tends to be a bullish month around Options Expiration week

See here to get the rest of the tips. As always, these are based on historical data, and history does not necessary extrapolate the future perfectly. But it is interesting to be aware of these...

Watch for Bellwether Stocks Earnings This Week

2008-04-15T02:19:00.000+08:00

We'll see many bellwether stocks like IBM, Google, Intel, Citibank etc reporting earnings this week. There is also plenty of economic data coming out this week. Be very careful with your trading and be sure to check for earnings date when you are swing trading.

Google Inc (NASDAQ:GOOG) is reporting earnings after hours this Thursday. GOOG is always a high profile stock but its not my trading style to place directional bets on earnings. Here's a preview of GOOG chart:

After staying in a downtrend channel for three months, GOOG has finally broke to the upside with series of higher highs and higher lows since end March. The move up hit the 50 day moving average which acted as resistance. Right now, the 20 day moving average and $450 level is providing some support. GOOG may well stay within the range of 50 day moving average and $450 until earnings is out. But with Intel Corporation (NASDAQ:INTC), another giant on the Nasdaq announcing tomorrow, it may very well move GOOG out of this range.

Mon: Retail Sales, Business Inventories
Notable earnings: ETN, GWW

Tue: PPI, NY Empire State Index
Notable earnings: CSX, INTC, JNJ, STX

Wed: CPI, Housing Starts, Building Permits, Industrial Production, Capacity Utilization, Fed's Beige Book
Notable earnings: ABT, EBAY, GILD, IBM, JPM, JCI, EDU, KO, STJ, WFC

Thurs: Unemployment claims, Leading Indicators, Phil Fed
Notable earnings: COF, CAL, FHN, ESLR, GOOG, HOG, IGT, ISRG, MER, MAR, NOK, NUE, PFE, RS, SNDK, SYK, SPWR, TXT, UTX

Fri: Options Expiration
Notable earnings: CAT, C, HON, SLB

Bullish Watchlist: RRC, MDR, CSX, OXY, WLT, CMP

Bearish Watchlist: MHS, NIHD, PPDI, WFMI, WHR

Triangles: RL, OMG

Alcoa Profit Falls On Higher Costs & Weaker Dollar

2008-04-08T09:08:00.000+08:00

With Alcoa Inc. (NYSE: AA) having officially kicked off the earnings season on a bad footing, the S&P 500 E-mini futures is down after market (see chart above). It will be interesting to see how the market reacts to this earning season, given the challenging conditions faced by many companies on one hand, while on the other, many analysts would have probably factor in such assumptions in their valuation model.

Mon:
Notable earnings: AA

Tue: Pending Home Sales, FOMC Minutes

Wed: Wholesale Inventories, Fed Chairman Bernanke speaks, Dallas Fed President Fisher speaks about U.S. economy
Notable earnings: CC, BBBY

Thurs: Trade Balance, Treasury Budget, Europe Interest Rate announcement, Fed Chairman Bernanke speaks

Fri: Michigan Sentiment, G7 meeting
Notable earnings: GE

Watchlist For This Week

2008-04-01T01:56:00.000+08:00

Mon: Chicago PMI

Tue: Construction Spending, ISM Index

Wed: ADP Employment, Fed Chairman Ben to testify about economic outlook
Notable earnings: BBY, MON, KMX, RIMM

Thurs: ISM Service, Bear Stearns Hearing by Senate

Fri: Non-farm payroll, Unemployment, Fed Governor Kroszner to speak about global economic & financial challenges
Notable earnings: MOS, FDO

Potential Bulls: NFLX, WMT, BNI, HLF, GILD, JOE, NUE, SCHN, ILMN

Potential Bears: IBKR, CEG, HUM, MICC, WFMI, MGM

Triangles: RL, MUR, ATI, FAF, POOL, AIV, JWN

Why I like Visa

2008-03-25T00:45:00.001+08:00

Some quick facts about Visa Inc. (NYSE:V)

-It has the world's largest retail electronic payments network.

-IPO priced @ $44, open at trading for $59. Having sold 406 million shares, its also the largest IPO to date.

-MasterCard Incorporated (NYSE:MA) priced @ $39 in May ‘06, opened at trading for $41 and is now trading at around $216. More than 400% move in less than two years
Now coming on to why I like Visa (I also do like Mastercard):

-Revenue comes from processing fees. Visa estimates about 42% of its transactions is derived from payment for staples such as groceries and utility bills. So even during hard times, the demand for staples will remain and business maybe even better for Visa if its customers use it to tie over short term cash flow problem

-Below are some statistics from Monetary Authority of Singapore on credit cards in Singapore:
-As you can see from above, the number of accounts (main cardholders) and amount of spending (billings) have been increasing at significant pace in the past 19 years. While not all countries are growing at such a rate, the overall business in this industry is still a very good one.

-Credit cards business is very lucrative. I know because I used to be an analyst in this sector. There are several lines of revenue sources and year on year growth is respectable even during times of slowing economy.

On the revenue front, card issuers are constantly thinking of ways to increase card utilization e.g. promotion and tie-ups with retailers, utilities payment etc. across various customer segments, especially targeting the young adults and emerging affluent. In emerging markets like China, I believe card issuance is growing at exponential rate and getting these new customers on board is priority.

On the cost front, card issuers are always thinking of ways to reduce the cost of acquiring new customers or acquiring them via the cheaper channels such as mailers or telemarketing.

Therefore, this business, while competitive, has very healthy profit margins. Excellent business model. If I have the money, this is a good one for long term investment. Meanwhile, I'm waiting for the stock to become optionable...

Mon: Existing Home Sales
Notable earnings: TIF, WAG

Tue: Consumer Confidence
Notable earnings: CMC

Wed: Durable Orders, New Home Sales
Notable earnings: ORCL, PAYX

Thurs: GDP
Notable earnings: ACN, APOL, GPN, LEN

Fri: Personal Income, Personal Spending, Core PCE Inflation, Michigan Sentiment
Notable earnings: KBH

Markets Await Uncle Ben's Announcement

2008-03-19T00:20:00.001+08:00

The markets are getting used to 2%-3% moves each day and you will realise that what used to be wide range in the past is now considered the norm. Just take a look at the recent bars on the major indices. Wow...and as for the news about The Bear Stearns Companies Inc.(Public, NYSE:BSC), I was dumbfounded. I think its a ridiculous buy-out price. I had expected a buy-out announcement on Monday, between $20-$30. I have never imagined it to be on fire sale, at $2!

As I'm writing now, we're waiting for the Fed policy statement in about half an hour's time. Fed funds futures now priced in a 96% probability of a 100 bp cut, with a 75 bp cut fully priced in. The markets have been trending up so far since the gap up this morning on better than expected earnings results from Lehman Brothers (NYSE: LEH) and Goldman Sachs (NYSE: GS). I wonder if it can have another leg up after the announcement as it looks quite extended on an intraday basis. Major indices are up between 2.5%-3% as of now. Can Uncle Ben gives the market what it wants?

Mon: NY Empire State Index, Capacity Utilization, Industrial Production
Notable earnings: BSC

Tue: Building Permits, Housing Starts, PPI, FOMC Policy Statement
Notable earnings: GME, GS, ADBE, LEH

Wed: Visa IPO
Notable earnings: NKE, MS

Thurs: Phil Fed, Leading Indicators, Options Expiration (Quadruple Witching)
Notable earnings: FDX

Fri: Good Friday (Markets closed)

Intraday Action: BSC and $MNX

2008-03-12T08:31:00.001+08:00

Today is a great day for those who traded the double bottom or inverted head and shoulders pattern. The market gapped up, traded in a range, then pulled back, but was unable to close the gap by late morning. This is a strong sign that it can sustain the positive momentum for the day.

Above is a 2 day 5min chart of The Bear Stearns Companies Inc. (Public, NYSE:BSC). Enter on break of neckline. Target move is the height measured from the head to the neckline. You can use the Fibonacci Extension (200%) drawn from the head to the neckline to see the target better. Given the choppy nature of the markets lately, it would be wise to take partial profits at the 61.8% extension and hold the remainder for final target.

This is a 2 day 5 min chart of $MNX, the Mini Nasdaq 100 Index. Same story as BSC, only thing is alot is left on the table as it makes a final surge 15 min before market closes.

$MNX is a good proxy for those who want to day trade options on the market. It has much better bid/ask spreads than the OEX, and on the hand, has a wider daily ATR for intraday movements than the SPY and DIA.

Nasdaq the Weakest of the Trio

2008-03-10T23:14:00.000+08:00

Earnings have wind down, with a few more retailers reporting. Last week, we see the Nasdaq break Jan's low and S&P 500 and DOW are both near Jan's low as well. In the above short term chart by stockchart, we see the Nasdaq accelerating its downside relative to the other 2 major averages since mid Feb. Shorting or buying Puts on the Tech is a good idea.

What's to happen next? We won't see any significant market moving data coming out until end of the week. As I said in the earlier post, this market is now very news/event driven. Rumours of Fed cutting its rates earlier, credit or liquidity issues are swinging the market up and down. Adhere to the 3Rs:

Reduce number of open positions
Reduce number of contracts
Reduce time frame to avoid whipsaw

Otherwise, staying in CASH is an option too (excuse the pun)

Mon: Wholesale Inventories
Notable earnings: HOV

Tue: Trade Balance
Notable earnings: DKS

Wed:
Notable earnings: AEO, MW, SIGM, TBSI, VIP, ARO

Thurs: Retail Sales, Business Inventories

Fri: CPI, Michigan Sentiment, Fed Chairman Benarnke to speak about home onwernership
Notable earnings: ANN

Watchlist For This Week

2008-03-05T05:51:00.000+08:00

A little late, but nevermind...we've got alot of market moving data coming out this week. This market is very edgy and reacts violently to any event, good or bad. Basically, it is very news/data driven.

Mon: Construction Spending, ISM Index

Tue: Fed Chairman Benarnke speaks about Mortgage Foreclosure, Dallas Fed President Fisher speaks about inflation & growth, Fed Governor Mishkin speaks about economic outlook
Notable earnings: HLYS, CHS, CLWR

Wed: ADP Employment, Non-Farm Productivity, Factory Orders, ISM Service, Fed's Beige Book
Notable earnings: BIG, BJ, COST, CSIQ, SKS, PETM

Thurs: Pending Home Sales, NY Fed President Geithner speaks
Notable earnings: JOYG, COO, URBN

Fri: Non-Farm Payroll, Unemployment, Fed Vice Chairman Kohn speaks
Notable earnings: CIEN

Because of the sell off in the last few sessions, there aren't many candidates for PUT options, most are too late for entry now. Wait for retracement to resistance or former support level before considering entry. On the other hand, I've many stocks forming bull flags and a few triangles play. Here's the list:

Potential Bulls: FCX, ILMN, CLF, MICC, CF, CNQ, GES, SGR, HOC, ABX, AGU, GILD, CMP, CEPH, MDR

Potential Bears: VMW, ZMH, MDC, NILE, NIHD

Triangles: DE, PPDI, CVD, IHP, MON

Greetings From U.S.

2008-03-05T05:49:00.000+08:00

I'm back to blogging! Took a few days to settle down. Its pretty cold and very dry here and I'm still trying to get use to it. But one thing is for sure: Its feels REALLY good to be able to trade during normal hours, instead of having to follow the market at night. No more falling asleep while trading, lol!

Relocation

2008-02-25T12:04:00.000+08:00

A short note to keep readers informed that we'll be relocating to U.S for a few months end of this week. Things are getting busy and I will start blogging again after I settle down in U.S in 1-2 weeks time. To be updated when there are new blog posts, I encourage you to subscribe to any of these Feed Readers. There are free of charge. Meanwhile, visit anyone of my sponsors here :)

Market Breaking Out...Almost...

2008-02-25T11:26:00.000+08:00

Last week, I talked about the major indices coiling up in triangle pattern. Last Friday, I thought we would likely break to the downside..that is until the last hour of trading when the market surge on short squeeze as rumours of Ambac Financial Group, Inc. (Public, NYSE:ABK) bailout circulated. So right now, we are still technically inside the triangle and breakout is to come Very soon. The market is certainly behaving in a very erratic manner of late, which has made trading even more challenging!

Mon: Existing Home Sales
Notable earnings: LDK, LOW, JWN, OKS, ZBRA

Tue: PPI, Consumer Confidence, Fed Vice Chairman Kohn speaks about U.S. economy & monetary policy
Notable earnings: AZO, GPI, HD, RSH, KWK, PZZA

Wed: Durable Orders, New Home Sales, Fed Chairman Bernanke speaks,
Notable earnings: BYD, DLTR, DBRN, EGLE, IHP, CRM, TOL

Thurs: GDP
Notable earnings: AIG, CEDC, CPHD, CMED, DECK, FLR, GPS, HANS, KSS, OMG, SHLD, SGMS, FAF

Fri: Core PCE Price Index, Personal Income, Personal Spending, Chicago PMI, Michigan Sentiment, Fed Governor Mishkin speaks

Chart Analysis of AMZN - Bearish

2008-02-22T11:12:00.000+08:00

A reader asked me why I considered Amazon.com, Inc.(Public, NASDAQ:AMZN) to be bearish in my earlier watchlist.

From the chart above, you'll see that AMZN had 2 double top formations. One bigger one, another mini one. Both broke the neckline, which is bearish. It has also been in a downtrend since start of the year. At the point when I was going through my watchlist, I notice AMZN coming up against several resistance: neckline (former support turn resistance) and also near top of the downtrend channel. If you use moving average, you'll see that it is also nearing some key moving averages. But I didn't include them as I want to show that even without looking at moving averages, the pattern is still there.

Stocks in my watchlist do not necessarily pan out or pan out immediately. Even if they do as I expected, I may not take the trade if it does not provide at least 2:1 reward to risk ratio at the point of entry because sometimes the stock may have moved too much and I'm not comfortable with that. I've learned to be more patient and wait for the setup to confirm. I either set an alert in my trading platform or place these stocks which are about to breakout or confirm in a separate smaller watchlist, so I can keep a tighter watch on them.

Triangle Pattern on Major Indices

2008-02-19T17:53:00.000+08:00

We are seeing yet another triangle forming in the major indices after the last one broke down on first trading day of the year. As symmetric triangle can break out either way, keep an eye on them.

Mon: Markets Closed (President Day)

Tue: Minneapolis Fed President Stern to speak about U.S. economy
Notable earnings: ACLI, BCS, CROX, HPQ, HOC, NTRI, NUVA, JOE, UTHR, WMT, WLT, WFMI

Wed: Building Permits, Housing Starts, CPI, FOMC Minutes
Notable earnings: CECO, LFG, LNET, RIG, STP, SINA, OII

Thurs: Leading Indicators, Phil Fed
Notable earnings: ABX, BCSI, EV, CHK, ESRX, JCP, MGM, POOL, PRAA, OSIP, VDSI, GG, HME

Fri:
Notable earnings: LTM

Bullish watchlist: STLD, MCO, EMR, EDU, CNX, MDR, PCP, CEG, CLF, CTRP, AGU, AG, MEE

Bearish watchlist: FLR, BEN, SYNA, LRCX

Triangles: Some of those in last week's list are still awaiting for breakout. On top of that, I'm including these: HOG, MNST, OSK, YRCW, MUR

Watchlist for the Week

2008-02-12T17:56:00.000+08:00

Bullish watchlist: IBKR, CE, SLB, KMP, FAF, WHR

Above is Interactive Brokers Group, Inc. (Public, NASDAQ:IBKR), also one of the brokers I currently have. Not many stocks out there still have such nice uptrend.

Bearish watchlist: SYNA, DRIV, AMZN, VMW

Triangles: AGU, CTRP, YUM, ZMH, GILD, FMCN, BTU

Above a chart of Gilead Sciences, Inc. (Public, NASDAQ:GILD). Forming a symmetrical triangle, waiting for breakout. Could go either way.

Get Ready for Some Market Action

2008-02-12T14:35:00.000+08:00

After taking a break for almost a week, I'm ready to get into some action soon. So is the market...after consolidating in the last 4 sessions. See my next post for the watchlist.

Mon:
Notable earnings: ACLI, CG, GGP, CMP, LCAV, ZOLT, VMC

Tue: Treasury Budget
Notable earnings: ANR, NILE, BWLD, CEPH, BGC, GM, EXPD, TAP, PNRA

Wed: Retail Sales, Business Inventories
Notable earnings: BIDU, DVA, DE, GVA, MICC, NTGR, NTAP, NVDA, PFCB, VCLK

Thurs: Trade Balance, Fed Chairman Bernanke to speak about economic outlook
Notable earnings: EYE, BRY, BUCY, CMG, IR, PCLN, WTW, UBS, VMI

Fri: NY Empire State Index, Capacity Utilization, Industrial Production, Michigan Sentiment
Notable earnings: ANF

More Earnings This Week

2008-02-04T21:20:00.000+08:00

This post will be a short one, no charts. Last week was a recovery week for the indices. But whether it is a reaction rally or a genuine bottoming remains to be seen. There is still alot of companies announcing earnings this week. I'll be trading light this week as we approach the Chinese New Year. Gong Xi Fa Cai to all!

Mon: Factory Orders
Notable earnings: APC, ADM, BEAV, HUM, ILMN, RMBS, GOLD, SOHU, SIRF, YUM, WEN, TMA

Tue: ISM Service
Notable earnings: BHP, BBBB, BSX, BRE, BP, CBG, CG, CME, FORM, HAR, MLM, NYX, NBR, RVBD, CAKE, THQI, TM, TZOO, USNA, XL, WHR, DIS

Wed: Non-farm productivity, Phil Fed President Plosser speaks on economic outlook
Notable earnings: AKAM, ACL, BIIB, CCJ, CSCO, RAIL, NOV, PPDI, RL, PRU, RACK, REG, TWX

Thurs: Pending Home Sales, EUR interest rate statement and ECB President speaks, Dallas Fed President Fisher speaks on economic stability & central bank
Notable earnings: DO, EOG, FLIR, MDC, MFE, MCO, ATVI, AET, AG, AOC, APA, BMC, CTSH, CF, BG, RAI, PEP, PENN, TRA

Fri: Wholesale Inventories
Notable earnings: AIV, BEC, CVH, SYNT

Google After Earnings - Chart Analysis

2008-02-01T11:10:00.000+08:00

You may have read by now that Google Inc.(Public, NASDAQ:GOOG) tanked almost 6.5% after reporting its earnings. After hour trading was 527.4. Above a daily chart of GOOG. Look for support in the region of 520, 510, 500. Looking back, since GOOG broke the triangle formation to the downside on 4 Jan this year, it never recovered. Technically, this is a very weak chart. The last time, it found support at 200 SMA (back in Aug'07). It has now cut through 200 SMA, retested it yesterday and now with this gap down, it looks like a point of no return

On a side note, I did not trade most of the stocks in my watchlist, either because they didn't confirm technically or risk/reward did not work out to be favourable ( I require reward to be at least twice of risk.) Weak sectors such as retailers, financials and housing are now behaving very strong. I will continue to watch this group closely. I did dip my toe in XLF Puts prior the FED meeting, but was stopped out even before the meeting. I was glad I placed a tight stop, because given the trading environment these days, at the back of my mind was like "if it works, it should show right away, if it didn't, it should also show right away".

Indices Testing Resistance

2008-01-28T21:37:00.000+08:00

Above S&P 500 showing 1360-1370 level which was previously a support now turned resistance. Technicals are pointing to the downside, at least for these 2 days prior to the Fed meeting on Wed. Tons of data coming out on the economic front and earnings reporting this week:

Mon: New Home Sales
Notable earnings: ARG, BDK, HAL, MCD, MTH, SNDK, STLD, VMW

Tue: Durable Orders, Consumer Confidence
Notable earnings: MMM, BNI, CRS, CFC, CTX, JLL, LXK, OXY, OXPS, DOW, TRMB, X, VLO, YHOO, ZMH, WBSN

Wed: ADP employment, GDP, FOMC policy statement
Notable earnings: MO, AMZN, BHI, BOBJ, ADS, CNQR, CEG, CVD, ESLR, EXP, ITW, MRK, PHM, NVLS, SBUX, BA, UPS

Thurs: Core PCE index, Personal Income, Personal Spending, Chicago PMI
Notable earnings: AFFX, APA, BEBE, CAM, HOT, CELG, DRIV, GR, GOOG, GYI, TSO, HOLX, ICE, LLL, MA, NDAQ, UA, MBI, MEE, OI, PG, SNE, YRCW

Fri: Unemployment, ISM manufacturing index, Consumer sentiment, Construction spending
Notable earnings: ACI, CVX, CMI, XOM, GCI, TDW, EL, R, OSK

My watchlist for the week (some pending confirmation):
Bearish: RL, XLF, LIZ, ATI, KSS, SHLD
Bullish: HWAY, PPDI, ESRX

World Markets Nosedive

2008-01-22T10:11:00.000+08:00

It was an aweful day for the stock markets worldwide yesterday, even though the U.S market was closed. This is a 15 min screen shoot of the S&P 500 futures (E-mini) as I'm writing now:

At this point, the futures is down by almost 5% from Friday's close! Looking at this chart, see how it is unable to break through the 20EMA (red line) and as of now, 1260 level is acting as a support and I see 1285 as the next level of resistance.

The triangle breakdown of the S&P 500 I talked about earlier has made the full measured move and more. Let's see if we'll have any capitulation today.

Mon: Holiday (Martin Luther King Day)

Tue: Treasury Sec Paulson speaks about economic outlook and housing
Notable earnings: AKS, AAPL, BAC, CNI, CREE, ETN, JNJ, HOKU, PCP, SU, TXN, UAUA, WB, ABK

Wed:
Notable earnings: APD, ABT, COF, AME, CHKP, CTXS, COP, EBAY, EXC, FFIV, GD, MOT, NFLX, NE, QCOM, QLGC, RYL, ROK, VAR, UTX, SYK, SYMC

Thurs: Existing Home Sales, Greenspan to speak about U.S. economy
Notable earnings: AMGN, T, BRCM, JNPR, WFR, LRCX, LEN, MFST, NOK, POT, SPWR, SYNA, TXT, VPRT, NUE, VSEA

Fri:
Notable earnings: CAT, HOG, HON, GWW

Secrets Of Options Trading Group Champion Revealed!

2008-01-17T11:23:00.000+08:00

The Options Trading Championship 2007 ended quite sometime ago. Above a picture of my friends, Wei Ping (first from left) and Macolm (first from right) at the championship. Both were members of the team -The 4 Challengers, which emerged as the Group Champion. I did an interview here with Wei Ping, who was the 2006 individual champion. This year, I’m pleased to have Macolm for this interview to share with all his thoughts on trading.

Simply Options Trader: How did you get started on options trading?

Malcolm: After attending an options trading seminar

Simply Options Trader: Describe your style of trading.

Malcolm: I’m a short term Technical Trader, normally hold position for less than a week. I buy current month ATM or ITM option depend on the delta and Average True Range of the stocks. Will buy OTM options if they are cheap (few cents) and I am willing to hold for a few weeks.

Simply Options Trader: What are your favourite stocks for trading?

Malcolm: Volatile stock - VMW, RIMM, GOOG, GS, POT.

Simply Options Trader: How do you determine entry?

Malcolm: Moving Averages crosses, Daily Support/Resistance, Candle Stick Signal and Stochastic at OB/OS.

Simply Options Trader: What’s your exit strategy for winning and losing trades?

Malcolm: My reward/risk is at least 2:1. Will exit if it hits major resistance/support and mostly based on Candle stick.

Simply Options Trader: What technical indicators do you use?

Malcolm: These are my secondary indicators - Slow Stochastic, ADX. Mainly, I look at Candle stick & support/resistance.

Simply Options Trader: What single lesson did you learn along the way that has helped you the most in your trading?

Malcolm: Never afraid to cut loss and protect your capital.

Simply Options Trader: Tell us about 3 books you would recommend to traders to read

Malcolm:
1. Japanese Candlestick Charting Techniques by Steve Nison
2. If It's Raining in Brazil, Buy Starbucks By Peter Navarro
3. A Beginner's Guide to Short-Term Trading By Toni Turner

Simply Options Trader: Give some advice to traders who have just started out.

Malcolm: Paper trade, paper trade and paper trade.
Try different strategies and settle with one that suit your own personality.

Simply Options Trader: What do you like best about trading?

Malcolm: It helps to improve my mental strength and the ability to react in split seconds.

Simply Options Trader: Thanks Malcolm and all the best for your trading!

My Hotlist of Stocks for the Week

2008-01-14T16:37:00.000+08:00

This week we'll be seeing earnings results from a few big banks which have had huge credit write downs. There are also several market moving economic data and bellweather stocks like IBM, GE announcing earnings.

Mon:
Notable earnings: DNA

Tue: Retail sales, PPI, NY Empire State Index, Business Inventories
Notable earnings: C, EDU, INTC

Wed: CPI, Industrial Production, Capacity Utilization, Fed's Beige Book
Notable earnings: JPM, WFC

Thurs: Housing Starts, Building Permits, Fed Bernanke Speaks about economic outlook
Notable earnings: CAL, IBM, MER, STX, FHN

Fri: Leading Indicators, Michigan Sentiment
Notable earnings: GE, SLB

Here's my super HOT list for the week, i.e. stock candidates which I'm ready to take a swing position in, once I've worked out the risk/reward and they fulfill at least 2:1.

Call Options: POT, AGU, CNH
Put Options: HANS, SHLD, LFC, TAP
Neutral (can break either way): LDK (mini-triangle)

No time for charts, will try to post one later this week.

Major Indices Break Out (down) of Triangle Formation

2008-01-07T09:22:00.000+08:00

I talked about triangle formation in major indices early last week and that they are likely to break to the down side. And the bears certainly took control last week! We are now near Nov lows in both S&P 500 and DOW. The markets closed lower for 6 consecutive sessions and we may just see a bounce near the corner. But this doesn't mean we are out of the woods yet.

Speaking of this coming week, we have LOTS of Fed talk and it also marks the start of the earnings report season. Be sure to check for earnings date before you enter that swing trade.

Tue: Pending Home Sales
Notable earnings: AYI, APOL, KBH, FDO, SVU, PPDI

Wed: Fed President Poole speaks about subprime mortgage
Notable earnings: AA, MOS

Thurs: BOE Interest Rate Announcement, ECB President Trichet speaks, Wholesale Inventory, Fed Chairman Bernanke speaks about "Financial Markets, the Economic Outlook, and Monetary Policy", Fed President Hoenig speaks about US economic outlook

Fri: Trade Balance, Treasury Budget, Fed Gov Mishkin speaks about monetary policy flexibility, risk management & financial disruption , Fed President Rosengren speaks about economic outlook

Triangle Pattern Formed in Major Indices

2008-01-02T09:55:00.001+08:00

A HAPPY NEW YEAR to all! Wishing good health, happiness and smooth trading in 2008.

Trading volume should start picking up and with that, let's take a look at the S&P 500 chart.

The blue dotted line in the chart above outlined the triangle formation in S&P 500. This lower highs and higher lows pattern is especially obvious in S&P500 and DOW. This neutral pattern signals a breakout in either direction to come. If there is any clue on the direction of breakout, right now there is a bearish bias as both of these indices closed below all three moving averages: 20D, 50D, 200D. Let's see where the market wants to take it when the traders are back in full force.

Wed: Construction Spending, ISM Index, FOMC Minutes

Thurs: ADP NonFarm Employment
Notable earnings: MON, BBBY, GPN

Fri: Unemployment rate, Nonfarm Payroll, ISM Service

Merry X'mas & Happy New Year!

2007-12-24T09:40:00.000+08:00

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!

Big Banks Results This Week Will Determine The Swing

2007-12-17T09:31:00.000+08:00

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

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

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

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

Random Musing On Capital Injection...

2007-12-11T14:29:00.000+08:00

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

2007-12-11T13:35:00.000+08:00

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.

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

2007-12-10T09:13:00.000+08:00

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

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

Fri: CPI, Capacity Utilization, Industrial Production

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

2007-12-05T15:59:00.000+08:00

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.

S&P 500 At Major Resistance

2007-12-03T13:41:00.000+08:00

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

Tue:
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

Fri: Unemployment, Non-farm payroll, Michigan Sentiment

Short Term & Long Term Chart of S&P 500 Index

2007-11-29T15:17:00.000+08:00

Above is 6 month daily chart of S&P 500. As you all know, the bulls came charging back with vengeance and broke the short term down trendline yesterday. For the DOW, it is also the biggest 2-day gain in 5 years. The last few days have not been easy for swing traders with those offsetting wide range bars. Is it all rosy now? Take a look at the longer term chart below.

This is a 5 year monthly chart of S&P 500. Since 2005, the 20MA has proven to be a great support for the monthly chart. Over the longer term, if the 20MA can hold, it looks like the indices will do fine. But the shorter term picture, in my opinion, is still on the edge and easily affected by the credit issues and economic data.

Has the Market Found a Bottom?

2007-11-26T14:09:00.000+08:00

The bulls were sidelined ahead of the typically bullish Thanksgiving, though last Friday saw a nice trending market for half a session. A bullish engulfing bar is formed on S&P 500, but we need to see follow through in the days to come before calling a bottom because I don't give much weight to a half day session. Otherwise, we are still in a short term down trend.

Tue: National Home Price Index, Consumer Confidence
Notable earnings: AEO, ADI, DBRN, MRVL, SIGM

Wed: Existing Home Sales, Durable Orders, Fed Beige Book
Notable earnings: ARO, CWTR, MW, DLTR, SNDA

Thurs: GDP, GDP Deflator, New Home Sales
Notable earnings: DELL, OVTI, SHLD, VIP, ZUMZ

Fri: Personal Income, Personal Spending, Core PCE Inflation, Chicago PMI, Construction Spending
Notable earnings: BIG, TIF

Ray Barros' Secret to Managing Money Well - Supportive Spouse

2007-11-21T19:19:00.000+08:00

Here'sRay Barro's interview with The Straits Times. Click article to read. My jaws nearly dropped when I read that his wife stood by him through his first seven years as a trader despite $1m in losses. While I have to admit that not many traders out there can sustain the $1m losses and still make a come back, I cannot agree more with the importance of having a supportive spouse. A trader can focus 100% without the added pressure of having to answer to an unsupportive spouse. In this Thanksgiving, I'll like to say a big Thank You to my beloved hubby for his patience and support all these time ;)

Source: The Straits Times

Bullishness Ahead of Thanksgiving

2007-11-19T10:28:00.000+08:00

Above daily chart of S&P 500. We are in a short term downtrend but seeing strong support at 1440. Upcoming week is a short week with Thanksgiving holiday falling on Thursday. I expect the second half of the week to be quiet. Typically, we see the bulls join in the celebration ahead of the Thanksgiving, unless of course, we hear the "C" word again this week.

On the earnings front, we see more retailers announcing results this week.

Mon:
Notable earnings: HPQ, MDT, JWN, LOW

Tue: Building Permit, Housing Starts, FOMC Minutes
Notable earnings: BKS, BJ, BCSI, BGP, CMED, DKS, FMCN, GME, GYMB, WFMI, TGT, SKS

Wed: Leading Indicators, Mich-Sentiment
Notable earnings: ANF, DE, PLCE

Thurs: Thanksgiving Holiday (markets are closed)

Interesting Market Internals Observations

2007-11-14T14:52:00.000+08:00

Above chart shows % of stocks trading above the 20MA, 50MA and 200MA since Jun this year. Notice that during the last sell off in end Jul -Mid Aug, less than 20% of the stocks traded above 20MA. We saw this dip below 20% on Monday. Are we seeing a bottom here?

Over at this chart, we observed that while the market was making a slightly higher top in Oct, it was not supported by the market internals - the pink line (which represents the # of stocks making 20Day high less # of stocks making 20Day low) carved out a lower high. A telling sign of toppling.

And more recently, a few days ago, I started to see this pink line making higher lows despite the market tanking. Again, this is indicative that a reversal is near.

So is the sell-off really over? While the rally yesterday was strong and broad-based, only time will tell which way the market will go. But I do expect the bulls to stay at least for the next few days. But hold your breath. If you observe the first chart, you see that we have 3 bottoming points of the blue line (both in Jun and also in end Jul- Mid Aug period) before we see any meaningful bounce. In such volatile times (and don't forget we've got options expiration on Fri), you need to adjust your game plan, like trade lesser positions, more balanced portfolio of calls and puts (if you've been too aggressively bullish) and be quick to lock in your gains. If you are still not comfortable, stay on the sidelines.

I credit Br Brett for introducing this method of reading the market. He had an great post "Gauging the Extent of Market Moves and an Indicator Update", do read it.

Related Post: What Is The 20 Day Hi-Lo Telling Us?

Retailers' Week

2007-11-12T11:16:00.000+08:00

Earnings season is wrapping up with most Tech and Financial stocks having announced their results. This coming week, we will see some retailers announcing earnings. Let's see what they think of the holiday shopping this week.

Mon: Veteran Day (Bank Holiday)
Notable earnings: DISH

Tue: Pending Home Sales, Treasury Budget
Notable earnings: EXM, HD, WMT

Wed: Retail Sales, PPI, Biz Inventories, Fed Chairman Bernanke speaks
Notable earnings: NTAP, SINA

Thurs: CPI, NY Empire State Index, Phil Fed
Notable earnings: A, ADSK, KSS, CRM, SBUX, STP, TYC

Fri: Industrial Production, Capacity Utilization, Fed Governor Kroszner speaks about economic outlook (tentative), Options Expiration.
Notable earnings: ANN

p/s: having abit of problems with uploading charts. Will try to post some if blogger allows.

The Trader's Guide to Key Economic Indicators

2007-11-10T22:48:00.000+08:00

Ever wondered why some economic data are weighed more heavily than others? Under what kind of economic conditions would the trading community place more emphasis on this or that set of economic indicator? You need the experience over time to learn this on your own. It sure took me some time watching the market before I came to realize these. And even then, I have only seen the bullish side of the market. I have not started trading during the 2000-2003 down trend. If only I had read “The Trader's Guide to Key Economic Indicators” when I first started trading, it would have speed up my learning curve a lot faster! So beginner traders out there, do take note.

By pure chance, I saw this book and was drawn by the organized format of its content. Each chapter discusses a key economic indicator (e.g Retail Sales, Personal Income & Outlays, CPI & PPI etc – there are 12 of them) and each chapter consists of the following:

-Evolution of the Indicator (which gives the curious mind a background of how the indicator comes about)
-Digging for Data (sources of the data and what inputs and numbers are combed and combined to give the reading)
-What does it all mean? (explaining the sub components and intricacies of the indicator)
-How to use what you see (what should be taken into account of when interpreting these data)
-Tricks from the Trenches (what other methods or calculation economists use to predict the numbers ahead of to look at it in another perspective etc)

Written by Richard Yamarone, a former trader, academic and current Wall Street economist, this is an excellent book written in a concise manner. As one commentor said: "The book breaks down the often complex world of economics into easy to understand guidebook for investors." You will not find yourself muddling through it or falling asleep while reading this book, unlike some other economic textbooks. For traders, this book teaches you how these indicators affect the stock and bond markets when they are released.

If you are looking for an economic book for traders which doesn’t give you a headache after reading, but yet still has substance, I highly recommend this book. Even if you have been following the market for some time, there are still some interesting nuggets to be picked up from this book.

I will try to throw in some of the “nuggets” I’ve picked up in another post. Stay tune!

Grade: A

First Solar (FSLR) & Cisco Systems (CSCO)

2007-11-08T13:56:00.000+08:00

FSLR, a darling of analysts, beat earnings and raised guidance when it reported its results on Wed after market closed. Above chart of stock with after hours action. Stock traded at $206.5 after hours, up $39.38. The solar energy sector has been going from strength to strength despite the market weakness. Don't believe? Check out JASO, STP, SPWR, ESLR. Other stocks in this sector that may move in response to the blow-out earnings from FSLR includes: AKNS, ASTI, CSIQ, CSUN, DSTI, LDK, SPIR, TSL, WFR, YGE.

CSCO fell almost 9% after hours to $29.82 despite reporting decent numbers. Why? Its revenue growth forecast for the current quarter fell short of analysts' expectations. CSCO result is likely to weigh the Nasdaq down when market opens on Thurs. Let's see if Nasdaq, which up till now has been leading ahead of S&P 500 and DOW, can defend its position.

On a separate note, both the DOW and S&P 500 have carved out lower high and lower low with yesterday's action. The bears are now officially in control. As for the financial sector, the 2-day relief was indeed a very short and temporary one. It broke the down trend line yesterday. I will try to post the charts later today or in my next post.

Temporary Relief In Financial Sector?

2007-11-05T10:26:00.000+08:00

Its official. Citi's Chuck Prince became the second CEO casualty from subprime and CDOs mess, right after the departure ("retirement") of Merrill Lynch's Stanley O'Neal. Here's a 2 year chart of XLF (SPDR Financial Sector):

Financial Sector carved out a lower high and lower low in June and has since suffered some ugly damage, although there appears to be some reprieve in mid-Aug to mid-Oct. Purely from a technical standpoint, this sector is likely to see some temporary relief as it printed a hammer at the lower end of the down trend channel.

As for the S&P 500, it has now carved out a lower high, with strong support at previous swing low of 1490. This is now an important level to watch for to determine if we have confirmed change in trend.

Mon: ISM Service Index, Fed Governor Mishkin and Korszner to speak
Notable earnings: ASEI, APC, CECO, WCG

Tue:
Notable earnings: ADM, NILE, BMC, TAP, PZZA, JOE, WPI, CTSH, HLF, HOC, JEC, BTU, VLO

Wed: Non-Farm Productivity, Wholesale Inventories, Fed Governor Warsh to speak
Notable earnings: AIG, EGLE,FLR, FWLT, FTO, GM, HET, HLYS, MDR, RL, TRLG, TM

Thurs: ECB President Trichet to speak (after interest rate announcement), Fed President Bernanke to speak (about economic outlook)
Notable earnings: COGO, ENER,F, QCOM, STN, TBSI, TOL, URBN, DIS

Fri: Trade Balance, Consumer Sentiment

And by the way, day light savings has ended and we revert back to standard time on the first Sunday in November. Take note!

Day Trade: Oil Service HOLDRs (ETF) (Public, AMEX:OIH)

2007-10-30T15:14:00.000+08:00

Above is 15 min chart of OIH. Entered Nov 190 Call options just before 12pm. Stop loss indicated by red dotted line and target in blue dotted line. Stop loss was adjusted to just below the next 15min bar after it was formed.

Reason for entry:
-Support around $192 region
-Gap (up) is closed
-The 11.00am hammer with heavier volume has shaken out the stops. Next two bars see declining selling pressure
-Breakout of the down trend line

The flip side to this trade is a string of MAs overhead. But the reasons for entering were quite compelling and I also liked what I saw on the 5 min chart. But most importantly, the risk was manageable. Target was hit later in the afternoon.

Related Post: Anatomy of OIH Intraday

I believe I have talked about OIH a few times in my blog. You can also type OIH in google to search "This Site" for more of my posts on OIH.

Tags:simplyoptionstrader, day trades, technical analysis, oih

100% Chance of At Least 0.25% Fed Cut

2007-10-29T10:45:00.000+08:00

After a nail-biting week, this coming week is another big one in terms of economic news. We've got the FOMC as well as the Unemployment rate. Speaking of the FOMC, traders are pricing in an 100% chance that the Fed will lower the Fed rate by at least 0.25%. This is based on Fri's market close for Nov '07 30-Day Federal Funds futures contract.

Mon:
Notable earnings: EOG, RSH, SOHU, VMC

Tue: Consumer Confidence
Notable earnings: BEC, BWLD, CRDN, CPO, RAIL, GPI, MLM, PG, SIRF, UBS, WYNN, WBSN

Wed: GDP, GDP Deflator, Chicago PMI, FOMC Policy Statement
Notable earnings: BYD, CCJ, CEDC, MTW, REG, SNY, RIG

Thurs: Personal Income, Personal Spending, Core PCE Inflation, ISM Index, Pending Home Sales
Notable earnings: BUCY, XOM, GYI, OSK

Fri: Unemployment Rate, NonFarm Payroll

Tags: simplyoptionstrader, economic calendar, earnings, fed rate

Is The Trend Changing?

2007-10-23T20:21:00.000+08:00

There are some good comments from readers in response to Let The Charts Tell The Story. Specifically, double-top, candlestick pattern and trend change is being talked about.

One reader raised the possibility of double top in S&P 500. There is a possibility of this pattern forming, however, confirmation is required.

"Breaking support from the lowest point between the peaks completes the double top. This too should occur with an increase in volume and/or an accelerated descent"

In other words, we need to see a break of Aug low, accompanied by heavy volume to confirm this pattern.

Another reader talked about monitoring candlestick pattern before confirming trend change. Indeed, some candlestick patterns require confirmation, while others do not. Also if one finds confluence of candlestick pattern at some form of support or resistance level, then all the better! I would recommend Steve Nison's Japanese Candlestick Charting Techniques if you want to learn more about candlestick patterns. Last Wed and Thurs, the S&P 500 printed a spinning top and doji near the base on the uptrend channel. As we know, spinning tops and doji represent indecision. The bulls were basically fighting the bears to keep their territory after a few days of pulling back.

Then came the massive sell down on Fri. The bulls lost their footing. Short term up trend channel is broken. While this is a sell signal, does this means a change in trend? I would say no. Take a look at How to Identify a Change in Trend by Craig. In his post based on the book "Trader Vic - Methods of a Wall Street Master", there are 3 steps to confirming a trend change:

Step 1: The Trend Line Break
Step 2: Retest and Failure -stock fails to move above prior swing point high
Step 3: The Confirmation - stock moves below the prior swing point low

Essentially, we need to see lower high and lower low following the trend line break to confirm change in trend. Right now, we are at Step 1. We have to see how the index behaves as it approach the base on the channel. What is formerly a support will now act as resistance.

It is too early to say if we are at the start of bearish trend or this is just another blip. As a reader said, time will tell...

Tags: simplyoptionstrader, technical analysis, market trend, candlestick pattern

Earnings Galore

2007-10-22T12:21:00.000+08:00

The markets took a big hit last Friday and both the S&P 500 and DOW has broken the short term uptrend line. So what's next? I'll talk about it later today or tomorrow.

Meanwhile, lots of companies announcing earnings this week. 123 Jump has a good section on earnings, divided into 4 sections:

-earnings news
-sector earnings
-earnings call summary
-earnings calendar

If you are an investor, you will find the earnings call summary very useful. I like the way it is being laid out.

And if you are into straddle plays for earnings, here's a list of most volatile stocks on earnings announcement, which can be found in MY DEL.ICIO.US

Mon:
Notable earnings: APOL, AAPL, AXP, CNI, CHKP, EXP, HAL, PETS, SGP, TXN, ZBRA, MRK, NFLX

Tue:
Notable earnings: CAKE, AMZN, BIIB, BNI, CE, CTX, COH, CYMI, ILMN, TRMB, POOL, JCI, JNPR, LXK, MICC, PNRA, UPS, PPDI, OXPS, UAUA, RVBD

Wed:
Notable earnings: AFFX, APD, ARG, AKAM, ATI, ACLI, ACL, PFCB, AMGN, BOBJ, CME, COP, FFIV, FORM, FCX, PCAR, GRP, LM, MDC, MER, MNST, MCO, NTRI, RYL, BA, NDAQ, ZMH, SYMC, SLAB, VMW, VAR

Thurs: Durable Orders, Existing Home Sales, New Home Sales, Fed Consumer Advisory Meets (to discuss mortgage regulation)

Notable earnings: EYE, AET, BIDU, BMY, ELN, GR, KLAC, MOT, PENN, VSEA, WEN, YRCW, DOW, POT, NTGR, LLL, HAR, IMCL, MFE, NIHD, VDSI, FLIR, BEN, CKFR, BOOM, DRIV, DO, CMI, BG, CELG, CENX, ICE

Fri: Michigan Sentiment (rev)
Notable earnings: BHI, CFC, IR, MTH, TDW

Tags:simplyoptionstrader, economic calendar, earnings

Let The Charts Tell The Story

2007-10-18T18:15:00.000+08:00

Above is the daily chart of S&P 500. For the past two weeks since the Fed announcement, it has been tagging the upper end of the uptrend channel. Yesterday's aggressive pullback pushed it back to the lower end of the channel where it found support and bounced off strongly. While I wouldn't classify yesterday's candle as a hammer (the upper tail is too long) and the market to reverse and rise from here, support at around 1530 is quite clear.

The housing index is testing its low for the 4th time. This market is really in a depressed state and many analysts expect this to drag on until at least early next year. So while it is already at a low, there is no guarantee that it won't fall further. Same for LEN, a home builder stock.

Tags:simplyoptionstrader, technical analysis