Monday, April 20, 2009

On to a shock therapy....

The pigs did get slaughtered, but your stinking wabbit did not fare much better: violated the money management rules and went literally all-in on SKF last Friday afternoon near 59 (long) with no stop-loss, then ignored lady wabbit's warning this morning and closed all out around 65, thus adding another demoralizing victory to my long list of woeful trades.

Lady wabbit just ordered a shock-therapy: absolutely no trading, no chart-reading and no blogging until I get my mental mess sorted out and my shit cleaned up, and this time, I just ran out of the excuse not to comply with that.

So that is it, folks, either I'll come back as a brand-new wabbit, or I shall be locked in the cage while worshiping the wisdom and glamor of my lady wabbit and dreaming how I could've masterfully flown high above the battle field of the bulls and bears all these times.

One last take on the market: it will bounce back as early as tomorrow, but if bulls cannot take it to a higher high within a week or two, watch out below.

Best luck to all!

Friday, April 10, 2009

To be a bull or a bear, that is the question!

Before I start, just want folks to know that we are moving locally and I may not be able to post much in next 2-3 weeks.

The raging bulls kept the rally going for the 5th straight week and almost recouped all the steep losses occurred in Feb. While the bulls become more assertive, bears are seemingly on life-support now. Some observations and thoughts:

On overall TA pictures of major indices

1. Weekly charts:
While the intermediate trend is poised to turn up, the overall picture still looks like a spectacular bear market rally, at least till this point. The growing positive momentum suggest that the overall trend could continue go up for another 1-4 weeks. But as they get into the overbought region, further upside movement may become increasing difficult to sustain.

2. Daily charts:
Solid uptrend, but the bearish divergences start to emerge (momentum, volume, candle body, etc.). The over-stretched price over the still declining (flat for NASDAQ) MA50 in persistent overbought region makes market increasingly vulnerable to pullbacks.

Some thoughts:

1. Next week features lots of bank ERs, and just like WFC, I suspect they are going to a lot of "positive surprises ". However, judging from what the big boys did yesterday (huge negative money flows on major bank stocks), I also suspect that the big boys will use these spiking-up as the opportunity to sneak out the back doors.

2. With M2M and short-sell rules all nicely re-written for the financial bulls, the only big remaining event is the stress-test results in 2 weeks. Ever since the Fed went all in, I have little doubt that the results will be overall favorable.

3. After 5 weeks' of fiece rally, I suspect that the easy money on the long side has been made, and the risk/reward ratio is becoming very unfavorable for initiating any new long positions from this point further.

4. While I won't be surprised that the MM may stage some sizable drops in the OE week to protect their call-selling premiums, I feel that bears need to be patient for at least another week or two to start aggressive SW short positions.

On trading plan for next week:

I will focus on the finanicals by using SKF as the handler. I will consider aggressively shorting April SKF OTM puts (50 or below) if banks spike higher on their all good ERs. I will also gradually build up May SKF OTM puts (40-60, ideally) short positions. SKF is obviously in a tremendous run away down spiral, but the chance that it will at least revisit the 80/100 zone in next 1-2 months is pretty good, IMHO.

The bottom line? Things are looking up and rosy for bulls, and the market has pretty much priced in a nice economic recovery in the 2H of this year, the problem? No one knows for sure if that bullish scenario will pan out, and if not, watch out below.

Thanks for reading all the trash talking by the Easter Bunny, now enjoy your weekend!


Sunday, March 29, 2009

The March Madness, marching on?

With the winning streak extended to the third week, bulls have recovered around 2/3 of the huge losses during bears' February rampage. A steady stream of better-than-expected economic news greatly bolstered bulls strength, and the resulting V-shaped powerful rebound has many now believing that "the bottom" is in and a new bull market could be in the working.

Personally, I feel that a tradeble bottom (good for at least a couple of months) is likely in. At this stage, the market has also priced in the optimistic views that (1) US economy will see recovery in the second half of the year and (2)thanks to the all-in efforts by the Fed, the US financial system is stabilized if not building a solid footing for recovery. However, the burden is on the bulls side to substantiate those rosy views, and they must come out on the top on major reality-checks, such as this week's March job report and the upcoming of Q1 ER season.

TA wise, all major indices' primary down trend remains intact despite of the sharp rally as they are yet to even make a higher-high rebound (NASDAQ is pretty close). The dramatic V-shaped rally is looking tired and vulnerable for pullbacks if bulls cannot find new fuel this week. Considering these factors, I will once again focus on DT/ST from both sides. I intend to gradually build up some SW long positions IF the major indices can have some decent pullbacks (around their weekly MA10).

Had another winning week. Tried to be more patient and it paid out well on my BIDU short play (waited for days and finally shorted around 196 with intended stop just above 200, and covered the next day around 184), but the patience left me empty-handed as I refrained from going short on Thursday closing, hoping for a Friday gap-up at the open, which did not happen.

1. AAPL: ST/MT-CTT: long from 97-100 (stop just below 94), short from 112-120 (CS just above 120). bullish bias.

2. AMZN: ST/MT-CTT: long from 60-65 (stop below 60), short from 75-85 (CS above 85).
bullish bias.

3. BBY: LT/ST-S1 from 41.5-48, CS just above 46, IDS just above 48, IT around 34.

4. BIDU: LT-S2 from 197-220, CS just above 215, IDS just above 220, IT around 175.

5. COH: LT-S1 from 20-22.5, CS just above 21.5, IDS just above 23, IT around 16.

6. FAZ: speculative QT-L2 from 18-19, CS just below 18, IDS below 17, IT around 25; or speculative ST/MT-L1 around 10-15, stop just below 10, IT around 25.

7. FCX: LT-S1 from 46-53, stop just above 53, IT around 38/40.

8. FSLR: QT-CTT between 130/135 and 165/180.

9. GS: ST/MT-L1 from 92-101, IT around 115;

10. MON: ST/MT-L1 from 78-84, stop just below 78, IT around 95.

11. NFLX: QT/ST-S2 from 41-43, IT around 37.

12. SKF: speculative LT-L1 from 68-81, CS just below 70, IT around 120.

13. EDU: MT-S1 from 53-57, CS just above 58, IDS above 60, IT around 45.

14. ESRX: ST/MT-S1 from 45-51, stop just above 51, IT around 36.

15. KSS: LT-S2 from 48-52, CS just above 52, IT around 40.

16. LMT: MT-S2 from 75-82, stop just above 82.5, IT around 70.

Saturday, March 21, 2009

When the Fed goes all in, what should you do?

Last week's FOMC's decision shocked the crowd as the Fed literately went all in. To me personally, the real shock is that I now realize that the economy/financial system are in much worse shape than most people thought.

While the long-term negative consequence of the Fed's aggressive move seems relatively straightforward, I see no one has a clear idea or certain about its short- and intermediate term "positive" impact on both economy and stock markets, which I think is one of the major reason why the market acted pretty weak after the FOMC decision, especially on the Friday. Until that part of the picture gets clearer, I will refrain from actively initiating sizable swing positions from the long side. On the other hand, swing-shorting the market at this stage is also very dangerous undertaking, considering some of the remarkable strengths of the latest rally, AND the fact that there are a few more tricks up the sleeve of the US government (next week's bank rescue plan, the final actions on M2M and uptick rules, etc.). You don't fight the Fed, when it is turning into a crazy, red-eyed, and mouth-foaming bull. A prudent bear should patiently wait until the bulls exhaust all their ammunition and exuberance.

TA wise, both long- and intermediate term trends (monthly and weekly charts) for all major index are still solidly down, their short-term trend (daily charts), on the other hand, is mildly bullish. If the market continues to pullback early next week, I will build up some long positions for the second leg of the rally, but I will be quick on taking profits if the major indices fail to break last week's highs, which are some very important resistances. Another miserably failed attempt to overtake those key technical levels could spell big trouble for bulls.

1. AAPL: ST-L1 if it breaks 104 with volume, IT around 110, stop just below 100; ST-S1 from 112-122, stop just above 122, IT=105; DT-S1 if it breaks 99.5 with volume, IT around 96.

2. BIDU: LT-S1 if it spikes towards 190/200, stop just above 200, IT around 160.

3. FAZ: ST-S1=40-47, stop just above 50, IT below 30.

4. GS: ST/MT-L1=85-93, CS just below 86, IT=100/105.

5. POT: ST-CTT between 71/73 and 80/82, tight stop just cross the boundaries.

Saturday, March 14, 2009

Why does history repeat itself?

It is likely NOT anything original, but it hit me yesterday as I was pondering on my own miserable performance last week: you know why history repeats itself? because people never change, or can you say that human nature never change? After another big win last Monday, I stumbled through the rest of the week, along the way, gave back a major chuck of the profits from the week before. It could've been another best week had I not exited too early of my GS calls on the Tuesday (bought when GS around 76) or curtailed the bloating confidence and refrained from shorting overbought but trending stocks. One thing becomes crystal clear: if I don't want the history repeat on me, the only solution is a real change of myself.

Do you think you can really change yourself?

Now on to the market:

While I was right on the overall direction, I obviously underestimated bulls' strength in my last weekend's post. In just 4 days, the major indices recouped over 50% of what they had lost in the previous 4 weeks, and convincingly reclaimed some key technical levels (especially SP500 around 740/750). Also noticeable is that for the first time in weeks, there are finally some better than expected economic news. The way-better-than expected earning news at Citi and BAC could be potentially very significant as they might signal the deceleration of the worsening fundamentals of the financial sector. However, I am yet to be convinced that things are really turning around for good, and I suspect that most of the G20 participants this weekend feel the same, otherwise they probably won't bother to get together for a group therapy and vow together loudly so that they can hide the sinking feelings for now.

I expect the market will overall continue to climb next week or two. However, the further advance is likely to be choppy as the major indices have to fight through lots of overhead resistance in the face of overbought conditions. Before the major indices reach their next key resistance zones (NASDAQ-1470 to 1500, SP500-780 to 840, DOW: 7500-7900), I will generally refrain from opening short positions that meant to be held more than 2-3 days. On the other hand, I will consider SW from long side on decent pullbacks of the market.

To sum all this up: The long and intermediate down trends are intact, but the short-term trend is bullish and could turn into something more substantial than a typical bear market rally, in other words, I don't really know what the heck will happen, you?

1. AAPL: SW-MT-L2 from 89-92, CS below 90, IDS below 88, IT=97; Q-S2 from 99-103, stop just above 103, IT=95.

2. FAZ: speculative L2 if it spikes down towards 32/33, CS below 32, IDS below 30, IT around 50.

3. FSLR: SW-MT-S2 from 139-150, CS just above 150, ITS above 155, IT around 120.

4. GS: SW-MT-L1 from 85-92, CS below 87.5, IDS below 85, IT=98; Q-S2 from 105-110, CS just above 110, IT=95.

5. ICE: Q-CTT between MA50 and MA200 with stops just below/above.

6. JPM: SW-MT if it spikes towards 28, CS just above 28, IT=22

7. MON: ST/MT-L2 from 74-77, stop just below 74, IT=82

8. NUE: MT-S2 from 40-45, stop just above 45, IT=35.

9. RKH: MT-S1 from 50-56, stop just above 56.5, IT=40.

10. SKF: speculative MT-L3 (calls) from 100-120, stop just below 100, IT around 150/160.

11. WFC: MT-S2 from 15.5-20, stop just above 20, IT=12.

Sunday, March 08, 2009

No rally no bottom?

Last Friday's Feb job report was in very sense the climax of the month long bad news flood, yet the market's reaction was nothing but an anticlimax. This may not be surprising as the major indices extended their losing streak to 4 weeks with a cumulative losses near 20%, a dramatic and lengthy drop that could well exhaust bears' fuel tank for now. With relatively light economic reports/earning events on the plate for this coming week, it is very likely that bears will pause to catch their breath so they can gather the strength for the final push.

The 60 min charts suggest a likely initial rebound of 2-3% in all major indices, possibly occurring in the early part of the week. However, I have serious doubts that the major indices will be able to challenge the key technical levels that they lost lately: SP500-- 740/750, DOW-- 7100/7400, NASDAQ--1350-1390 as the weekly charts show no signs that the slide is ending. For that matter, I won't look for a tradeble intermediate bottom until the weekly stochastic dips into oversold area, which likely needs at least another week or two. With that in mind, for next week, besides more day trading from both long/short side, I will consider short-term positions on the short side once the major indices approach those key resistances or when their 60 min charts become overbought.

Last week ended as the best week I have ever had, which actually triggers a grave concern: will the triumph leads to a sense of euphoria that in the past inevitably leads to serious drawbacks if not outright debacles? Wabbit might be a natural-born runner, but can he really fly high like an eagle without breaking all the natural laws? May God have mercy on me!

1. AAPL: ST-CTT between 80-83 (IDS below 78, CS below 80) and 90-93 (IDS above 93, CS above 91).

2. AMZN: MT-L1=52-58, CS<54, IT around 66.

3. AXE: MT-L1=24-25.5, stop just below 24, IT=30/33

4. BIDU: MT/ST-L1=140-148, CS just below 140, IDS just below 136, IT=180.

5. CME: MT/ST-L1=172-177, stop just below 170, IT around 220.

6. DHI: MT-L2 if it spikes towards 6, stop just below 5.7, IT around 8.

7. FCX: MT/ST-L1=28-33, stop just below 28, IT=37/40

8. FDX: speculative L3=30-33, stop just below 30, IT around 44

9. GOOG: MT-L2=280-300, stop just below 280, IT around 330.

10. GS: MT-L2=60-70, stop just below 60, IT around 87; ST-S3=85-90, stop just above 90, IT=78/80.

11. LEAP: MT/ST-L1=26-29, IT=35, CS just below 26.

12. MA: MT-L2=130-141, CS below 135, IDS below 128, IT=165.

13. MON: MT-L2=65-70, stop just below 63, IT=80.

14. NTRS: speculative L2=39-44, stop just below 39, IT around 54.

15. POT: CTT between 54/64 and 78/80,

16. SKF: speculative S1=280-350, stop above 360, IT=180/200. the possible strategies include shorting March 350-400 calls, or bear put spread, or alright puts (May strike).

17. SQNM: MT-L1=10-12.5, stop just below 10, IT=18/20

18. USO: ST-L1=23.5-26.5, IT=31/34

Good luck all!

Thursday, March 05, 2009

The bulls: down and out?

Certainly a bloody week for the bulls this week thus far.

As planned , I have pretty much just day traded GS, POT and AAPL since this Monday and some how am having one of the best week in my entire freaking trading life.

The market so far has been acting pretty much like what I wrote in last weekend's post, and we will see if it keeps that way tomorrow. Bought in some April calls in GS (when it was around 80.6) and AAPL (when it was around 88.5) late in today's session because I feel that with such a precipitous drop, the market has priced in a very very bad Feb job report tomorrow, and I might lay down a few small chips just for fun. On the other hand, should the market have a bloody Friday, I will start to move my retirement account back into SPY500 index fund, 15-25% a time, starting at SP500 around 660 all the way down to 500, hehe.

Oh, I have been keeping eyes on SKF, may start to build puts between 250-300 range.

best to all,

Sunday, March 01, 2009

Is the hell about to break loose?

Well, the monthly, weekly and daily charts favor such trending scenario, especially for SP500 and DOW. There is little doubt that after the 3.5 month of consolidation, the market is once again in the bottom-searching mode.

This coming week is crucial for bulls: if SP500 fails to close above 750 by the end of the week, it will be extremely hard from the TA point of view that the market can halt another precipitous leg down. The scary thing is that if you look at the SP500 20 year monthly chart, there are not much meaningful support until the 420-480 area. There is a little bit of support between 600-660, which could serve as an initial target for the first pause. On the other hand, all major indicies may reach a rare multi-time frame oversold (monthly, weekly, daily) conditions in next 2-4 weeks, depending on the speed of dropping, and it seems worthwhile to position for an oversold rebound some point during the mid/late March. However, at this stage, I am unsure how long the March bottom could hold.

One theme that is becoming very clear lately is that while we all expect more bad macro-economical news, the actual news have been overall worse than even the most gloomy estimates, and I suspect that this Friday's Feb employment report is no exception. The bottom line is that as long as the global economy continues to deteriorate at a faster-than-expected rate, hoping a sustainable bottom in the stock markets is nothing more than a pipe dream.

Speaking of this Friday's Feb employment, my gut feeling is that if it comes in with less than 700k job loss and below 8% unemployment rate, the market may have a relief rally IF it goes down hard in the early part of the week. We shall see.

Given the current TA picture, I will once again try to avoid initiating any long positions that are meant for mid term (1-8 weeks) or long term (1-12 months) holding, in other words, I will once again focus on DT instead. However, I might consider some short term (1-10 days) long setups when the risk/reward ratios become very attractive.

1. AAPL: ST-L2=79-85, CS just below 80, IDS just below 78, IT=90.

2. AEM: MT-S1=32-35, CS just above 36, IT=26

3. AMLN: MT-L2=6-7.5, CS just below 6, IT=12

4. AXE: MT-L2=26-28.2, CS just below 26, IT=33

5. BIDU: MT-L2=130-141, CS just below 130, IT=165/180

6. FCX: MT-L2=26-28.5, CS just below 26, IT=37/40

7. FSLR: MT-S1=110-125, CS just above 125 with a bullish candle, IT around 95.

8. GS: MT/ST-L1=80-85, CS just below 80, IDS below 78, IT=93, OR when it closes above 93 with a bullish candle, IT=98/100, stop just below 90.

9. MA: MT-L1=140-147, CS just below 140, IT=170/180; DT-L2 if it spikes towards 150, stop just below, IT=160/165.

10. POT: MT-L2=76-80, CS just below 77, IDS below 76, IT=86/95

11. SNDA: MT-ST-L1=28-31.5, stop just below 28, IT=37/40

12. SQNM: LT-L1=10-12.5, stop just below 10, IT=18/20

13. USO: ST-L2=23-25.2, stop just below 23, IT=28/30

I know, I know, there are quite a few MT or LT long setups here despite what I said earlier, I don't know, the charts are making me calling them.

Friday, February 27, 2009

Holy smoking $#&*@# bears!!!


Right at 3:45 pm today, I was almost ready to kneel down before the almighty PPT as SP500 poised to close well above 740 if not 750, then the bears decided that they had enough of the bullshit (pun intended), and just like that, SP500 closed solidly below its Nov.08 closing AND intra-day lows. With the weekly charts now looking so ugly, and the fact that there are no distinctive close-by support levels for both DOW and SP500, any more chilling news over the weekend and we could see another waterfall type of leg down of these indices. It is unfortunate that what I wrote in last weekend's post came to the reality.

Did you notice I had some decent trading calls in last weekend's post (especially on GS, BIDU and AMZN)? If none of you have acted on them, you are not alone: I did not do that either, well, maybe a half-assed one on GS. Once again, I pretty much DT all week on GS, POT, AAPL, and was lucky to walk away with another winning week in this crazy market.

I have to say that while I admire bulls' resilience in the past week or two, I really feel that the resistance is futile :) and the sooner the bulls completely throw in the towels, the sooner we will have a real bottom. On the regard, if bulls really give up next Monday, we might be looking at a mid-term bottom in mid-March.

Until then, we might be better off just watching the hardcore bulls and bears fighting tooth and nail on the sideline.


Enjoy your weekend!

Sunday, February 22, 2009

Trading calls for the last week of Feb, 2009

Short rebound areas: SPY from 80-83; QQQQ from 29.5-31.7; DIA from 77-80.

1. AAPL: MT-L2=83-90, CS below 85, IT=95/97

2. AMZN: MT-L1=54-61, CS just below 55, IT=72/75

3. AXE: MT-L1=27-29.2, CS just below 28, IT=33/36

4. BIDU: ST/MT-L1=124-132, CS just below 120, IT=160/180

5. DHI: ST/MT-L2=6-7, CS just below 6, IT around 9.

6. FAS: speculative L2 ONLY if C/BAC nationalized, IT=8/10

7. GDX: speculative ST-S1=39-43, stop just above 43, IT around 35.

8. GS: MT/ST-L2=78-81, CS just below 79, IT=90

9. MA: MT/ST-L1=140-146, CS just below 145, IT=170/180

10. NTRS: MT/ST-L1=46-52, CS just below 52, IT=62/65.

11. SKF: speculative MT/ST-S1=220-300, IT around 140, ONLY if C/BAC nationalized.

12. TNA: speculative L2 ONLY if C/BAC nationalized, IT around 21

Are we there yet?

An accelerating downside momentum and the convincing breaking-down of DOW last week flash serious warning signals that we might see another leg down in this bear market in coming weeks. However, at this stage, I will be reluctant to be a mid/long term bears overall. Playing short-term/DT bears is not ideal either as the intra-day volatility has been incredible, and mostly hurtful to short-term/DT bears. On the other hand, with DOW making new lows, SP teetering on the edge of the cliff, and both NASDAQ/Russell2000 broke down 2.5 months trading range, I feel very uncomfortable to aggressively build long positions for mid and even long term holding, as any rebound will face stiff selling with so much overhead supply.

For next week, I do feel there will be some over-sold rebound, so I will definitely consider bottom-fishing on any big gap-down at the open. However, I will be quick to lock in profits on any of such trades, unless, both C and BAC indeed get nationalized and the market sells off in knee-jerk reactions, in which case, I will consider some aggressive mid-term long positions, even in the financials (may use FAS or TNA). Speaking of C/BAC, my gut feeling is if their issues are not clearly resolved one way or the other (actually, only one way?), the market will have a tough time to reverse the slide.

Day traded last week for the third week on a roll, mostly on GS and POT, and made another couple of grand. I really don't want to DT, but at the moment, it seems to be the better strategy.

Will post some trading calls later on if I get chance.

Thursday, February 19, 2009

Market is crashing but where is the fear?

Market is in a slow motion crashing, and the weekly charts are even more bearish than the daily's (barring a super rally tomorrow), but there is little fear (just take a look at the vix chart), in fact, more traders I know have becoming more bullish today and some of them have already started scale in long positions today. I originally had plan to bottom fish aggressively if the market gaps down big tomorrow morning, but now I am having a second thought on this plan. When there is blood on the street, yet not many has the fear, what does it really mean?

I will carefully examine my last weekend's calls to see if I should get in any of them tomorrow if I get chance.

Bears may be crazy, but bulls are just nuts!

Sunday, February 15, 2009

Trading Calls for the next week or two -- Feb 16, 2009

I am yet to have time to write down a manual of my TA and along the way really tie up everything. When that is finished, I will have to make quite a few changes about setups and trading plans. Before that, let me just pencil down some trading calls here in case those setups come to life in next 2-3 weeks, I will probably focus on DT GS/AAPL in the meantime if I ever get some time.

Some new abbreviations:
QT=quick trades, to be held from a few minutes to 2 days (including day-trading)
ST=short term trades, to be held from 2 day to 2 weeks
MT=mediate term trades, to be held from 2 weeks to 2 months
LT=long term trades, to be held from 2 months to 2 years.

1. AAPL: ST-CTT: between 90/93 on the long side (stop below 87) and 112/125 on the short side (stop just above 130).

2. AKS: SW-MT-L3=7.5-8.5, CS just below 7, IT=14/15.

3. DVN: MT-S2=55-63, CS just above weekly MA10, IT=40/42

4. FCX: MT-L2=20-26, CS just below 20, IT=40

5. GOOG: MT-L2=310-325, CS below 300, IT=380; LT-S2=420-440,CS just above 460, IT=330.

6. GS: MT-L2=80-87, stop just below 80, IT=95; LT-S1=110-140, CS just above 140, IT=80;

7. MA: MT-L2=140-145, CS just below 140, IT around 180.

8. MCD: LT-S2=58-64, CS just above 64, IT=40/45

9. POT: MT-L2=75-77, CS below 75, IT around 95.

10. SQNM: LT-L1=10-14, CS below 10, IT around 25.

11. AXE: MT-L1=29-33, CS below 29, IT around 42.

12. XOM: LT/MT-S1=76-80, CS above 80, IDS above 82, IT around 60.

I know that the MCD and XOM calls are a bit against both common sense and popular views, but my TA says that's what's likely to unfold, so we will see ....

Getting better before getting worse, or the other way around?

The market has become increasingly bipolar in the past 2 weeks, and the schizophrenia can be clearly seen on the charts of the major indices: while SP500/DOW are not only bearish both mid/near-term, but poised to break down further, NASDAQ has been unmistakeably bullish (mid/near term). At this point, the market could either break down as both DOW/SP500 overpower NASDAQ or break out to the upside as NASDAQ lifts all the boats. Another likely scenario is that the market continues its maddening and muddling way and stays within the trading range of the past 3 months for a few more weeks.

At this point, I am unsure which of the above scenario will play out, and as such, I will continue not to initiate positions (short or long) meant to be held for more than 3 days. I day-traded only (mostly on AAPL and GS) in the past 2 weeks and got some pretty good profits.

A couple of more observations and thoughts:

1. The Chinese stock market has finally broken out the multi-month range and now in pretty solid rallying mode. TA wise, I expect the rally to continue for next 2-3 months with 20-30% of gain. FA wise, I think the rally will fizzle out when people find out that the Chinese economy will not thrive on just domestic consumptions. Before that happens, however, it is possible that the Chinese rally ignites sympathetic rallies in stock markets around the world.

2. Obama administration has been really pressing hard and marching ahead with success in terms of passing important bills, but the "Yes we can" mantra will hit a iron wall pretty soon as both the Republicans and the economy are increasingly unfriendly, to say the least. If the market disappoints again next Weds when the details of the new housing bill reveal, the honeymoon may end sooner rather than later.

Might post some trading calls later if I get chance.

Saturday, February 07, 2009

I am back!

Got back last Monday, believe or not, it was the first time that I actually felt that the vacation is too long :P. Obviously was happy to see all the family members and sure enjoyed lots of good food! But it was a bummer missing the entire NFL playoff, especially the Superbowl which said to be one of the all time best. On the other hand, my Saints disappointed me again, wasting a great performance by Drew Brees was just terrible, now that they got a good defensive coordinator, I am once again superbowlish on my Saints, hehe, just never learn!

I did some trades during the vacation, mostly quick trades (all options) from the short side and enjoyed pretty good gains. Also spent time to really think about my TA system, and I thought I have cleared up a lot of issues and possibly leaped to a higher level, we shall see about that :P

Some observations and thoughts on the market:

1. TA wise, the intermediate trend is poised to turn up, led by the techs. The long term trend is still solidly down, and the talk of "bottom is in" is still premature until the major indices close above their Jan.09 highs to say the least.

2. FA wise, the ongoing rally is once again largely based on hopes not fundamentals, the deterioration of the later is actually still accelerating, which as the results will likely to put a ceiling on the counter trend rally.

3. Aside for the black holes in the US/world financial system, the biggest wild card right now is China (my home land). After spending nearly 2 months there, my conclusion is that China is at a very critical stage right now: if China can decelerate the slow-down or even hold off further sliding of its economy/housing market in next 3-6 months, the hope of its stabilization, which would really help the global economy, could become a reality. If on the other hand that it fails to do so, I am afraid that economy/stock markets of China and the rest of the world could suffer a catastrophic breakdown in the second half of 2009, and along the way pushing the eventual recovery to 2010/2011 at the earliest.

4. My personal take on the rosy scenario is 50/50 at most, which is why at this point I have been holding off any initiation of long time positions from the long side in US stocks.

I notice that there was an average couple dozens of visits to my blog every day during my hiatus, which was unexpected and I sure appreciate that! I am pretty sure that you won't be disappointed reading my future blogs, in fact, I ask you to get ready to help with my beer fund with the profits that you earn based on my trading calls, LOL!

Still unwinding down and got a lot at hands, but will try my best to start regular posting soon.

One quick question: overall, have you won or lost since early Dec.?