Out Hanging out with friends - Look before you Short

I was out hanging out with some long time friends, so indeed I have missed two days of rally.

Looking at the charts, my advice is not to attempt to short any thing at all...what pays is the price action during the day...not what we think will happen.

There are some interesting stocks like GS making new highs....While XOM, CVX is still on its way to its highs.... JPM, PNC, WFC are also on their journey up. So I think it is not wise to enter into any FAZ or ERY at the moment.

IWM has impressed me too, I was thinking of getting some TZA...but I think I will pospone my plan because there is still plenty of room for further upside.

Overall, the bullish sentiment is still quite strong. When those other traders come back from vacation, we have Obama to inspire the market...and I happen to be one of those traders who is hungry for more rally..... Kinda sick of shorting anything at all at the moment.

But yer know...I am a day trader for now...So when opportunity presents itself...I will take it...

Happy New Year!

What is in store for January?

The year 2009 begins on Thursday! I am anxious to see how we are going to end the year, I smell a rally to about SPY - 90 - 92. To go beyond that will take a lot more market participation and willingness for sellers to hold on much longer.

I still see the market moving sideways...perhaps saving for a grand event like year end Window Dressing or Obama inauguration.

But I foresee that, January could be a more volatile month with many companies reporting their earnings. So I wouldn't be going into big bets, I think it is better to wait for more conservative setups for more consistent profits.

The key things that I am watching out for are Gold, Crude Oil, Infrastructure stocks and Small Caps.

The market sentiment remains cautiously bullish amid some uncertainty during the holiday season. Obama is beginning his Presidency in mid January, so I see 3 possible scenarios developing:
1. Testing the lows and then rally.
2. Trading sideways and then rally.
3. Corporate earnings and other unforeseen events fade any optimism for an Obama rally.

Therefore, I shall continue to stick to my strategy of daytrading.

My watchlist:
GS, VIX, FSLR, IWM, AEM, NUE

Perfect Day Trading Environment

Merry Christmas fellow readers!

I have been having a great time day trading, the markets are moving better than last week. Volatility is about right, enjoy this while you can.

I have been focusing primarily on IWM options recently...because they are quite cheap at this time of the year.

For those of you who are still hopeful on the Santa Rally, all is not lost until Christmas Eve.
Most stocks indexes are still trading within a range, nothing is broken...so my stance is neutral for the time being.

Ok, good luck in your trading...the "TREND" is your friend. It has worked for me thus far

I smell something good (19 Dec 2008)

I hope you made a good profit yesterday ;)

Basically I stayed on the sidelines keeping my hands on the mouse trigger....waiting for a bigger sell off. Unfortunately, it did not happen. The bullishness of the SPY chart is still intact.

Friday will be an interesting day, I suspect this might be a good opportunity for the bulls because an announcement might be made about the auto rescue plan.

On the other hand, the pull back of the EURO to 1.4 could mean that it has found some intermediate support.

In addition, Treasuries are making its first correction after a 7 week rally... So some money is coming out from Treasuries.

On the bearish side, the possibility for the Dollar or Treasuries to resume the rally still remains.

For longs, Im aiming for 91.43. If we manage to get above 92.43 the next target is 93.41. Then there is nothing stopping it from going to 95.42
For shorts, I plan to open positions if 88.27 is breached. My target is 86.31 followed by 85.44

TLT Rally (17 Dec 2008)

Shorting TLT is not ideal when the FED is still buying up MBS. I am still trying to figure out a way to determine how to detect a turnaround in this Bond rally and I have to be honest with you that...it is very hard to know the right timing to short this.

I am pretty sure that the we will know when equities start rallying and get out of this depressed state...In the mean time I wouldn't want to get in the way of this rally.


If you feel that you want to short this and are willing to be patient...then go for the TBT. I do not think that the returns will be as great as the returns on your equity trades.

SPY (17 Dec 2008)

The S&P Futures throughout the asian and european trading session were lower than yesterday's closing price. At one point it was more than 20 points lower.

Where this market is headed to this morning depends on how we open the trading session.

As of now the SPY is in overbought territory, so I wouldn't be surprised to see a retracement of up to 50%. It all depends on the buying momentum of this rally, overbought
conditions does not mean that the market cannot keep on rallying.

So the first sign that I am looking for is how big the gap down or gap up is going to be...and then I will make the necessary adjustments to my trading plan.

If we break 91.96 today, this rally can continue higher to 93.30 then 94.95. If not I am expecting SPY to close unchanged and continue lower tomorrow...hence continuing to trade in a range of 82 - 92



I am keeping my watch list smaller due to the fast paced market:
Possible Shorts: GS, IWM, ERY, FAZ
Possible Longs: GS, IWM

GS earnings tomorrow (16 Dec 2008)

16 Dec 2008 - GS Loss not as bad as expected

In case you are wondering why I refrain from making a post today. Its simply because I don't want to speculate on GS earnings. If it turns out to be not as bad as expected then you might see a rebound on this stock.

The FED is going to announce their interest rate decision tomorrow, that could be a reason for some weakness in the dollar. But judging by what I see in the commodities market space, I think traders are not convinced by the decent gains in Crude Oil earlier in the morning...hence leading to a sell off later in the day.

In conclusion, there is still no decent trend...hence I will stay on the sidelines for a while.

Bulls and Bears lose in this choppy market...so do be patient with your trading ya.

SPY may not break above 920 (12 Dec 2008)

The Auto bailout failure and JPM CEO statements caused the markets to tank. Prior to these events, I still see stocks trading in a range.

In the morning, I was going long on GS after a pullback and a 2nd attempt to breakout. Even though the volume was impressive, it was a fake break out. From then on I switched to bearish mode by looking out for any potential breakdowns in the stocks that I am watching today...primarily GS, POT.

I think SPY is highly unlikely to breakout above the 920 level. Which MM would risk their money to do such a thing? In the event that there is a 2nd attempt to bailout the Auto makers...I expect just a moderate rally...simply because there are so many resistance levels above us now....and heading into middle of December keep an eye on more Hedge Fund redemptions.

The key resistance levels after yesterday's events are 85.71 and 88.45
Breaking below resistance 83.43 will see SPY heading to 81.63.


Here is a more detailed chart of my trading plan. Notice the number of resistances overhead, we will need a very powerful rally to overcome all those. Note the possible reversal point in the event that you wish to go long for a scalp...?

KO, GS (10 Dec 2008)

KO, GS could be due for a bounce; there is still a little room to correct before touching the trend line.

You can buy on the dip if you notice a reversal as long as the trend line holds.

Terrible Fake Outs - Bull Trap? (9 Dec 2008)

Basicly, I am not very impressed with today's bounce. It can't go higher because there is no participation from people like you and me. Tell me if you did?

First of all...we have to ask ourselves what was the purpose of the gap up? Could it be that the market makers want to scare the shorts to cover...? If it is I don't mind at all....we shall see.

AZO, FDX has worked as expected....but tomorrow shall be a key day to see if we are heading down or not. I would'nt be suprised at all if these stocks turn green tomorrow to scare the shorts a little.

Basicly, SPY is still trapped in the descending channel. It should have broken out of this channel today if it really wants to stage a genuine rally.





Here is the chart of SPY showing potential levels for tomorrow if there is any big move. I just hate to see SPY end up smack in the middle again...keeping us guessing ....that sucks.




Finally, I wish to caution the bears because we are closing in on OpEx. So it is advisable to remain defensive in your trading because MaxPain for SPY is 100. So I wouldn't write of a rally to somewhere close to 100.



Strategy:
Daytrade only.

Watchlist:
Neutral: GS
Buy Dips: PNC
Potential Shorts: SAFM, FDX (Gone even before market opened...yikes)

SPY (08 Dec 2008)

SPY is still in the grey area and I shall remain neutral on the major indexes. From past week's action, it appears that the sell down on commodities has been offset by buying in other sectors hence....making SPY appear to trade sideways.

I can see money flowing out of some defensive consumer stocks like PG, JNJ into other undervalued quality names in other sectors. Even some consumer discretionary stocks like DECK, TIF, RL has gained despite their earlier weakness.

Here is the SPY chart for Monday, if 83.61 holds we will most like trade sideways or head higher if SPY can breach 89.71.

Buy Dips - WMT, ENR (8 Dec 2008)

I found a couple more potential long ideas, I think some bad news next week might present some buying opportunity.

WMT is moving within an ascending channel, if there is any selling next week. My advice is to buy on weakness near the lower trend line.


ENR is about to breakout, keep an eye on this for buying on dips.

I can see some profit taking and buying into some badly beaten up stocks happening.

Try not to hold overnight because I am not sure whether we are going to have Selling or Santa Rally.... We are still in a grey area.

KO - Cheap and easy (07 Dec 2008)

I was enjoying my "Coke" the other day and was wondering how is Coke doing....

I am quite impressed with the amount of activity in this stock on a daily basis.

On average this stock has been moving at about 2.50 each day. So its a pretty consistent stock to make money each day, I highly recommend you buy on dips on a daily basis...and don't forget to take profit fast.

SPY (05 Dec 2008)

SPY is still showing no signs of direction, I won't be playing the indexes. It might seem that there is not much going in the markets...actually there is. You will need to drill down to those individual stocks to see the action.

Today we saw commodities continue to decline, I have no short positions for commodities at the moment. But I think, commodities are setting up for a move soon.

If you remember GS...on how there was a sell of day after day a few weeks ago, I hope you see what I mean. If there is any big move in commodities...it is going to be a shocker.




AZO, FDX, FSLR will have a big move soon; they are all in different sectors and are showing different price actions. (Click on link to drill down)

As for the SPY, if there is any big move to the upside or the downside. Here are the likely
targets.



If SPY goes up, I plan to go for the TNA, FAS, ERX. It all depends on whether commodities wanna move or not...if not I will just leave out ERX. Ideally I like FAS to pullback a little bit for a cheaper entry.

As for the downside, I prefer to use individual shares to get the maximum effect.

FSLR (05 Dec 2008)

This stock is trading in a descending channel until it can prove otherwise by breaking out from this channel for 2 - 3 days.

I like this stock for a daytrade for now.

AZO (05 Dec 2008)

Now I see the pattern in AZO...lol.

Its quite an easy play, as soon as the auto bailout news is over. Your short positions should work, so be patient with this one.

FDX (05 Dec 2008)

FDX is trading inside a rising wedge, if we gap down tomorrow I foresee 2 scenarios:
1. Lower trend line holds and we might rally into the close.
2. Lower trend line is broken and we could be headed 63.90, I plan to exit shorts from there.
On the other hand, we gap up...I am planning to enter short position at 79.80.

SPY (04 Dec 2008)

Out of curiosity, I have updated the SPY forecast chart. Apparently, we are still lying in the grey area. I believe Thursday's trading session could be key, here are the updated 2 scenarios.

1. Bearish case - Rally to 91.91 before turning south for more selling until 73.79.
2. Bullish case - Breakdown to 80.44 before turning around for a huge rally tp 92.94.


My stockpicks:

Potential Shorts:

AZO - 116

FSLR - 133.72 - A gap up could be possible before rolling over

FDX - 71.83 - A gap up could be possible before rolling over.

Potential Long:

AZO - 91.9

FSLR - 92.89,

FDX - 44.45

GS - 72.79 - A gap down first perhaps.

2 Possible Scenarios (03 December 2008)

Day trading has nothing to do to predict any future... I have been doing some Elliott wave analysis to forecast possible targets in the short term.

So far, I noticed that the market has been switching back and forth between a bullish/bearish Gartley pattern to make any Elliott wave analysis all the more confusing and taking more effort to do it on a daily basis.

From the SPY chart below, I foresee two possible scenarios in the coming days.


1. SPY could hit 79.99 and then rally towards 96.28.

2. SPY could rally all the way to 95.24. What happens after that, seems quite unimaginable...I know, it could plunge to 73.66 or lower to 60.97

One thing for sure....technically the chart is telling us that there could be a technical rebound soon. This analysis is only valid for today, not planning to play god to predict the future...lol

Tomorrow and Watchlist updates (02 Dec 2008)

Just what I have been looking for, the watchlist performed better than expected. Just take a look at the moves in the price...

I will be sticking to this watch list tomorrow because it works.

If you ask me what is going to happen tomorrow, well...nobody knows..... We have broken through any barriers below, it all depends on the MMs and the market now. It is hard to predict market behavior when all memory's from the past have been erased. The market is on course to set a new record here....so we will just have to take one day at a time.

Here is a chart of SPY indicating in green any upside targets, in red any downside targets. Right now we are smacked right in the middle of a trading range. All I can say is if we breach 80.5 on the SPY, we will reach 75 with ease.


On top of the watch list above, I just discovered that the VIX could be a good buy. The way to play this is to buy when if you see markets tanking.


On a final note, be careful if you are trading AZO, FSYS. There is a slight risk in relation to the Auto Bailout.