Fiscal Cliff

Hope you guys had nice trading week. Markets still look shaky going into new year. Watch for the Fiscal Cliff deal or no deal scenario. Its possible the markets may continue to decline even with possibility of the deal. Stay light on your positions....

Meanwhile, if you still struggling to understand what all the fuss is about in Washington, here is a good article on Fiscal Cliff :-

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/27/absolutely-everything-you-need-to-know-about-the-fiscal-cliff-in-one-faq/

Watchlist for week of 12/24/2012

I'm neutral to bullish going into last trading week of the year . Friday's close was promising given that we did not take out the morning lows. We need to break Friday's lows for me to be bearish again. Here are some good looking setups to keep an eye on -

HLF - Ackman's short thesis

Here's a very interesting presentation on Ackman's short thesis on HLF -
http://factsaboutherbalife.com/wp-content/uploads/2012/12/Who-wants-to-be-a-Millionaire.pdf

Highly recommend to stay away from this. I see SEC investigations coming soon....

Plan B

Futures are own ~ 2% across the board as we speak. SPX is hanging around 1418 level which is very strong area of support. If we open tomorrow morning in this range, it will be just below 20SMA and just over 50SMA. Look for a bounce here. If we confirm below 50SMA, we may be in for big trouble going into the weekend. Remember the #2 scenario from my SPY update post last week? That may start looking like a strong  possibility if we don't hold up tomorrow. If we do selloff tomorrow, I highly recommend closing long positions and taking losses. Don't get too emotional about it. Remember, all losses start small, so take it while they are small.

Good luck!!

Whats up with Gold?

Since the 2008 crisis, we have seen huge rally in GLD and SLV prices, mostly driven by unlimited quantitive easing and future inflation expectations. Easing has devalues the USD which has been driven the asset prices higher. So basically, GLD and SLV prices are inversely correlated. Dollar goes up, GLD goes down and vice versa. This is the relationship I understand, but since November I have been noticing something strange. While the dollar has been tanking, GLD has been plummeting as well. Fed has announced unlimited QE till 2015. Japan annouced further easing and with Europe crisis still looming more easing will be required there. Also, world economies are doing reasonably (atleast there has been no major change in the view since November) so the commodity demand should drive the prices higher. Here are three reasons why I would go down -
1) Reduced Demand -  Demand mostly driven by consumers in India and China and Soverign eocnomies buying it. Indian market has held up reasonably well, while China seems to be rebounding. More central banks are buying it as well. Should move the prices higher.
2) Dollar - Dollar is going down so GLD should be moving up. Not happening right now.
3) Manipulation - Year end dumping? This is the only rational thing that comes to my mind.

Clearly there is something else going on which is beyond me (if anyone has a better explanation, I would like to understand).

Either way, I though i would post some charts and also a chart on why I picked up some GLD and NEM today.

Weekly chart of GLD since 2008. Since 2009, GLD has been moving in lock step with SPY and gaining strength with

Daily chart shows disconnect from November.

GLD - I picked up because of strong support in 158.50 region. There is also a gap fill. If it goes to 156.50 i woud add another 1/2 position. Hopefully we should see a bounce in New Year if the manipuation is over.

Finally, NEM chart. Its self explanatory. I hope you caught some of the bounce.

Daily Analysis and Stock Ideas for 12/20/2012

Daily Analysis -
We saw some profit taking as I had called out yesterday.  Market held up pretty well for most part of the day before selling off towards the end. I think I over traded today even though I was expecting a down day, which wasn't a good call on my part, although some of the trades worked our fairly well. We are likely to have another down day tomorrow so be prepared and have a plan ready.

SPY Levels -
Resistance - 144.50, 145.50
Support - 143.69, 143.05

Trades -
FSLR - Entry 32.11. Exist 1/2 32.90. Holding 1/2
QCOR - Entry 29.55 yesterday. Exit 30.07.
CIE - Out flat today.
SKUL - Added at 8.28. Avg now at 8.44
TNGO - New pos at 12.79. Look much better today.
ISRG - Lost ~ $30 on this one. Lot of things to learn. I entered the trade close to resistance at $549 yesterday, i was hoping it would break resistance with market acting strong. Today turned out be nasty day on a research report. I keep hoping for a bounce to recover my losses but finally gave it up at $520. Exactly why you need a plan before you enter a trade and not be emotional about it. Its difficult to take losses, so hard stops are always good. Oh well...lot to learn!!!
SD- Entered at 6.48
YELP - Entered at 18.44 (Looked good intraday, need confirmation tomorrow)

Current holdings - CALL 1/2, GMCR 1/2, AAPL, DVN, SD, C, CYH 1/2, BRKB, SKUL, TNGO, PAY, YELP, PWER, EGLE (thats why i hate <$5 stocks)

Stock Ideas -
WYNN - Nice C&H pattern on daily.
NTES - China stocks have been hot. This one held up well during last hour market selloff.
GMCR - Looks great over 42.

 

Crude - Playing catch up

USO has been down in the dumps for over  two months now, hanging around $31-32 supprot level. While its been good for us at the gas pumps, its not be so for Oil and Gas companies. I don't see a huge upside for this given the talks of recession possibilities with Fiscal Cliff, but i do think we may have a tradeable bounce to the upper end of the channel. I'm also seeing some of the oil stocks come to life, so it may be worth a try.  Way to play - Buy USO, or 2x long ETF UCO, or pick an Oil and gas company. Here are some charts for your consideration -

USO -  Key is volume as if it cross 50SMA. If it drops to 20SMA you can also try bounce play.

 

 

APA - Looks the best here. Look for continuation

 

NFX - Has had a decent run from the lows. I played it for 50cents in 25s but looks good for another 3-5% play.

OXY - Looks similar to APA

SD - This one looks interesting for a bounce play right here or if it drops to 20SMA. Watch it closely.

Rinse and Repeat

Hope most of you caught the nice rally last couple days. We've have seen huge gains in across the board in last 2 sessions, mostly on the back of potential resolution on Fiscal Cliff. BUT we still don't have an agreement and no one is sure what it means to the economy going forward, which means enough uncertainty prevails.  McClellan oscillator is back in the overbought territory, so caution is warranted. If we gap up higher tomorrow, most likely it will be sold into for proft taking.  I'm also seeing lot of stocks hitting resistance levels which is another indication that market needs to digest some of the gains before moving higher.

If you are holding positions overnight, i would highly recommend lightening it up going into second half of this week. This is aslo an options expiry week so expect volatility to climb up in the market.  If we get a pullback to 143.55 level, I would be buying with both hands for a potential run up into last week of December and January. I still have some long positions (incl AAPL, C, BRKB, ISRG, GMCR) going into tomorrow which are mostly swings i plan to hold into early next year, unless of course we see a huge weakness in the market.

There is a common saying amongst swing traders "RINSE and REPEAT", which means clean up your positions and wait for the market pullback to add and ride it higher.

Few additions to weekly watchlist

Here are few other stocks that look interesting --

CJES - Entry over 21.10

 

 

LPX - Entry on strength and below 18

 

 

VMW - Long great for long term swing.



EPAM - Entry just below 21.

OCZ - Entry 2.08

XLF - More upside coming

Financials have shown tremendous strength in last month or so. XLF weekly chart indicates more upside coming for financials.  XLF over 16.40 has an easy run to 17.10-17.20 level. You can either play Financials through XLF or use a 3x long ETF FAS. I prefer playing this through strong names in the sector.  Here are few chart setups --

SPY Roadmap Update - 12/17/2012

Last week on SPY roadmap post I highlighted the two possible scenarios after we hit the key pivot on 12th December. I had a bias towards the bullish scenario. This seems to be playing out perfectly so far. We have a nice pullback to 50SMA on Friday and bounce. Today we had a nice run off the bounce and closed 100 pts higher on the DOW. Would be good to have some small range bound days below the purple line before we resume the move higher to retest the 2012 highs at 147-148 level.

I picked up some positions on the SPY pullback which worked out very nicely today. C, BRKB, GOOG, SHLD, YOKU, KKD worked nicely. CLF just taking a rest here after almost 20% move last few days.  My shorts ofcourse didn't turn out as well. I covered PHM for -$1 and after PII bounced from $79 level, i covered it almost flat.

Basic materials need some pullback after a nice run last week. I'll be picking some on slightest pullback. NUE, X and STLD look good.

AAPL Bottom? Tried picking some up on Friday but lost money. Picked it up again this morning at 510.80. I was willing to add more if it dropped to $490 level but it bounced from $501 level.  Friday drop came from reaction to slow China launch, but AAPL announced over the weekend that they sold over 2m iphones over 3 days. I had a feeling this would scare some of the bears to start a rally again. I think AAPL selloff is way overdone and all the hedge funds who had been selling in order to realize the capital gains at lower tax rate would start jumping back again. Agreed there is some chatter about lowering the orders on suppliers but it could be on the back of an expected blow out Q4 quarter. We'll see how it turns out.

Here's an updated chart on SPY -

Again.... TRADE WHAT YOU SEE, NOT WHAT YOU THINK :)

Watchlist for week of 12/17/2012

 

 

 

Here some nice patterns I'll be watching next week...

 

 



Basic Materials - Showing Signs of Life

After being stuck in range tight range for most part of the year, Basic Material stocks seem to be have come to life finally. Basic Materials was the best performing sector for the week with about 1.3% gains for the week. I have a feeling we are seeing sector rotation in play. With the weakness in Technology, money is rotating into Basic Materials and Financials. Basic materials however look much stronger in terms of breadth as all sub-sectors are showing strength.  I like Steel and Coal stocks the most at this point. Here are my picks in these sectors  --

NUE - This is the setup I gave out last week. This went up almost 3% on Friday.

X - Finally broke out of the channel. Gained almost 7% on Friday alone. Near term target of $26

STLD - Another steel stock set to the break long term trend. Add now or over $14.

AKS, MT also seem to be bottoming, although the setups are not as clear.

Amongst the Coal stocks ----

ANR - In the breakout zone. The strength this time around should take it over 200SMA and into teens soon. I'll be buying some long term options here.

WLT has been showing great strength as well. First tatget $40, then 200SMA

Other stocks to watch for JOY, ACI, BTU, JRCC

Daily Analysis and Stock Ideas for 12/14/2012

Daily AnalysisSo we got the pullback as I expected. We held support at 142.25 level and bounced back late in the day. This pullback so far looks very healthy. Expect choppy market for next few trading days. Find the stocks that you want to buy and hold for a long term, and pick them on the dips. Hopefully we should be embarking on a longer rally soon. Note, all bets are off if we close below 139 (3% below the high of 144.55 yesterday. I'm expecting a nice bounce coming into AAPL as well, don't think we see new lows this year, but time will tell.

PAY announced earnings afterhours. Earnings were inline but revs were light. Seems like my lottery play on $38 Dec options is going to expire worthless. Well, it was mostly from the profits from trading PAY earlier in the week.

SPY support or resistance levels.
SPY resistance -   143.09, 143.55, 144.49. Watch the purple trendline.
SPY support -  142.25, 141.68, 140.40 139.05, 138.50, 137.55, 136.66

Sector watch -
Most sectors were weak today. The only notable one that stands out is Semis which were one of the weakest. Watch for bounce off the 200SMA on SMH.

Trades today -
Added long term positions on C and BRKB

Closed TNGO and TSLA (~ 30% gain)

Day trade in AAPL (lost $2),

GOOG (Holding swing at 702)

CIEN (swing at 15.65)
SHLD (swing at 42.40)

Swing Trade update -
YHOO -Full position.

CLF - April 30 options.
YOKU - 1/2 pos from 14.17
LULU - Holding

Trade ideas: -
Two quite different setups today. One trading at 52 week highs and one at all time lows.
GPOR - Looking set for a b/o
EGLE - All time lows. Peak in 2007-2008 was 120s, now trading at 1.78. I'm interested in swinging this into next year with a wide stop.

Watchlist for 12/13/2012

Tomorow's watchlist - CYH, ZNGA, VVUS, SFY. 

CYH - Have had an eye on this  one for over a month now. Took minor gains on this a week ago. I like this more and more with the range tightening. Looks very similar to FSLR.
Entry - Build position on dips or enter over 30.55. Easy stop loss at break of the lower trendline. This has long term potential of high 30s.

 

 

ZNGA - Building a nice bottom pattern. Expanding volume last few days.  Entry over 2.68 and first target of 3.22.

 

 

 

VVUS - Again, nice expanding volume. Entry over 12/

 

 

 

SFY - Entry over 15.68. Stop loss on break of 20sma.

 







Hello, NOK, RIMM!!- Comeback in the making?

NOK and RIMM stocks have seen nice bounces off their July and October lows respectively. NOK on close today was trading at $3.83 - over 125% higher than its July lows of $1.63 while RIMM is trading at $13.30 over 100% higher from its October lows of $6.22. 

After a initial lukewarm reception to Nokia's Lumia Windows 8 phones, they seem to be picking up some momentum. Latest pop in the stock came from 2 new phone launches in China, where it has given up a lot of share. We don't have sales numbers for these phones for this quarter yet but the stock price seems to be suggesting reviving fortunes for the company

RIMM on the other hand doesn't have any new phone on the market. The pop has come on upcoming launch of Blackberry 10 (expected on Jan 31'2013), videos of which have been circling around on Youtube.

Not sure if either of these stories warrants the kind of move these two stocks have seen. Is there more to it than meets the eye? Perhaps market is pricing in falling market share of AAPL picked up by one (or both) of these cellphone manufacturers. Wireless Carriers like Verizon, AT&T like to have more alternatives for the subscirbers, they would welcome players like RIMM and NOK who bring in differentiated product offerings. Also with more alternatives, it won't be easy for AAPL to hold the Carriers at ransom and ask for huge subsidies that Carriers currently offer them. That may another reason for market pricing in lower margins for AAPL going forward.

Either way, the technicals for NOK and RIMM look awesome, while AAPL seem to be in trouble.

NOK - Bull Flagging again. Target $4+ soon and $5 by end of January.

RIMM - Nice b/o last two days. Needs some rest before it makes its move to $14.60 and eventually to $18 before Blackberry launch.