NVDA break resistance line

My last post about NVDA was on Nov 9. The dec call was a profit position. The stock price was $13.16. Today NVDA close at $17.88.

Up about 30% in less than 2 months. Also NVDA has broken the resistance line at $16.5

It may because of Santa Claus rally but still the tech sector now is a leader again.

The entry point for buy high - sell higher has been missed. It still can go higher but risk reward ratio is not really good

We should use buy on support strategy to enter long position in NVDA. Buy two months call option.

Wait for NVDA to drop near support around $16.50 then we can long 17 Feb call.

Best regards

Snip

Dollar broke the downtrend

The chart of dollar ETF (UUP) shows that dollar has broken its downtrend line.

The volume is quite high. It can show the potential new uptrend for dollar.

Today the stock market is up, dollar slightly up, gold down. Looks like there is changing of relation between three of them. Usually dollar went down while stock market and gold went up.

It looks like the big fund institution is moving their fund from gold. Their fund then can be allocated to cash or stock market. And they stop shorting the dollar. Big institution can not move their funds in only one day, so they have to start early, in anticipating the Fed may increase the rate in 2010

UUP has broken the downtrend line, retested it and go up. Based on technical analysis it show probability that this is not only a regular bounce for dollar.

So I recomend go long on dollar, buy on support for UUP. The long call is not really expensive.

Stock is moving sideways with bullish bias. Continue to buy on support for swing trading.

Best regards

Snip

Take Profit for VALE

VALE call option that I recomended two days ago has risen.

27.5 Jan 10 call @$1.67 -->2.05, profit=$38
27 Mar 10 call @2.98-->3.40, profit=$42
28 Mar 10 call @2.47-->2.85,profit = 38

Price is taken from live bid price when this posting made.

I recomend to take profit and go weekend in happiness.

Best regards

Snip

Buy on Support: VALE

We have buy on support opportunity for VALE. Today VALE is holding on support MA 50 days.after went down several days. Stochastic show no more overbought condition

The options that can be choosed:

27.5 Jan 10 call @$1.67
27 Mar 10 call @2.98
28 Mar 10 call @2.47

The price is taken when market still open.

You can enter now or wait until 10 minutes before market close for candlestick up confirmation.

Please buy with proper money management.

Best regards

Snip

VALE and RDC

I found new uptrend stock that bounce off their support on MA 20. Today they go higher and will test their resistance line. The entry time should be today or for breakout play, we should wait until the stock break through the resistance line. For VALE we can buy Dec 28 Call or 29 call.

for RDC we can buy Dec 25 or 27.5 call. If you prefer bigger delta then you should go for more ITM call.

As always, dont forget to set your stop loss and do the good money management.

US Stock will likely to move higher after Ben Bernanke state today that the Fed will keep interest rate low for extended period. So the dollar will still be moved into stock and commodity. As long as the dollar go down, the stock market will go up. But becareful when the Fed start to give signal raising interest rate, the stock market will likely have big correction because dollar will be moved out from stock.

I have a thought that now the usa economy still in recovery mode but stock market has gone up fast. When usa economy start to grow fast, the interest rate will be raised, dollar move out from stock, then stock market will most likely go down. So Dow theory is correct, stock market discount everything.

Best regards

Snip

NVDA,SWKS,SBUX

After earning announcement last friday, NVDA and SWKS gapped up and break their downtrend line. With good outlook forecast news, these two stock can go higher. MACD has formed golden cross for bull signal. Stochastic has pointed up and leave oversold level.

SBUX also gapped higher because of earning announcement and made new 52 weeks high. I still believe this stock can go to $25 in less then next 3 months. This stock once in downtrend mode and now should be in uptrend mode because of its fundamental better now.

As usual for playing uptrend, we can buy call option.

For NVDA, we can buy Dec 09 13 call, SWKS Dec 09 12.5 call, SBUX Dec 09 21 call.

Their theta are 0.01, so it is quite small.

Best regards

Snip

Dow - Technical sign of reversal

Dow formed hammer candle on important support MA 50 days yesterday. It signal sign of technical reversal. Check the chart and see what happen when Dow created hammer candle on MA 50 in early Oct 09. If history repeat itself, technically we will see bounce up.
But last time, there were no concern regarding Fed will increase fund rate that can affect dollar carry trade. The following FOMC will be closely watched by trader to see if there is any sign that Fed may increase the rate in short time.
If trader find any sign of it, I think there could be market sell off because stock market discount any news and the herd will overreact. But this market sell off will not be long.

Usually the interest rate will be raised because economy is improving, so in the longer time frame, based on historical data, when the fed raising the rate, stock market went up after went down first.

I prefer not to add any position before Fed announcement because market will be volatile before and after announcement. If you lucky to have correct position, then there will be quick profit, otherwise there will be quick loss.

Best regards

Snip

BAC - took profit

Last night I put profit protection order for my Nov 15 put and it was hit at 45% profit.
I put profit protection so the profit position will not turn to a loss one.
BAC went lower at early trading yesterday and then reverse up.
It always feel good to take profit, no matter how much it is.

Best regards

Snip

Stronger Dollar, weaker Stock Market

From March 09 till now, it is clear that Dollar has inverse relationship with stock market. As easy dollar is provided by the Fed, people use it to buy stock, gold, crude oil. So while the stock market, gold, crude oil go up together, dollar has been in downtrend.

Recently the dollar show some strength, as trader took profit and move position from stock,gold, crude oil to dollar cash.

As a result, the dollar go up and the others go down.

From the dollar chart, it show that the dollar price has been above MA 20, down retesting it and go up last friday. It will test whether it can break the downtrend line.

Stock market can only go up when there are buyers who willing to take higher price from seller.

Currently looks like big institution start to move the money out, as we can see from the dollar chart. As individual trader, we must becareful not to be trapped buying from big institution. Follow the big money, when they get out, why we should insist to stay? My prediction is dollar will be able to move above the resistance line and stock market can go down to 9200 for dow jones.

For option trader, we can start to buy put option to play this correction phase. Start small first and can add when get confirmation from dollar break above the resistance line.

Currently I play put option BAC and my position now is 50% profit.

SP500 has breach its important support while dow close on MA 50 support, not yet breach.

Weekly chart of Dow and SP500 also show bearish sign, while their monthly chart create doji pattern which show indecision between buyer and seller.

When market does not respond well on good economic news, we should be ready that the correction will continue. If you can not handle shorting or put position, better stay sideline until the market show some uptrend strength again.

Best regards

Snip

S&P 500 breach important support

S&P500 breach important MA 50 day support. While Dow is heading for MA 50 days support.

As Dollar continue to be stronger, stock go down. Same thing happen with crude oil and gold. Looks like the profit taking action is happening. The lack of good economic news and doubt for USA earning has caused market to go down. The last four days loosing streak happen on Sept 29 when the dow and sp500 pullback to their MA 50 days support, then bounced up.

Today SP500 already breach it but Dow has not. While this is usually happen in bull market, especially in overbought condition, we have to becareful to add long position. Buy on support can be used with stop loss in place to protect capital.

For BAC , I just entered put option 15 nov 09 because the stock and bank sector lack of good news and the sentiment has been negative for BAC.

Best regards

Snip

DOW weekly chart

DOW weekly chart's candle formed gravestone doji, a sign of reversal. Meanwhile the dow daily chart show sideways movement.
On Oct 26 close, DOW close lower with increasing volume.
I check the technology(XLK), energy (XLE) and financial sector(XLF) as the leader of market rally. Financial currently on the support of MA50 (daily chart) after went down because bad news for banks.
Weekly energy and technology chart is at resistance level MA50 and can not go through it.
They signal that market may have some pullback.
DOW can reach MA 50 before go up again. Some profit taking action are going to happen. We just to be careful to see if the big institution sell to individual customer (which often come late) at top.
I have not added more long position because of this market behaviour lately.
The last time DOW hit MA50 showed good entry point because market went up after that. I will wait to see that happen while looking for some potential short position.

BAC chart show some weakness as it break support yesterday, creating first lower low.
Usually market will bounce up after went down more than 100 points these days.
So when BAC go up then fail to create higher high, then we can go short BAC for more safer entry point. The timing entry should be at 15 minutes before market close.

Best regards

Snip

SBUX update 2 - exit signal

Ascending triangle of SBUX give exit signal today as stock break down the support of ascending triangle. Next support is $20.03. One can exit today, for more confirmation can exit near market close to confirm that the candle close below support. For me I will stretch my stop loss to $19.90 to avoid false break support, but the risk is I will loose more. Please calculate your potential loss and protect your capital. My personal view this SBUX is a good ascending triangle but now it is starting to fail that chart pattern play. My current floating loss for SBUX position is 40%

Best regards

Snip

SWKS - CUT LOSS

Update for SWKS, this play does not work. I have exited my position and take loss 60% of my SWKS position. As usual, I did not put more than 5% of my total capital for one position. So my loss is about 3% of my total capital. This is business cost. Yesterday after I analyzed SWKS chart and admit I was wrong. This chart create lower high and lower low. I should not play call option. So yesterday I took my loss.

Today the stock going down further because of symphaty play. TQNT which in same industry as SWKS get bad earning news so SWKS going down in symphaty.

Best regards,

Snip

CROX

This once loveable stock had been crushed from $75 to $1. But from early April 09 this stock has started uptrend and go sevenfold. The last closing price is $8.

I admit the buy signal should come yesterday when the stokc break its resistance at $ 7.45.

The stock usually rise two weeks before earning date (Nov 5) and now plus takeover rumours that may push the stock up. The target price from Technical Analysis can reach $10.

Fundamentally, the last earning report is better than expected. The firm is probably mending their financials.

It is up to you want to buy call option or the stock for investment.

Best regards

Snip

UPS

When searching for stock candidates, I found UPS. The stock has created higher low, and with economy going better, surely UPS sales can increase.

The earning date is Oct 22, 2009. If you are not an earning gap player, you should exit on Oct 21.

We can buy Nov 55 call at $3.2 per contract. How many contract? It depends by your capital. We must not take more than 5% of our capital for one position.

Best regards

Snip

SWKS

In line with good news from INTC, i found new candidate for my blog. I have played this stock and made profit from it before. The stock has pulled back and may give sign ready to go up again. The earning date is November 5.From technical analysis, the stochastic ready to leave the oversold area, MACD histogram create lower bar, the price also fail to create lower low.

The 12.5 call Nov 09 looks interesting. I capture the price 2 minutes after market open as below:

The ask price is $85 per contract.

Best regards

Snip

Ascending Triangle-SBUX-Update 1

It has been a while for SBUX. On Oct 8, 2009 it penetrated the resistance line but failed to close above it. After that SBUX going sideways for few days. Looks like the stock wait for the good news to break above or bad news to break down.

Today we may have good news to push it up, the good news from INTC & JPM earning.

Hopefully SBUX can go up and close above the resistance line for confirmation up trend.

Best regards

Snip

OC, LVS reviewed from Sep 28 posting

Let's see if we buy my candidates on Sep 29. We buy OC Nov 22.5 call $$2.00/contract and LVS Nov 18 call @ $2.00/contract.
The stop loss is set on 70% loss, so we will get out if loss reach $1.4/contract. Big stop loss for anticipating price swing dan can kill our position and reverse back the next day/hours. Because of that, for one position we should only put maximum 4% of our capital. So the maximum loss for each position will be 70% X 4% = 2.8% from our capital.

I use thinkback feature from my favourite brokerage, Thinkorswim, to track historical price.

For Oct 8, I use live price when writing this post, so the price can be a little different.

Buy on Sep 29, sell on Oct 8.

The calculation as per below :





Not a bad profit for 8 trading days only.

Best regards

Snip

SBUX...again ?

I notice that SBUX is forming a continuation pattern. The pattern is called ascending triangle. The stock price creating higher low, and one resistance area of last highs.



For uptrend stock like SBUX, this pattern is a good setup for long play. If the price break the resistance of $20.94, we can buy the stock or call option Nov09 strike 21 or 22.
If breakout, the target price is about $25-26. Quite a good reward.

Hopefully the earning season will be good so market can support breakout plays.

Best regards

Snip

Swing to profit

Market go up in early trading after tested MA 50 and bounce up.
Buy on support strategy work well. If yesterday you buy stock or option for my candidates, most of them go up yesterday and today.

For quick profit taker, you can take your profit now.
If you are trend trader, can try to ride the uptrend if earning season news are good.
If it is bad, better to protect profit by taking it.
The chart shows similiar pattern before last earning season. If the bull climb wall of worry, maybe it is time to show it. Pullback has been placed and supported by MA 50 days, now if only the market can make new high...to maintain the uptrend.

Are you a bull or bear this october? :)

Best regards

Snip

Buy on Support

Dow jones is being supported by MA 50 days. We should anticipate bounce for the stock market. Calculate the risk and set stop loss.
I will share some candidates for "buy on support" strategy.

MGM-Support by MA 50 days


STLD- Doji candle, outside bollinger band,stochastic oversold-ready for golden cross, ,support with fibo 38,6%.


Some others stock being supported by MA 50 days = NLY,LVS,MU

Plan your trade and trade your plan.

Best regards

Snip

Dow continue its weakness in early trading

Dow once again open red and go lower in early trading today after bad economic news.
Looks like it is hard for market to take out last lower high. For the last 6 trading day , there is only one green day for Dow, the rest are red. We did not see this when the market rally for the last few months.
The last similar pattern occur on June 15, 2009 until July 10, 2009 which was a correction period.

Should be careful to take long position. Either use buy on support strategy or sell on resistance, at least for October month. October month also known as bad month for market historically.
If I see Dow chart, I may guess that Dow will create head and shoulder pattern, but this is just a wild prediction. What do you think ?


As an Option Trader, we can buy call option to play uptrend market and buy put option to play downtrend market.

Best regards

Snip

DOW on Sep 30 closed

Dow pare losses and close higher than the support line.
It still down a little. The candlestick form a hammer, sign of bullish reversal.
Let's see if it can take out the last lower high.
If it does, we can go long position again.

Best regards

Snip

Weakness signals at US Market

When market are trending up, it should create higher high and higher low.
Dow jones has been making higher high and low since July 13, 2009.
Yesterday Dow create its first lower high, and today (market still open when I post this) dow down again and testing its support line.
Three down days, one up days, then down days again. Today many bad economic news make market go red.

I like to see market to continue rally, but from technical analysis view, I will let the chart tell me what to do. Besides the lower high signal, there is another weakness signal which is negative divergence on MACD. Price goes up, MACD goes down, usually those directions should be the same.



We can not be sure whether dow will continue to dip further through its support or bounce and creating trading range, or market will just pullback, or maybe bargain hunters will come again and push the market up in one hour before market close.
I have taken my money off the table to see further development of us market. Protect our capital is very important to keep staying in the trading game.

So we have weakness signal on technical analysis (lower high and negative divergence) and fundamental analysis (economic indicator news are not good recently)
Do you believe marketwill continue to rally and keep your long position or see the chart and follow its signals? I choose the later, and wait another signals to enter long position.This is not recomendation to short the market, I will play short position after there are more signals to confirm reversal to downtrend.

The confirmation will be valid if today market close in red and penetrate the support level.

Best regards

Snip

OC, LVS

Two interesting uptrend stock for this post. The strategy is buy on support

OC looks like has tested MA 50 support as per below chart


We can buy call option for Nov 09 22.5 C
Pls check the implied volatility.


LVS also seems has tested its support.



We can buy call option Nov 09 18 C
Its implied volatility is also high, if it does not fit with your risk profile, dont buy it.

Remember, dont use more than 5% of your capital for one position, plan your trade by calculate the exit point (cut loss or take profit) before enter position.

Best regards

Snip

DOW Jones up 124 points

Well, we should not fight the trend until it is broken.
The uptrend is still intact. Market correction will be used by bargain hunters to push the market up again. Correction is little wave currently. We should go with the big wave which is up. Try to guess the market top or bottom is very hard work and can cost you much. Instead we should use the first weakness signal in uptrend market for taking our profit and wait another chance to enter long position.

Enter long position with call option but don't use more than 5% of your total capital for one position. Keep at least 50% cash in your portfolio, don't use all the bullets. Diverse your risk by not putting all your eggs in one basket, you will be able to sleep better in the night.

Bull climbs up wall of worry, we can see it is true by seeing the us market chart for the past 6 months.

Best regards

Snip

MU - Update 1

MU Nov 09 8 call has increased about 10%.
The stock tested the support and bounced up. Looks like it still can go higher.

Below list of Mu option as per Sept 28 closed.



It is really great to trade stock option in us market. The liquidity is high and we can choose from thousands of stocks which has options.
But don't trade money you can not loose because stock option is high risk activity.
Only if we found good risk reward trade, then we should go into the trade.
Analyze the chart, check the options list, check the risk reward value, plan your exit points, then enter the trade.

Best regards

Snip

SBUX - Update 1

SBUX go up significantly on Sept 28, 2009 (market still open).
Below are the option list of SBUX after about 40 minutes market open.




If I compare with my previous post:
The price of Oct09 20 call was $0.62 per contract on Sep 25, now it is $0.92 per contract on Sep 28. Nice gain about 50% for this call option. Not bad for only one trading day (Friday to Monday).

For conservative trader can take profit today. If one is more a risk taker, can wait another day to see more gain for SBUX stock price.



Best regards

Snip

SBUX

SBUX price has pullbacked for the last three days. Today there is news that Bernstein initiated coverage for SBUX with Outperform rating and $25 target price.

The chart below was taken about 70 minutes after market opened today.



SBUX price may found support on MA 50 days and 23.6% fibonacci retracement.
We can enter long position (buy stock or call option) at near market close today if the candlestick still show strength from buyer (price does not go below yesterday close)

List of options as below


We can choose to buy Oct 09 20 Call or Nov 09 20 call. For bigger delta we can choose strike 19. Personally I will choose Oct 09 20 call for cheaper price, so the risk:reward will be better. The position should be held until the profit target is reached or stop loss is hit. The profit target and stop loss should be adjusted to your risk profile. Do not use more than 5% of your total capital for each position. So if this position is 100% loss, your capital will be reduced only 5%. If you set stop loss at 50%, your capital will be reduced only by 2.5% (5%X50%). There will be still enough capital for you to stay in the trading game and you can sleep well knowing the risk is so small. I welcome any comments from visitors of my blogs.

Best regards

Snip

MU

I found interesting uptrend stock. The ticker symbol is MU.
It is uptrending stock. The price has bouncing few times when testing MA 20 days.
MU pullback yesterday and reach near MA 20 days ($7.84) and fibonacci 23.6% retracement at around $7.78. This is a good setup for buy on support strategy.
The plan is to buy stock when it retrace around $7.78-7.84 price or buy call option Nov'09 8 call

The chart as below (Sept 24 closing price)






List of options per Sept 24 closing price



Remember, always calculate your risk, don't use more than 5% of your total capital for one position.
If you buy stock, please set stop loss minus 8% from you buy price, if you buy option, please set stop loss minus 50%-80% from you buy price.
We must always now when to exit when the worst comes before entering the trade.


Best regards

Snip

OC

I found this ticker from thinkorswim prophet chart.
Interesting to see that the ticker went up from March low to May high from $4 to $20.
500% gain!

It then pulledback, and starting give upside sign on June 23, and is creating higher low and high again.
Today it hit resistant MA 200, when it break above it, it will show another bullish sign.

Currently index is in pullback mode, earning season will determine the next move.

When index confirmed the upside play, I would like to play this counter.

Happy Trading!

Best regards

Snip

Earning Season and Crude oil

US market is entering earning season. This season will determine whether the bull still has more leg to come.
Also for speculative option player, earning season will be like theme park time.

Oil has dropped from $73 to $59 after big analyst raise oil target to $75.
The last oil bull market also ended when the big analyst raise oil target to $200.
Seems there is a pattern here.
I think the oil speculator is taking their profit from oil so the oil price is dropped. Oil is not really controlled by fundamental demand. When the money flow to oil, the price will go up whether supported by fundamental data or not.
We should follow the money. Currently the money is flowing out from oil. When the money flow to oil again, we should be ready and ride again. But until then, oil will continue go down or hover between support level of $59.
From today oil chart (hourly) oil is making one higher high and low, we should see whether it can create another higher high and low . When it does, be prepared to enter oil again with small portion of your money or according to your money management.

Happy Trading!

Best regards

Snip

Bearish Sign on Dow Jones Index (June 22, 2009)

After 3 months rally, the bulls of US stock market looks tired. On June 22, 2009, Dow Jones index close below its 50 days SMA after retest 200 days SMA and failed to break above it. This is clearly a bearish sign from technical analysis point of view. Also dow fail to make new highs but create lower high instead.

I use Fibonacci Retracement to calculate the down target for dow jones.
Based on the 23.6% retracement the target is 8313 and if the dow break that, the next target will be 38.6% retracement which is 7959.
After that, next target will be 50% retracement at 7673.

When the 50% retracement is reached then there is big probability market will reverse to uptrend again. Before that happen, let's ride the downtrend by this moment.

Best regards,

Snip