DRV

Almost got shaken out today, it is breaking out in the end.

Final nail on the coffin?

Looking at the slope of each rally, it gets flatter and shorter. Today's bearish engulfing looks like the final nail on the coffin.

VISN

VISN has performed well since added to the newsletter.

Mainly day trade right now!

I can't ignore the strength, I can't fight the trend, so I covered my NUE, SCHN shorts yesterday. I remain a long term bear, but I respect the current bull trend and daytrade the long side nervously.

Stop is too tight

It was a good pick, but the stop was set too tight. Otherwise, 30% gain!

Short candidates

I have been shorting SCHN since last week, now I am shorting another steel stock: NUE.

Critical time

If the bulls can't push the market higher, a possible double top seems likely.

I am right, this time

I know I have sounded bearish a number of times this year, but I did bravely and timely call a market top on Sep 16th on Twitter, which I feel pretty good about it.

NASDAQ retreating

The NASDAQ quickly approaches the bottom of channel. Can it hold?

Builders

Jim Cramer keeps claiming the housing has bottomed, which I am not sure about it. From the chart above, the housing index shows cracks by first dipping under 30 day moving average that also agrees with my bearish outlook for the rest of the year.

What I learned from 19 consecutive losses

As I am doing some catching up for my lack of posting here, I conclude that I had 19 consecutive losses from end of July to mid Sep. Two of them turned out to be big winners, CIEN and LVS. In order to find out why I had losses after losses, I go to the big picture, the NASDAQ daily chart. You can see from the highlighted dark blue area: it was whipsawing, no clear trend. My method clearly failed in that kind of trading environment.

A bullish case for China

If China market stops bleeding and starts to consolidate at this level, we may form a bullish reversed head&shoulder.

Update: MPG

I am kicking myself not taking proft at $3 area.

Sorry for the absense

Since I changed to Windows 7 this Sunday, Hotspot shield stopped working, which has been a must have tool in China to access some blocked foreign sites, such as Blogspot. Finally with my buddy's help, U95, a Chinese software can also do the trick. So now I am back in the game.

Recent additions

I have been long these two since earlier this week.

MPG

I recommended MPG last night, today it was up 50% at one time.

Ignorance is a bliss

First I have to admit I made a mistake, I tried to pick the turn again. I should not start shorting the market before the trend changes that is 30 week moving average starts to point down. Now once again it is proved that we are still in a monster bull market that has rallied over 54% within 6 months! I have been firmly believing that we are in a long term bear market, because the economy is in a bad shape and this time the root is bad, the Americans have to change their life style. Besides, the technical picture did not support a sustained rally: no double bottom or triple bottom. So from the beginning, in the bottom of my heart I was thinking and projecting the rally is just temporary and doomed to fail some day. I still believe that, but this belief makes this year's trading particularly difficult. I have to trade from the long side while holding a chuck of shorting positions to hedge. And as long as the market keeps rallying, the struggle inside my head gets more intense and at some point my belief is going to shake. Maybe this time is different? Ignorance is a bliss. It is so fit in this situation. If I am a rookie, I could be much happier this year.

Paul Tudor Jones

Paul Tudor Jones is betting against Goldman Sachs. Which side do you pick?

Breaking down!

At the end of day, I got sell signals across the board and I am fully shorted right now.

Recent market action

Sorry for lack of posts lately. The market basically moved nowhere since my last post which is boring and not encouraging. The only thing moving in this market are the small financial junkies, like C, FRE, FNM, CIT, AIG etc. Those are good for day trade only and too volatile to be considered swing trading.

So are we going up or down from here? I really have no idea. The bulls could say we broke out and now we are just resting. Even China's over 6% drop could not bring us down today. The bulls reversed the earlier weakness nicely. In the mean time, the bears could argue that the recent breakout was sluggish and we lost China, the biggest economic driver. The breaking out stocks are getting leaner and leaner.

Both sides are reasonable. If I have to choose a side, I think the bears have a chance, though the bears have got killed many times this year.

NASDAQ

I was bearish earlier this week, but I guess the market is playing with me, now it looks like a bear trap. As a trader, you gotta be flexible. I am long some FRE and C from yesterday.

Finally the internet is fixed in China

Due to the earthquake in Taiwan, the internet in China was cut off for the last 4 days. I could not access the foreign sites like Yahoo, MSN etc. Today it is finally back to normal, which makes me feel so GREAT! And I just realize how my life turns out when there is no internet. My life sucks (hope she does not see this!)

Still in a trading range

I don't see a nasty sell off for now, maybe a decent pullback to 1830 at most.

Hedge fund bought BAC

John Paulson's hedge fund is reported having bought 168 million shares of BAC during the 2nd quarter. Do you think you can profit from this almost 2 months' old news? I highly doubt it. The retail investors are probably holding the bag for him to cash in. I think this is just another sign of the top.

But why I am not excited

On this weekly chart, the NASDAQ is right at the resistance. I don't think it can break through it this time.

Transportation index

It is breaking out!

Hard to be a bear right now

With the strength of banks, it is hard to have a bear case.

Update: LEN

LEN still climbs.

CSCO-the party breaker?

Panic button

I am concerned by the speculation on the small cap stocks and I also think the uptrend from March is due for a break. I used the "panic button" today and closed most of my long positions. I will watch from the sideline for the rest of the week.

Lesson from Sol at Xtrend

Among the investing bloggers I regularly visit, I have a lot of respect towards Xtrend gang. The main reason is they correctly predicted last year's crash and made lots of profit from it. Trader Sol grew his account from 350k to 4 million at the end of last year. Today he announced he blew it off.

How can a good trader like him lose it all? I conclude 3 reasons from my observation of his trading this year.

1. Fighting the trend. He has been shorting this market all the way up from March.
2. Picking the turn. He has been trying to pick the top from March.
3. Being stubborn instead of flexible. Though we are in a long term bear market, the inter medium is clearly up after March 23rd. Being a trader, recognize it and go with it.

And best luck to Sol, hope he learned his lesson and recover himself from it. He can be much stronger.

Banks still lagging

Even with recent strength, the bank index is still lagging on the weekly chart by looking at the the down sloped 30 week moving average.

Dow Jones weekly

Dow Jones is at some sort of resistance too.

NASDAQ at resistance

I think we should start closing long positions. It is clearly at a strong resistance. If this is a bear market rally, which I think it is, the downward trend line is too heavy to break through.

Update: HOV

It reached my target today, with 35% profit.

My jump seat

Remember the "panic button" I was talking about? If tomorrow's GDP number disappoints, I am probably going to employ that technique.

The only bright spot

The bright spot is the bank index that continues its uptrend. As long as it rallies, my 10% upside target is achievable.

A shooting star

A shooting star is a bearish candlestick formation, which means the buyers exhaust. Tomorrow is the key; a down day says the uptrend is over and we might probably have seen the high of the year.

Shanghai A share is down 5%

Shanghai A share is down 5% after over 80% rally this year. Does it predict our little bull market near the end? Anyway, I am less confident than 8 hours ago.

Update: LEN

So is LEN, now up 9%.

Update: HOV

HOV still on the run, 20% in the pocket so far.

Final stage?

Look at the slope, I think we are at the middle of final blow off.

NASDAQ weekly

Lots of resistance upside, my target zone is 2050-2150.

LEN

LEN was added.

Filling the gap

The NASDAQ is about to fill the gap. A place to sell? I am not sure, since I can't think of a material reason to stop the bull.

SNDA

SNDA is breaking out now.

What's wrong with banks

The bank index lost steam after the breakout of the channel. This is a major concern for this bullish trend to continue.

HOV

HOV was added today.

Panic button

I think every trader should have a panic button in their mind. What does it mean? When the trend changes, traders should get out of the previous bets right away, even though some of the charts look still favorable to the previous trend. Lock in the profit or take the loss, just get out. The sooner the better.

I conclude this is a "must have" technique in a trading friendly market, like what we are in right now.

Update: newsletter performance

New high!

Jerry Favors

Do you remember Jerry Favors, the African American technician who often came on CNBC on Fridays back in late 90's? He is an export on Elliot Wave and Gann's theory, which I first heard of from him and till today I still know so little. During the horrible days of bursting bubble, everyone looked to him on Fridays hoping for a bullish prediction and searching for a possible bottom. He was like a guiding light. But after year 2000, he seemed disappeared from the television, also slowly from my memory. I did not know why CNBC no longer invited him, he might be a figure welcomed in a bear market.

Anyway, yesterday I googled his name and found out he has passed away in 06. I am sad not only we lost an excellent technician, but also lost a memory.

This is his page.

Update: SPWRA

Closed the position yesterday for a nice gain.

Crazy that is all I can say

This market is crazy, it can really go to extremes in a couple of days. We were plunging like 800 is the next target, now everything looks so rosy and breaking out!

Semi

This looks bullish, the worst is over?

Remember the "not bad looking" chart?

After today's strong bounce, it looks even better and it might pull everything up with it. In this market, anything is possible. And that is why I am taking loss on FAZ, TZA. I could always go back in if the thing does not play well.

Update: SPWRA

Now 18.3% in the pocket!

POT

Now 8.4% in the pocket.

Update: VMC

Now 6.8% in the pocket.

It this fails, the NASDAQ will look out below

A possible head and shoulder top pattern, which will certainly hurt the NASDAQ if it breaks down.

You ain't seen nothing yet

The bank index still shows a "not bad looking" chart. Wait till it breaks down the channel.

Transport

Breaking down from a double top. What is the old saying again?