Stock picks

Scanned using optionsXpress. Checked manually. These stocks are picked based on TA only.








Be cautious to ABB. The big trend may have reversed.

S&P 500: a wild guess

Mar 14: UYG and SKF

UYG is in a down channel, while SKF is in a up channel. In the near term UYG will go up, and my target is 35. From Mar 18 to 20, i will watch how XLF goes and decides what to do next (most likely go for SKF).

Tomorrow if UYG opens significantly lower, buy it. If it opens higher, try SKF and sell it quickly for 1-2% of profit. Otherwise, watch and wait for the best entry point.

Mar 14: BIDU

Now it is facing two resistances: resistance line at 280 and EMA50 line. If it can go above 280, 300 will be the next target. Hopefully it can break 300 and reach 320 before OE!

USO: short/put

Near term trend is bullish, wait for a safe entry point?

OIH: short/put

since the uptrend was broken on Jan 15, it seems OIH has been in a down channel for some time. The next two supports are at ~167 and ~153, respectively. Will it touch the lower edge of the down channel? Maybe in two months?

MON: short/put

MON has broken the intermediate uptrend line started on Aug 2007. Target is to touch the strong support at 95. If 95 can be broken then it will go down to about 85.5.

Entry: open a position when MON < 108 in the next trading day.

long put: MON Jul 90 put. bid/ask=5.6/5.9, theoretical value=6.471. delta=-0.235. current IV=60.78.

Mar options: the following spread for a credit of $2.65

• short MON Mar 105 call;
• long MON Mar 110 call;

breakeven=107.65. max profit=265 when MON<=105, max loss=235 when MON>=110.

April options: the following spread for a credit of $3.30

• short MON Apr 95 call;
• long MON Apr 100 call;

Breakeven=98.3, max profit = 330 when MON <=95, max loss = 170 when MON >=100.

GG: short/put

Look at the above chart:

• OBV signal provides a perfect entry point of either short or long. Look at red arrows for long entry points, and blue arrows for short entry points.
• In the near term GG will likely touch the fine blue trend line. Therefore the target price is about 39.

March option trading plan: following spread for a credit of $1.05

• short GG Mar 42.5 call;
• long GG Mar 45 call;

breakeven: 43.50 (current price 43.13). max profit=105 when GG<=42.5, max loss=145 when GG>=45.

Open this position when GG >=43, close it when GG <=40 or let it expire.

April option trading plan: following spread for a credit of $1.14

• short GG Apr 42.5 call;
• long GG Apr 45 call;

breakeven 43.64. max profit=114, max loss=136.

Long put: long July 40 put, bid/ask=3.1/3.2, theoretical value=3.725, delta=-0.337.

One can also short, but I don't think long put is a good idea because current IV at 53.71 is not very low, and this stock isn't very weak either.

Mar7: INTC

I guess nobody else is holding INTC call options, but I do. Although it looks cheap, INTC is a component of DJIA and playing an important role in the market. I hope its direction can give us some hint to the big market.


The weekly chart shows the intermediate and long term pattern. This chart is pretty clear:

1. the uptrend since Aug 2006 has reversed in Jan 2008.

2. from the RSI and STO, the price in Jan is not likely a bottom (yet).

3. a triangle pattern is forming since this Jan, and the volume is decreasing which support this pattern.

4. about 18.x there is a support. However it was broken in Jan, so it will likely be broken easily again.

From TA's perspective, it will have a breakout very soon (within two weeks) and the target is 14-16 in the intermediate term (after 2 or 3 months). Usually after the breakout the lower edge of the triangle will be tested, that means we will see price under 19.5, and then a sucker's rally to touch ~20, and then go down to touch 18.x, then up and down.


The daily chart shows the near term picture, which is not entirely clear to me (remember I am a new frog!). What I am seeing is:

1. the intermediate term uptrend has been reversed in the early Jan, this is identical to the weekly chart.

2. it's forming a downward triangle, which is bullish IF the price is bottomed out.

3. volume is flat, so above pattern may not be valid;

4. neither RSI nor STO indicate a bottom so upside breakout is not expected.

5. IF there was a upside breakout, the target would be 24 (remember this is unlikely).

Therefore, the daily chart is neutral to bearish.

My INTC Apr calls are surely hopeless. I am waiting for a chance to put it.

I am not suggesting to put it, but it may indicate that DJIA has probably a big downside movement in the following weeks.

Mar7: AAPL

Disclaimer: I don't have any holding of AAPL options/stocks.

Both weekly chart and daily chart are not very clear to me, but I am trying to give my opinions to push this discussion here.


Weekly chart:

1. Intermediate term uptrend since July 2006 is reversed in the end of 2007. If we talk about long term uptrend since May 2005, it's not broken yet.

2. There is a big support zone between 60.x to 70.x, considering that long term trend line, people won't be really panic before AAPL is dropping to 90.

3. RSI in these few weeks is quite low but it's not oversold yet. STO is below 20 but there is no sign of reversal yet, and the volume is still bearish.

My feeling is there is no sign of reversal or rebounce. After reaching 108.5 it may have a small upward movement. Most stocks don't go down straightly.


Daily chart:

1. currently RSI isn't low and there is space for going down, according to this indicator.

2. STO is below 20, but no sign of upward movement.

3. the volume is bearish.

I would say before OBV is going up and STO is crossing above 20, the rally cannot be confirmed. Before March OE, I don't expect any abrupt change of the price.

These are just my personal immature feeling, please have your own outlook before opening or closing any positions of AAPL.

Mar8 weekly chart reading: the rest

$CPC: now it's 1.240. It should have space for further up.

$VIX: according to the weekly graph, breakout of the triangle pattern will happen in May. At that time, market will either start to rally or go down deeply.

UYG: last prediction was wrong. Now it's at a bottom will reverse soon.

1. Financial

C: last prediction was almost right. It went down in the last two weeks. Now RSI is at the oversold level, and STO is below 20, so a rebounce is due. But OBV is still going down. In the near term it will have a upward correction.

JPM: prediction was wrong. During last two weeks it went down deeply. But now it may have started short recovery. It will go up to 40+ quickly.

2. Technology:

IBM: last prediction was right. Now it has not a lot of space for further up, but the near term down trend hasn't really started.

AAPL: Still range-bounding. It didn't go lower and not go up either. The outlook is neutral to bearish.

GOOG: wrong prediction. It was going down in the last two weeks. It will go further down but there is not much space for big down.

MSFT: last prediction was right. The near term down trend will be reversed very soon.

T: almost wrong prediction. It only went down slighly. Now It should go up slowly, but may not jump above the resistance at 36.

RIMM: wrong prediction. It went down and closed the gap. Take a close look at the price level 100. If it stays above 100 in the next week, it may make a historical new high in the intermediate term; otherwise 100 may become a resistance and the up trend will be reversed.

3. Resource

XOM: prediction was correct that the price reached 90.17 but then it went down quickly. It will go down to 80- in the next week. There is no sign of reversal yet.

4. Transportation

DRYS: wrong prediction, the toppy STO finally dragged down the price. In the near term it will go down. In the weekly chart the wave C down is just started. If in the next week it stays below 70, the next target will be 50+.

FDX: during the last two weeks it went neither down nor up. Now it seems ready to go down. the target is 85.

UPS: it looks toppy and should go down slowly.

5. Industry

BA: wrong prediction. it went down. in a down channel. the target is 75-->70.

GM: prediction was right. It will still go down in the near term! 22 is a support. Once breaking 22, the next target is 18.

DD: prediction was correct, now it's closer to 44. The big trend is down. The next target is 42.5.

MMM: right prediction. Still in a down channel. The next target is 72.5.

6. Medical

JNJ: wrong prediction. Now it's range bounding between 61+ to 64-. The near term is down.

7. Food, consumer

MCD: wrong prediction, it went down. The near term trend is down, the target is 50+.

PG: now standing on the intermediate term uptrend line started in June 2006. In the intermediate or near term, it's still going up slowly. Note that RSI and OBV is nearish.

KO: range bounding. it seems the triangle pattern is about to break, and the the uptrend will be reversed.

WMT: bullish.

8. ETF

VWO: wrong, it went up and down. it will go down, and the target is 92.

EWZ: correct. it will go down significantly. The target is 75.

ILF: similar with EWZ. ready to go down.

FXI: sucker's rally soon.

XLE: it went up and then down. ready to go down further, the target is ~72.

XLB: similiar with XLE, target ~38.

GDX: prediction is correct. Now wait for correction.

DBA: Now it has started to go down. target 37+.

MOO: correction started. target 50.

Mar8 weekly chart reading: GRMN

It's hopeless. Too bad my call options are not closed yet. I think it's not very profitable for either long or short.

Mar8 weekly chart reading: FSLR

Weekly chart:

• The long term trend line is valid. So it is still bullish.
• The triangle pattern means continuation, so in the intermediate term it is bullish too. Let's wait and see the breakout.
  

Daily chart:

• The up trend in still there.
• After the triangle pattern is broken out, FSLR will likely go up.
  

Mar8 weekly chart reading: BIDU

Weekly chart:

• The long term trend seems not broken yet. It makes sense if the price goes down to 175-200+ and then goes up on this trend line. But that means a big down from the current level.
• The triangle pattern will be broken out. Most likely it will go down, let's wait and see.
  

Daily chart:

• The intermediate uptrend since Aug 2007 was inversed in the beginning of this year.
• Now we have a triangle pattern. Let's wait and see if it goes down from here.
• TA indicators are neutral to bearish.
  

Mar8 weekly chart reading: GS

Weekly chart:

• The long term uptrend started on May 2005 has broken in the end of July 2007. Later it was re-visited once with a historical new high. Note that when the price made its high in Nov 2007, divergence in both RSI and STO indicated that there would be no more higher high.
• Now GS is on a down trend marked by lower lows.
• Currently all three indicators are bearish. The slope of OBV is steep, STO is crossing below 20, and RSI is about to touch the oversold level. Therefore in the near term GS will still go down.
• There is a support at ~155. The lows in the last Aug and last week are quite close to this support level. If it's broken with big volume, GS can easily go below 140.
  

In the next week if it doesn't go below 155, there will be a upside movement which will possibly go to 180-.

Daily chart:

• The intermediate up trend started in the last Aug was broken in the early Nov 2007.
• Now GS is in a down channel in the intermediate term.
• There is a resistance zone between 175-180, and another resistance at 200+.
• Note that the low level of RSI and STO indicates that GS may have a correction and try to reach the upper edge of the down channel. Because of the resistance, it may stop at 175-180 and then go down.
  

My GS call options is against the intermediate term trend and the long term trend. When the sucker's rally is over, I will close it and see if it's possible to short/put it.

Mar8 weekly chart reading: XLF

Last prediction about XLF is wrong.

Weekly chart:

• The uptrend started in Apr 2005 has broken in the last July. Afterward, the trend line was tested once and then the down channel was established.
• The lastprice pattern is triple bottom breakdown. The first one is in Aug 2007, the second one is in Nov 2007, and the third one is in Jan 2008.
• The best possible scenario is to have a fourth bottom, either a sharp bottom or U-bottom, and then reverse this trend.
• Look at the RSI and STO indicators, there is a small space for further downside movemnet, but not much.
• The slope of OBV is very steep, and it may possibly recover a little bit.

Although there is no sign of reversal yet, and the last week's low doesn't look like a near term bottom, it is definitely a bad entry for short/put. There may be a strong a sharp upside movement to push the price to 26.5, and then it may go down again.

Daily chart:

• We are now in a down channel enclosed by two bold solid blue lines.
• Note that every time when RSI touched 30 and STO went below 20, a small upward correction was coming. This is what happens now.
  
• Note that during the last few weeks, every time when the prices went up, the volume was very significant. This is possibly because many people consider the financial sector is standing at an important bottom, and the valuation is low, so they are rushing in.
  
• There are two resistances at about 27 and 30 respectively. There is no good sign to break them yet.
• The volume in the last week was big.

I predict that the sector may go up and down a little bit, then there will be a strong upside movement. From both weekly chart and daily chart, I feel it isn't wise to open the short/put position because of the small potential profit and high risk.

Mar8 weekly chart reading: GLD

All three indicators, RSI, STO, and MACD, are standing at a very high position, so the present is not a good entry point. However there is no sign of trend reversal, and the bullish trend will continue.

Mar8 weekly chart reading: $USD

Last prediction was wrong, there wasn't a rebounce, and the range-bounding price pattern should be continuation.

By reading the weekly chart my feeling is $USD is hopeless in the intermediate and long term, since it is going down without looking back.

The daily chart doesn't look good either. The downtrend is clear, the question is when it can be reversed. In this chart, STO can stay below 30 for a few months, and oversold signal of RSI doesn't indicate a bottom either. In fact MACD makes more sense in this case. Therefore although both RSI and STO are very low, it is still very bearish and no sign of reversal can be seen.

Mar8 weekly chart reading: $COMPQ

Weekly chart:

• The intermediate uptrend from July 2006 was inversed in the end of 2007. At that point both RSI and STO indicated a weak momentum. Later that trend line has never been revisited.
• The triangle pattern started in the beginning of this year was broken out in the last week of Feb.
• Now it's standing on the long term up trend started in Aug 2005. There is no sign of reversal, so this trend line will likely be broken later.
  

From the triangle pattern it won't be a surprise if NASDAQ goes down to 2000 -- 2050. Now RSI is close to oversold level, and STO is below 30, OBV is going down as well. Therefore it's not the best time to open the short/put position for short-term profit, as the market might have a upside correction any time according to STO. On the other hand, reversal of down trend is unlikely.


Daily chart:

• The obviously triangle pattern was broken in the end of the last month.
• Three indicators show a bearish pattern, but look like approaching to a near term bottom. A upside correction is expected, but no very significant.

It seems it's better to wait a few days until the long term trend line on the weekly chart is broken. From weekly chart it seems people have little interest to test the broken trend line and the downward movement is quite straightforward, is this caused by over-valuation of the entire technical sector so people want to lock the profit and get out as soon as possible? I don't know.

Mar8 weekly chart reading: DIA

Last prediction: In the week before last week I predicted that: 1) previous trend would continue, i.e., go down; 2) suspected that market might give us a surprise, i.e., a upward breakout. What the market did was: 1) firstly a upward breakout, it was a fake one because the volume was small; 2) then going down again with slightly bigger volume. This means my prediction was right.

Action: if I had no guidance I would have closed March call options and opened farther month put options. But I didn't, and hadn't set up any hedges. Because I followed the highhand's advice that "no action is action" and trusted that "the market is at the bottom and will rally soon". The last two week has approved that my action was stupid.

Weekly: see the big trend first.

from the chart I can see that:

• the intermediate bullish trend started from July 2006 was broken in 2007. The thin trend line was challenged in Aug 2007, but in that week the volume was huge and the close price was above the trend line, so vaguely the trend was still not reversed, afterward it was broken in Nov 2007 with significant volume, note that both STO and OBV were down while the former signal was way above 50, and RSI was neutral in that week, this may indicate that the market momentum was not weak. Then the breakout of this thin trend line got tested with decreasing volume. Finally in the last week of 2007 the bold trend line was broken. Note that although the volume was very small, but RSI, STO and OBV were going down, and both RSI and STO were crossing below 50, this may indicate the market momentum was weakened further. On the next day the breakout was confirmed by a big down with big volume.
• The slope of the intermediate bullish trend line is quite steep, so I put a long term trend line, which was started in Aug 2005. Roughly it has been tested three times but it hasn't been reversed yet.
• When DIA made a new high in Oct 2007, the volume was small and divergence in RSI indicated that there would be no higher high later. In the next week there was a big down with big volume and this was possibly due to fear of market crash.
  
• Triangle pattern since Jan 2008: no matter it is a symmetric triangle or upward triangle, it IS a typical triangle pattern with decreasing volume, and this means the previous trend will continue. It has broken out in the last week with significant volume. Although the lower edge of the triangle may be tested, i.e., there might be sucker's rally, it is unlikely that the downward trend line started in last Dec will be violated.
  

Now RSI, OBV, and STO all indicate that the market will go further down. RSI and STO have space for further downside movement. According to J. Murphy, the triangle pattern may pull down the price to under 100. Considered that the volume is small between 110 and 118, the long term trend line may be broken easily and DIA may go down to 110.x. However it is unclear if it can really dive under 100.

Daily chart:
What will happen next? The daily chart tells the near-term trend, and the following is my opinion on it.

• If the price doesn't go above the neck line (started on the last Aug), the down trend will persist.
• Previously there was a triangle pattern and we got a breakout in the last week of Feb. However the volume was not strong enough. With further up and down, it had become a bigger triangle pattern by the end of Feb.
• In the first week of Mar the new triangle pattern had a breakout and the volume is higher than the ones before breakout. Therefore it should be real.
• Now all three indicators, RSI, STO and OBV are going down. RSI is not oversold, STO is just crossing below 50. So the near-term downtrend is not over yet.

The triangle pattern will likely be tested, although the near term is still down. I don't expect DIA can go above 126, but 121 is possible in the next one or two weeks, and that time should be a good chance to open short/put positions.