Rino: Market View

Did

do this today???

For the time being, there won't be any event that will shake the market or an individual stock. Most of the earnings have been reported, the Fed rate cut done, and the end of October portfolio cleanup also finished. The market should show some stability over the next few weeks. No more of this craziness... just take a look at CROX. Technical analysis goes right out the window as CROX took a major hit in the after hours to fall nearly 20 pts.

Rino: Market View

Frustration

before

the FOMC meeting...

Simon: Case Study: UTX - cautious buy

important to keep the stop very tight, just under the uptrend and your risk / reward will make this trade a good one.

Rino: Charting before Earnings

below is a clip from cnbc covering two of the stocks that are reporting their earnings tomorrow.
the insight from their chartology section is worth noting.

http://www.cnbc.com/id/15840232?video=581216034

Simon: Great Cramer Tips

This link is devoted to Cramer's show after last weeks huge 367 pt drop on friday. If i had known of these tips earlier, i would have gotten out before the market took away most of my hard earned gains. being a pig has cost me deerly....i especially love rule # 1, 4, and 5....

http://www.cnbc.com/id/21383059

Simon: Case Study - XLP and CVS

Research for the major sector ETFs showed that the strongest 2 sectors are tech and consumer staples (XLP). Above is a chart of XLP and its strongest holding, CVS. As the market is still undecided, i would not buy in now. But if the next wave is a bull wave, i would seriously get into CVS and hopefully on a nice pullback.

Simon: Case Study - SMH + AMAT

with SMH having a head and shoulders move and well under performing the major indexes, i decided to take a look at one of its biggest components, AMAT. looks like a good PUT play but with fed speaking next week and small downside potential, i will most likely stay out of it for now. if you are hoping to trade, buy SMH on the downside and hold until it breaks the stop at 35. unsure if i will buy in.

Simon: Good article on ETF trading

below is a great article on how to use ETFs to help with your screening process and a list of the most popular ETFs

http://www.smartmoney.com/options/index.cfm?story=sfo-2005septetf

Simon: Trading Strengths

As a trader, i am always searching for ways to improve my trading strategies. Last week i wrote about my trading weaknesses, this week i am writing about my strengths. With a combination of awareness in both my strengths and weaknesses, i should be able to come up with a consistently profitable trading strategy and psychology.

1. constantly looking for new ideas and techniques. Whether i am doing bad or good in the market, i reserve a part of my day to reading trader's blogs, reading a stock market book, or reevaluating my own trading technique. only the truly stubborn and cocky will assume that the market is simple and their trading is no need of improvement. i have learned throughout the trading year that i have much to learn and that trading is not anywhere as easy as it seems. me and the other titan have gotten ourselves into a very risky and tough business and only if we can keep improving, can we keep up with the big boys. i don't believe in just staring at charts watching the ticks move up and down (like the other Titan has been doing for the past hour). I rather spend my time looking for the next big trade or a new technique to incorporate into my analysis.

2. i enjoy trading. in fact, i can say honestly that i love it. love and hate maybe. without this love, i would have been out of the market on the first slump in my account. i am driven because i enjoy it. waking up and seeing the market is something i look forward to. trying to figure out the complex puzzle of the market and trader's psychology never gets boring. i don't think that any trader can make it if they don't have the passion for the market. i believe that success is in doing what u are passionate in. it is this same passion that i see my friend, Rino, have. he is (un)successful because of his passion. when i lose this love, it will be time to retire.

3. despite a weakness at times, i consider my emotions one of my strengths. its similar to my passion. the dips and peaks in emotion keep this game very fun. i feel alive through emotions. good traders supposedly aren't emotional to events in the market. i can either take my emotions and suppress them but instead i have learned to use it sometimes to my advantage. as long as it doesn't get in the way of sound judgment, i think it can be a benefit to my strategy.

4. economics degree. i feel that my education in economics back in college helps me a lot. i can differentiate important news from unimportant news. i can see news from a more unbiased direction to remove most of the clutter that confuses traders.

All these strengths are there. Only problem is that i haven't used them in their most useful way. My current goal, through all this sideways, trendless action of the market is to improve my strategy, mostly in using goals and being aware of my weaknesses.

Simon: Technical Analysis 10/24 (W)

Nasdaq QQQQ - hold





Dow Jones Index - hold







S&P 500 - hold





I don't see a strong trend going on in the market right now. picking stocks is like shooting darts without a trend. best to wait it out til more evidence of a new trend starting or an old trend resuming.

Simon: What kind of trader are you?

i read this great post describing the top 4 losing types of traders...i see myself as a half between the frustrated and anxious...which type are you?

http://traderfeed.blogspot.com/2007/10/four-problem-traders-four-trading.html

Rino: Market Outlook

The market is currently in a correction mode. The major bull market trend is still intact which I believe will restart in the near future. However, for the time being, mini bears rule the market. The last two days of positive gains in the market has no strength. It was based on outstanding performances of a handful of stocks, all in tech sector no less. The market as a whole needs more time to complete the necessary pullback.

As stated above, my long term outlook is still very bullish. Even with the credit crisis and oil hitting $90/barrel, we were able to manage our way up to record highs in all three major markets. I do expect the pace of the gains from here on to be slower than in the past but before proven otherwise, my money is on the bulls.

My shorter term view is rather bearish. I believe the market will need about 2 weeks to correct itself fully. In the meantime, I expect the market to fluctuate back and forth, creating a highly volatile environment with a stronger tendency to the downside. So the action that we had in the past 3 days should not come as a surprise.

The surprise factor that is in store for us is the fed meeting on the 30th. The market may form a bottom and move up like it did in august. The market may be disappointed if it gets anything less than a half point cut like last meeting and plummet after the release. Regardless of the outcome, I will try my best to stay out of the market until this date. Only after the fed decision will the market have an idea of where to go.

The only way to profit from this market is to be a day trader. However, you either make a killing or be killed in this environment. Thus, I've chosen not to participate and instead, practice the art of patience. Even this morning I was tempted to insert money into the market. However, the time is not right to buy calls and buying puts will only work on a day by day basis.

Simon: Confused Trader

I am officially confused...the market is crazy...most especially so is the QQQQs...it erased most of its losses (if not all of its losses) from last week's breakdown of the markets and seems to have much more strength to it. Last week...after the breakdown, i was very sure that technicals are finally going to make sense and the market will make a strong pullback from its huge uptrend...i had many reasons to believe it too (which will be mentioned below)...therefore i got out of almost all of my positions (GOOG, FXI, EEM, EMC) because of the bad risk / reward in my options (calls). but come yesterday and today, the market seemed to have shrugged it all off and off to its annual 4th quarter rally. despite how hard it was to stay out of the market for AAPL and AMZN's earnings, my skepticism for this week's rally and my confusion of the overall technical picture has gotten me sidelined. The only thing i am fairly confident about is the downhill spiral of oil and gas-related stocks (USO, XOM, XLE)...since i can't make up my mind, i am staying with a current mindset that CASH IS KING!

below are my reasons for an upcoming bearish trend and my reasons for a bull trend.

BEAR because:

1. defaulted loans, no liquidity and less money for major financial institutions and regular traders. many people are defaulting and in this problem, about 1.1 million people. that is a lot of money taken away from companies and investors involved.

2. major runup of stocks mean no possibility for the earnings of most of the companies to balance it. google and amazon are strong examples of it. never before have i seen so much negative reactions to dim outlooks in the next quarter's earnings.

3. the interest rate cut we had and the others that will come ahead don't solve anything. these rallys because of rate cuts are always brief (when compared to history) and aren't solutions to long or medium term problems. in the past, these rallys occur, then fail, leaving the market in worse shape than before the rate cut.

4. many bulls, especially technical bull traders are fearful and skeptical.

5. the divergence and super-underperformance of S&P, IWM, and DOW compared with QQQQ shows a lack of agreement amongst the bulls. one market alone cannot carry the weight of the whole economy.

6. Divergence in technical oscillators is occuring in many stocks in many different sectors of the market.

7. many speculation plays (i.e...china and solar stocks) have occurred which usually marks the end of a rally.

BULL because:

1. there is a strong bull rally going on. trends have more possibilities of continuing than reversing.

2. it is impossible to spot tops. we can only have thoughtout guesses.

3. oscillators are secondary signals and are not strong enough, by themselves, to be pure buy or sell signals.

4. maybe the worst of the credit disaster is behind us. the bad has already been factored into the stocks.

5. my fear is making me bias. i can't see things as they really are and because i got burned last week, i feel that it can happen again so i rather stay bearish than go bullish and be aggressive.

6. the credit problem was and is over exaggerated.

7. maybe we cannot put so much emphasis on the American market when looking at stock evaluation because the world is so much more global now. with china and other countries being in big profits for our companies, a slowdown in America might not necessarily hurt their bottom line.


I got a good feeling that tomorrow will be a down day for all the major indexes. a little rebound was expected from last week's huge down day and that just occurred...so its time to resume the pullback. also, after hours trading for most of the tech names have been down after AMZN's earnings call. but who knows...i don't trust this prediction enough to place my own cash into it so i recommend u don't either.

Rino: Stock Valuation

My newest method to help me find some consistency in this volatile market environment is calculating what the company is worth. This is nothing new on wallstreet as P + E = M is the basic fundamental equation to price a stock. Nonetheless, I've neglected to use this equation and have thus far suffered mightily during the earning season.

So here are my predictions for 5 companies that are to report in the next two days.

AAPL - Monday after market close
Currently @ $170
I expect AAPL to beat the analyst estimate and report $1.00 per share in earnings.
With that EPS multiplied by current growth, my price target for AAPL by next earning period stands at $188.
I expect this stock to fall after earnings. However, after the earnings and a little pullback to around 150-155 area, I'd be a buyer.
Long Term - BULL; Short Term - BEAR

HAL - Monday before market open
Currently @ $39
I expect HAL to report $0.65 per share in earnings.
My price target for HAL is $40.
I see no surprise to the upside on this stock for the next quarter. However, expect big things for this stock after next earnings as I annoint this stock as the stock of 2008.
Long Term - BULL; Short Term - Not Interested

AMZN - Tuesday
Currently @ $90
I expect AMZN to report $0.16 EPS.
Price target of $105.
Like AAPL, I expect this stock to fall for now. I'd be a buyer after a moderate pullback.
Long Term - BULL; Short Term - BEAR

T - Tuesday
Currently @ $41.5
I expect T to report $0.77 EPS.
Price target of $57.
This stock has by far the largest discrepency between the current price vs my target price. I do not expect for it to reach $57 by January, but I do see a lot of upside to this stock. Pick up the stock if it falls enough today prior to earnings report.
Long Term - BULL; Short Term - WAIT & BUY

UPS - Tuesday
Currently @ $75
I expect UPS to report $1.03 EPS.
Price target of $80.
Not much upside or downside to this stock for the foreseeable future.
Long Term & Short Term - Nada

Simon: Price Targets

AAPL: 180, then pullback to 145....check out the 180...i think it will hit before monday's earnings...

GOOG: 660, then a pull back to 600 (610 to be conservative)

SLB: 140, then pullback to 120 (i want to say 150 but conservative is 140)

FXI: 227, seeing this target makes me realize just how bad my decision was to buy this yesterday.

updates on my predictions as the price moves...

SIDENOTE: nickname change in progress...i will be known as "the chaser" instead of the closer or mr. bartoromo...thinks it more fitting..."I make bad news go down smooth"

Simon: Self Evaluation on Trading Flaws

As the bulls take a breather on wall street...so too will i...on off days, it is best to look back at recent trades to evaluate your strategy and see key flaws that might be holding down your portfolio and digging into your hard earned profits. looking back, i see that i have many reoccuring flaws that ruin the performance of my portfolio. despite the knowledge of it and efforts to keep level headed during trading, better judgment does not always prevail and i become a slave of the overly mentioned and all too true problem of "greed and fear. "

as a new trader...just one year in the market, i see myself fitting the amateur trader...the dumb trader all too often...much more often during the un-bull markets and during consolidation of trends...the main reason for this post as well as any post on this blog or even the creation of the blog is to help myself with the psychology of trading. i tell myself all too often that i learned from my mistakes...and i do...problem is, i forget the lessons quickly...its like people and news...we are affected strongly when they come out and vow that they have changed our lives and our perception of life and the world...but after a month, year or several years, the past news is all a blur and the lesson learned disappears with it...

my biggest flaws:

1. i love gaps...i chase and love to chase them...they are the most risky and i make it even more risky by buying overpriced, overly volatile options to try to get a lil piece of the run up despite very bad risk / reward ratios...

the solution: don't buy at the end of the day...in the last 1/2 hour on a gap day, chances a real high that buyers are in it just for greed, not technical or fundamental reasons...basically in it chasing with the crowd instead of in it because its a good buy. the days after...such as today with FXI and PTR after yesterday's huge run-ups...drop on a pullback gap...profit takers come in overnight and in the morning...good traders see that yesterday moved too much for it to be sustainable and rather get out of their positions and hold onto quick big profits instead of risking it all on a little bit more...they are the smart ones...the un-greedy...the disciplined...follow these people...

2. i love earnings...i never learn...well...i haven't learned yet...earnings move fast and despite companies beating the street or falling short of it, it does not correlate with the stock movement 100%. what does that mean? means that you are risking a lot...putting a lot on the line, to take a stab in the dark...fundamentals might get u right on the company's earnings but not on the price movement...and technicals might give u a better estimate of the price movement, but crazy earnings ...unpredictable news and bad or good conference calls can mess up your positions....

solutions: earnings are fun as hell...don't shut yourself off from them. but most of your money should be out of them. the wild ride of earnings is most profitable and most fun in the longterm when you are on the sidelines just watching. the heartbreaks are killer...don't get yourself involved...if u can't fight the itch...put less than $100 in it...i mean it...less than $100. don't think about percentages of your portfolio...think the biggest bill in your wallet...its a pair of shoes u are putting at risk...no more...so during earnings, have fun watching and setting up strong technical trades for when earnings for the company is over...thats what real titans of the market do...

3. worst probably of all my flaws is to get mad and cheated to find myself on the sidelines during huge price moves in companies. this is the reason for the reoccurance of flaw #1 and 2 by the way. its easier to preach staying out of the market when its volatile than it is to do it....when i see a huge spike in FXI, GOOG, AAPL, STP, LDK, i see that i lost money even though in reality i lost nothing. i care too much about the potential gains that i lost. In fact, when i am not staring at Ms. Bartoromo and Ms. Brennan, i am mostly concentrated on the stock ticker and looking at all the huge numbers, double digit gainers...its a real bad habit...should learn to be happy and most concerned with my own portfolio...not potential moves i missed out on...very similar to how i look at life and how i waste my energy chasing the past and getting mad at the missed opportunities instead of looking forward looking for the next big thing.

solution: this is all experience...that is how i am to learn...i am still new and haven't learned to keep huge emotions out of my trading decisions...i don't know how else to solve this other than getting used to huge gains and realizing that the best thing i can do is learn from them by seeing how they developed and looking for the next stock that might do the same.

UPDATE: solution to #3...look at stockcharts with fresh eyes everyday. buy if it is a buy at the moment...hold if its a buy...and sell if it just doesnt look like what u hoped...like my mentor Brian Shannon, defence and price pays...thats it!...great advice from a disciplined trader. take some time to support his blog at alphatrends.blogspot.com....great advice without the emotions and huge amateur flaws

Rino: Market Preview

Just when you thought you had the market all read, the market teaches you a lesson.

However, this time I can see the trap that lies ahead. The temptation, that is GOOG earnings, nearly blind sided me into thinking that I can just switch to cruise control til the end of the year.
The early bird does not catch the worm this time. He will dine on a rotten piece of meat that'll leave a sour taste in his mouth for the next 10 days, beginning this friday (possibly even as early as late tomorrow). *note: option expiration on friday.

GOOG's earnings report was the talk of the town today. CNBC had coverage on it all day long. There's just too much hoopla built up for this report which will create a superficial rise in the stock price for better part of the day tomorrow. It's then likely to fizzle after the report. I'm prepared to jump ship on this call option as soon as 650-660 level is attained during the day.

My view on the market being Bullish until the end of year still stands strong. However, there is going to be a roadblock until the end of this month. Once October is in the rearview mirror and S&P 500 @ 1500, Nasdaq @ 2750, & DJIA @ 13600, the coast is clear from there on until December.

If you are a stock trader, retreat into cash position and take a nice vacation until end of the month. If you are an investor, hold onto your positions and do a little 'mon back on the pullback. If you are an aggressive trader, like myself, shorting and buying puts will work just fine for the time being. You may choose a Chinese stock that's on a ridiculous run like PTR to short on a very short time frame. Or you may choose a housing stock that's still in search of a bottom like HD to buy a put in. Other than that, the only other safe haven during this upcoming storm is in the big oil stocks, most notably XOM, COP, CVX, etc. These three stocks are a sure bet to test the 100 dollar price tag in the near future.

"The best part of a roller coaster ride is the sudden fall. Don't be scared. Raise up your arms and enjoy it!" ~ R. Choi

Simon: Ebay Earnings and Market Forecast Ahead

Ebay earnings were well received today in the after hours trading but quickly dissipated....like most after-hours trades, it is not very important...most important is that tech earnings for Q3 are off to a great start. This goes well and gives fundamental support for why the strong bullishness in the tech sector. This of course with the weakness in the DJIA and the dissapointing financial sector earnings.

Unlike my counterpart, Rino, i am more cautious about the market. I don't like the divergence between the DJIA and the QQQQ's...it is good that SPY is going with the QQQQ's but they are far from having a strong rally. it is a weak near-term rally for the SPY at best. Not to mention the lack of volume in the rally. I think that this week will close out strong but that this coming monday might bring trouble. I won't be holding any of my large positions into the weekend. The overall market is still undecided, therefore i rather stay clear of any huge negative events that might trigger a big selloff after the weekend.

Ahead of earnings tomorrow, i still like GOOG. I got in on a modest position today and think that it can rally big for at least tomorrow and friday. Earnings rallies for GOOG are usually short lived so i plan to sell it late afternoon friday if the rally goes as planned. Most people are expecting huge things from GOOG so if they can't deliver, look out for a huge drop after earnings.

FXI is another stock i am looking at. I bought an out-of-money call on it believing that it will continue its rally up for at least the new couple of days. It is very volatile so be careful. Strength and optimism in china mixed with a strong rally are reasons to like this ETF. I like EEM for similar reasons....

Potential Trades:

DRYS (bullish)
CROX (bullish)
USO (bearish...its about time for oil to take a breather)

Rino: Market Outlook

Today's midday pullback is a gift!!
BUY BUY BUY!

The market is done resting and tomorrow morning, tech will lead the market forward.

If you were looking for a pullback to reenter this bull market run, now is the time. I would not be surprised to see buyers come in late today and create a bottom right here, right now! (11:45am)

Now, I must admit that housing and financials are still in a rut. But Energy stocks are still strong and will remain strong for the time being. And of course, we have the big name technology stocks that will bring the qqqq back into the virgin territory.

I'd load heavily on stocks that have worked for you for the past two months.
You've got AAPL, RIMM, AMZN, EMC, VMW.

GOOG and BIDU are very attractive speculative plays at this point with GooG's earnings report due out tomorrow after the market close. I'd closely monitor these stocks before taking a big position or feel free to take a small position in a far out-of-the-money call like me. Jackpot!

A couple of other plays that I like are FSLR and FLR. These are two very strong stocks and they are not done going up! Ride them higher.

I remind you again, the BULLs are coming.

"Vanity is here to stay." ~ R. Choi

Simon: Earnings Season

With earnings season upon us, it is more important to use good judgment and fundamental analysis along with our technical analysis. It is real easy to chase stocks and do short term options (within 2 months of expiration), unfortunately, they rarely work out.

Yahoo and intel's strong earnings today triggered a strong after market rally in almost all of the tech and internet related stocks today. is this the catalyst we needed to get out of this pullback? or will it be short lived? how about ebay's earning's tomorrow? my prediction is that tomorrow will open big but dip later on in the day. ebay's earnings will be modest at best and trigger a thursday morning selloff before google's earnings announcement. if the pullback is still in tact before the google earnings, i predict google to way outperform and take the entire qqqq to a huge day on friday. weak monday and strong fridays is a good generalization when it comes to the market. all these predictions are based on my trading experience and the look at the technicals that seem to still be asking for a stronger correction before a strong bounce back. the situation i planned out would be ideal but the market listens to no one...so just pay attention and don't chase. good traders adapt to the market, bad traders are stubborn and try to have the market adapt to them (which of course never happens)...at this point, with the unpredictability in the market from earnings, i have turned into a day trader using tight stops and setting short targets.

happy trading!

Inaugural Post

Simon Louie a.k.a. The Closer, Mr. Bartoromo (technical swing trader specializing in bull rallies):

the market -

still bullish. we are in a slight correction in this huge uptrend that should last through the holidays. but be careful. the markets, especially the QQQQs and the Chinese stocks have run up so much that a stronger correction would be healthy. timing and patience is key. don't place more than 20% of your assets into speculative plays, i.e. earnings setups. If you have an itch to take a risk, place 5% in each and go wild. But remember that your main cash flow will come from strong technical patterns and going with the overall trend (of the market). QQQQs remain the leader and if this rally is to continue, the Nasdaq will be the leader. Be careful of FXI as huge drops in the China trades can cause panic to the overall market. Just stay alert and be more cautious these next couple of weeks.

portfolio:

DRYS (bearish) - huge volume today in the bearish engulfing candle. huge run-up makes the risk/reward good. i own this and will have a tight stop on it. my target is 106 for i don't think drys is in a reversal as much as just a 38% retracement.

EMC (bullish) - tech is strong and VMW is very strong. I have a small position in this and like it because of the huge position it holds in VMW. It just hit its trendline today and is ready to restart its bull run.

possible setups:

GOOG (bullish) - this is a speculative earnings play. earlier this month i predicted a 650 target. with this pulback, i see goog doing well enough to hit 650, and with a strong likelihood of it brushing 700. i am cautious though. bullish signs include a strong uptrend, past history of strong 3rd quarter earnings, yahoo's impressive earnings, its merely modest run-up this year (compared to AAPL, RIMM, BIDU, chinese plays), speculation of Gphone, and absence of divergence in the oscillators.

VMW (bullish) - its hitting its trendline and ready to bounce up. it has moved a lot already but still has much more room to grow. i believe it can go to 130.

CROX (bullish) - the lack of participation with the bull market these past two weeks shows a good pullback to its moving averages. it seems ripe for a continuation bull rally once this market gets moving again.