Archive for December, 2006

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Hot AAPL Cider, Anyone?

HA!

Mmmm, I love the smell of roasted Apples in the morning.

 

AAPL: So Far, So Good

Only one chart tonight:

AAPL

We are at that point where we’ll know very soon how this story turns out. Probably tomorrow. At this point it looks like a classic pullback, diminishing volume and all. If I weren’t already short, I’d see a break of today’s low as a potential entry tomorrow. If it behaves really well, I may use that as a point to add to my (short) position.

Stop still stays the same, since today printed another higher low, and I don’t move my short stops (or second basemen) on higher lows.

 

Unique Gifts (Shameless Plug)

An old friend makes one-off art pieces - copper trees in driftwood, stained-glass lamps in driftwood, and stained-glass crosses. Prices range from about $30 to over $500. These things look like they’d be some of the most unique and cherished gifts you’ve ever given.

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Have Earnings Peaked?

A link I discovered in… my own sidebar. Hell, that makes my job so much easier! Note the reference to GS, whose chart I’ve detailed in the previous post:

Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. will be hard-pressed in 2007 to match this year’s profits with the U.S. economy growing at the slowest pace in a year and interest rates rising in Europe and Japan.

This is from Bloomberg.com.

 

QQQQ, AAPL, GLD, and a look at GS

First, Friday’s action on the Qs:

QQQQ

Friday printed another Thrusting Bearish candlestick within this apparent topping formation. For a longer-term trade, I’m still watching for a break through the 43.20s, and if we get that break, I’d now set my “loosey-goosey” stop at the second high of the formation- on 12/5, at 44.55, and my position size accordingly. For example: With an initial potential loss, or “R“, of about 1.30, if I wished to risk $100 on the trade, I’d need to short $100/1.32, or about 75 shares.

I’d like to point out here that, had I left my stop alone when I got short on 11/27, I’d still be short and in pretty good shape. A little more patience is often the key to better trading. A concept to which I’m sure many of you can relate– we’re often faced with a choice between making money and trading. Sometimes making money requires you to sit still. Sometimes not trading is the hardest part of all. Check out Lloyd’s pursuit of fewer, better trades over at The Miseducated Daytrader for some great, introspective thoughts on the subject. Also X’s post Chasing Success, Again — which induced a lot of reflection in most of us.

Also note that we keep coming back, over and over, again and again, to the fact that success is not in how many setups you can spot or what expensive software you use… it always comes back to something more personal, more psychological… something inside.

 

On to Apple…

AAPL

A retrace into the drop, lower volume, finished below the halfway point between the day’s high and low. Short still intact. Higher low, so stop stays the same.

 

Gold pulled something of a fakeout:

GLD

It gapped up on the open, then reversed and fell throughout the day. I was looking for an entry above 63.13, which was triggered, but the OGR (opening gap reversal) was the signal to take that trade back off, for a loss of about 15 cents.

Was gold’s action correlated with the dollar again?

EURUSD

Well, duh!, of course it was! Dollar gets stronger, takes fewer of them to buy the commodity, price of commodity in dollars decreases.

 

A commenter (thank you!) on the previous post pointed out the beautiful Bearish Engulfing candlestick at the top of a long uptrend in Goldman Sachs (GS). It was textbook, with multiple levels of resistance right at the $200.00 level. However, the break didn’t happen- $200 held to the penny, and we got a strong rally thru the end of the day:

GS

A couple of things about Friday’s action concern me:

  • The stock formed a Long White (blue) Line- the buying pressure continued throughout the day

  • Friday finished at 205.10, above the 11/27/06 high of 203.35, and, for you Fibonacci fans, also above the 61.8% retracement of the previous (Bearish Engulfing) day’s range, or 204.14.

This action on Friday appears to show some remaining buying interest in GS, and although I’d still love to get a shorting opportunity on this stock, I think I’ll now take a little longer-term view:

GS

Dave Landry’s Big Blue Arrow is one of the finest indicators around. I think he’s got trademark rights on the color blue :), so I drew a green one. No doubt which way the big arrow is pointing on this longer chart.

So, what to do? Right now I’m watching for a breakdown past the 11/28/06 low of 191.50, a followthrough downward thrust, then a retracement (up) on decreasing volume, at which point I’d get short, as my friend Mr. Bananaweeds says, with great vigor.

 

Who Wears Short Shorts? AAPL Wears Short Shorts!

Anybody else old enough to remember the “We Wear Short Shorts” commercials?

I’ve said before that the market likes to make its moves with as few people on board as possible. The way that extrapolates to our trading: remember the times where we see a setup, take a trade, then get whipsawed, stopped, spanked, and stopped some more until we finally throw the computer out the window and ignore it all for a while, only to come back and see we missed the big move by the skin of our teeth.

What to do? Well somewhere between giving up and not trading at all and going on TILT and overtrading there lies the path of backing up, taking a deep breath (or seven), then walking right back in and doing what you know. Keep on keepin’ on, as we say down here.

Soon, Mr. Jobs. Soon. (from last night’s post)

And me, I know Apple has been setting up over 89.50 for some time now. Gave Mr. Dow and Mr. Jones my notice last night that I weren’t skeered, and today they called my bluff:

AAPL

Would have been a beautiful daytrade, but I was at the Cancer Center sniffing chemo fumes. But my assistant, Ms. Stop Limit, was ever watchful and got me short for the swing trade entry I’ve been anticipating.

Here’s a look at it on a daily chart:

AAPL

It would take a massive rally to undo this break. Not impossible by any means, but improbable, which is what traders and p*ker players are looking for. Not certainty, not clairvoyance. Technical Analysis is about gauging probabilities, not predicting the future, and the misunderstanding of the difference is what gets TA its negative hocus-pocus image and “cult of the naive” following.

 

Also a little more on Q (that devious fellow). I’ve written many times before about the significance of high-volume bars, and have noted that since such a bar formed on the Qs on 11/8/06, the increasing price on diminishing volume has looked very much like topping action. Tonight I want to point out the significance of the 43.26 area I mentioned last night:

QQQQ

Not only would a break through the 43.20s be a failure of the recent range low, it would represent a longer-term thrust- and- failure above that 11/8 high-volume bar. Coincident levels of support and resistance. Keep an eye on the 43.20s!

 

Of course I can’t neglect dollars and gold. Look at a current chart of the dollar vs. euro and see if you don’t spot a nice little flag in that upper right corner:

EURUSD

If/When that little pullback breaks to the upside (i.e. dollar continues to weaken), the price of gold will increase, and I’ll have another swing trade entry. Here’s the GLD chart with that setup:

GLD

We could use today’s Dragonfly Doji to enter a trade, but with that resistance just above at 63.13, might as well wait for a break of that as a stronger entry and use the bottom of today’s bar as a stop. Of course, if the dollar and gold continue their pullback, the entry and stop points will change based on the chart.

Time for sleep. Nite.

 

Latest QQQQ and AAPL setups; Daytrades on NVLS and SAN

Just watching and waiting on the Qs:

QQQQ

A break below 43.26 could spell swing short entry. Right now, a reasonable stop would be above the Tuesday high of 44.55. And of course there’s the 11/24 high of 44.86 as either a breakout point or a stop, should we continue to wander.

 

Had an order in today to sell Apple short on a break of 89.50. Got all the way down to 89.67, and didn’t quite trigger:

AAPL

Soon, Mr. Jobs, soon.

 

Couple of trades this morning before work. One was on Novellus:

NVLS

Nice steady pullback and break. Got short 500 shares on the break at 33.18. It proceeded to head down obediently, and I would have normally taken off half of the position near the opening range low (guaranteed resistance). However, today I had to be at work at the ICK! other job at 1030 (1130 EST), and as I was heading towards the door at just after 1010, it tagged the O.R. low, and I decided to go ahead and cover the entire 500 shares since I wouldn’t be able to monitor it properly after that. Turned out to be a good decision today:

NVLS

It came all the way back to the day’s high, then failed again, providing an even more profitable trade entry off of the 1300 EST Dummy Spot. Alas, I was in the surgery satellite pharmacy discussing hyaluronidase right about then. Too bad.

 

On the other trade, I basically broke even, but I keep thinking there’s got to be some way to catch a move like this:

SAN

I had gotten short on the break of the 0950 EST bar’s low of 46.37. On the break, the price just surged downward, then started ticking back up. I had plenty of time to cover, and was sitting at the computer watching it. Just had no parameters for dealing with such a situation. Here’s a zoom-in to the 1-min chart to show the action:

SAN

I ended up covering for breakeven after commissions, plus a dollar or two. Left quite a bit on the table here.

So here’s the question: Anyone got any suggestions as to how to capture these sudden moves… sell on a break of the .786 Fib of any wide-range thrust bar like this? (Note: the “usual” Fib levels gave no clear clue)… Cover if you’re on board for a doubling of the day’s range? Me, I got nuthin’. Comments welcome.

 

Chuck Lorre Vanity Cards

CHUCK LORRE PRODUCTIONS #106

The Buddha taught that the first principle of existence is impermanence.
Absolutely everything in this universe is impermanent.
Impermanence creates uncertainty.
I don’t know about you, but I have a very low tolerance for uncertainty.
Uncertainty causes me discomfort.
Discomfort causes me to think stupid things.
Stupid thoughts cause me to take stupid actions.
My stupid actions bring about unfortunate results.
Luckily, the unfortunate results are impermanent.
Is this a great universe or what?

Remember those Vanity Cards that would flash up for about a half a second at the end of Chuck Lorre’s productions (Dharma & Greg, Two and a Half Men)? They’re all reproduced at his website for your entertainment.

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