SPX Resumes its Wild Zig-Zag like Moves; Sell in May & Go Away Delays

    Be aggressive at high probability moments, but risk small amounts to make big profits.

-Paul Tudor Jones

The U.S. markets have celebrated the benign Non-Farm Payroll numbers Friday by leaping 1.3% in S&P 500,  1.5% in Dow Jones  and 1.2% in Nasdaq respectively, three major indices now above their 21 & 50-day moving averages, but trading volume lacking overall.

The Russell 2000 index is weaker in comparison, still below its both 21-day & 50-day moving averages. Biotech sector showed a bit more strength as IBB bounced off a consolidation area and closed above its 50-day MA on good volume, nice to see. Biotech has been the strongest sector for recent years until it topped out in mid-March. Continuous merge news in biotech has finally played a positive role. But, as long as they are stuck in a trading range without breaking out into a new high, it remains a trading market.

Recently, many leading stocks gapped down hard on the earning reports, including CMG, CRM, BIDU, TWTR, YELP, WHR, BIIB, GMCR, PCLN, BWLD, SSYS, DDD, WYNN, MNST, etc. Even the ones with decent earning reports have reversed lower from their recent year highs and been chopping around in a trading range, such as AAPL, GS, AMGN, SWKS. These nuances occurred in individual stocks show fairly weak internals in the current markets. A six-year-old bull market is indeed getting too old to sustain its rally energetically.

For many trader who are used to upward moving markets, it’s been challenging to trade such a market with sharp up and down days in zig-zag moves. If you missed one day of big rally, you would be late to chase the gain at the top trading range; conversely, it is similar for shorts who have to cover positions quickly.

However, if you observe and listen to markets carefully, you would have made decent trades, either playing conservatively with smaller size of long positions when SPY hit the bottom trading range around 207ish while the Nasdaq McClellan Oscillator got close to minors 50, an very oversold level for short term trading, or shorting SPY near resistance of 212ish after it had reversal bars, although playing both sides requires quick reaction. By the way, the real time oscillator can be obtained on Dan Zanger’s website: http://www.chartpattern.com if you are a member. For many traders including me who like to trade SPY options, it’s good to play near-the-money call or put options for the expiration days in the following month accordingly. Weekly options can be very nerve wrecking with time value decay. The entry levels with cushion for the options are very important.

SPY currently sits around its top trading range of 212 after the huge bounce from two previous sessions ago when it hit recent low of 206.76 at the 100-day sma line. With the slow stochastic showing it is still slightly oversold, McClellan Oscillator at minus 10, with a few days before option expiration Friday approaching, I wonder if SPY may still have a bit room to move up before it will hit a brick wall again. Let’s see how it will play out next a few days.

It has been nearly 7 months since SPY has gained 30 pints (SPX with 300 pts) without a real correction. Will the “Seasonal Factor” of Sell in May and Go Away be at play? Let’s watch and see!

Chart of SPY.gif 5-10-2015 with note

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It is time to be prudent to cover shorts!

“Better to stop short than fill to the brim.” – Taoism

One month after I mentioned about toppy area at 190ish for SPY, market has been in correction mode. Now SPY has been stugging below/near its 100-day sma line for three days, QQQ is near its 200-day sma; DIA is also at its 100-day sma line.

Today is April 15th, tax filling due date, Full moon day, Passover, and it’s also two day before the option expiration day Thursday due to the short holiday trading week.

Market has acted wildly as SPY faded oversold bounce as usual while many leaders continue to slice their important moving average lines. Some leaders are having the biggest one-day drop after the prolonged selloff, such as TSLA PCLN GOOG NFLX AMZN BIDU WYNN etc.., usually an indication of short-term capitulation selling.

Note that SPY is almost hit the lower line of its ascending channel, near the support level; also it’s 61.8% fib retracement level. While bearish behavior still dominates, to me, it is prudent to start covering shorts on the way down. SPY is in deeply oversold territory according to all technical indicators I track, and the oscillator reading again hit the recent low. I expect to see consolidation to be formed soon before resuming its downward move. As traders, our job is to know when to exit positions to protect gain. Don’t ignore that today is the third day that SPY has attempted to bounce from recent low of 181.50ish, likely a prelude for further oversold bounce.

Remember: “Better to stop short than fill to the brim.” – TaoismImage

Trading smart!

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Rotation Keeps Market Going!

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” – John Templeton

Last week the U. S. market has had seesawed sessions as expected. By Friday, all major indexes closed in fairly strong note. SPX closed at 1,556.89, only 6+ points from its year high of 1563, and 20 points from its 2007 high of 1576.

The strong finish was well helped by the month/quarter-end window dressing.  We saw rotation into some beaten down stocks lately, such as AAPL, VWM, SSYS, and MLNX.

Note: Beaten-down stocks VMW and MLNX both had sharp bounce from their recent lows, and then sold off from the big resistance levels at their 100-day SMA.

AAPL successfully closed above its 50-day SMA, its first time during its past six-month downward move. In my opinion, its next possible upside target would be 100-day SMA near 500-505 as volume should come in.

Conversely, the recent leading stocks have pulled back from their highs seen in GOOG, GS, ISRG, NFLX, KORS, EBAY, etc. , but some of them may see bounce along with market rally. Shorting them at current levels is risky.

The volume on the market upward move has been light recently, and it should pick up in the coming sessions. The volume may pick up until buying exhaustion is seen. Should we see euphoria-like rally before a short-term market top occurs? Let’s watch and see …

Notably, the disappointing earning related news caused bearish price action to LULU, ORCL and FDX. It demonstrates how vulnerable it is during the company earning time, especially when their rally had been extended for a very long time. With only a few weeks away from next earning season starting in April, we should get more per-earning warnings along the way.

It’s always good to be flexible and objective, especially in a choppy market with rotation going on. Remember: have trading plans, enter trades with nice cushion, and cut loss short. Happy trading!

Here is my SPX chart with notes: Chart of ~SPC daily chart with notes 3-24-2013

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The market is Shaky Again …

“When the forgotten old dogs begin to bark & spearhead the market advance, the stock market is on its last feeble legs.” – William O’Neil

Last week was triple-witching option expiration week, the market made small advance helped by the strength in bank and healthcare sectors, but many other leaders have behaved suspiciously with some sold off hard considerably. Internals were in doubt!

After a brief 3% correction, the market has reversed up and climbed nearly 5% for past three weeks.  S&P 500 rose over 68 points from its low of 1,485  hit on Feb. 26th to its high 1563.32 reached last Thursday.

But the market internals have weakened in recent sessions!

The strongest stocks are either stalling out or pulling back from their recent highs, such as GOOG, PCLN, AMZN, KORS, WHR, GS; the beaten down laggards bounced up sharply despite some of them retreating seen in VMW, MLNX, FSLR, AAPL; and also some weak names kept being sold off further to their year lows, such as ISRG, BIDU, ULTA, RAX, DDD, and ISRG is one of wild puppies mentioned repeatedly with huge bearish reversal. GOOG had an exhaustion gap when it hit recent high of 844 on big volume before pulling back, mentioned on Twitter.

There is a saying: Don’t short a strong market as 80% of stocks tend to follow the overall market trend. However, plenty of individual names have acted alone based upon their own charts and price action, not following the broad market trend, and it is an interesting character of the recent market rally.

In conclusion, there are a few caution signs for a serious market pullback:

  1. The market rally is now four-month old since November low, mature enough for serious profit taking.
  2. The volatility index or VIX is below year 2007 low near 11, a sign of complacency.
  3. The rotation seems to be running out of gas with only beaten down stock trying to snap back, helping market stay up.
  4. The random price and whipsawing action were seen everywhere, and it’s hard for traders to hold positions overnight, a sign of instability.

With the end month/quarter window dressing near, we will likely see further gyration moves as institutions would re allocate their portfolios. As traders, it’s time to keep our sense guarded, have powder dry, be flexible, and be objective. Best luck on trading!

Here is my SPX daily chart with notes:Chart of ~SPC daily chart with notes 3-17-2013

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Be Cautious When Market Changes Characters!

“Never be afraid of the normal movement, but be very fearful of abnormal movements, it is similar to a major change in personality” – Jesse Livermore

Despite closing near the high of day after a big day of sell off, the S&P index has traded in the narrow range of 25 points from 1490-1515 in past ten sessions. Lately it has been vacillating within a broader range since the Dow has hit the psychologically level of 14,000. SPY closed at 151.05, 0.43 off the session high of 151.48.

The gyration moves have changed traders’ stance toward market on daily basis;  random price action on individual stocks with big gaps continues. It has become a market of “Buy Dip, Sell Rip”. But how long will market rally last ?

Many stocks look fatigue and are well off from their recent highs after their earning reports, seen in IBM, WHR, LVS, AMZN, GOOG, MA, FB, etc.

When many stocks are becoming wild puppies and market behavior is becoming bipolar, it’s time to get defensive and cautious. Trade wisely with caution!

Here is my SPY daily chart with notes:Chart of SPY daily chart with notes 2-5-2013

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My Market View after Dow hit 14,000 …

Real movements do not end the day they start, and it takes time to complete the end of a genuine movement.  Never be afraid of the normal movement, but be very fearful of abnormal movements.” – Jesse Livermore

On the first day of February or last Friday, the market celebrated most upbeat economic news including the Job Report with nice move. Dow finally closed above the psychological level of 14,000, the S&P 500 closed up 0.7% at 1,513.17 and the Nasdaq rose 0.9%. SPY closed at 151.24. Vix dipped below 13 again. GOOG closed at its fresh new high above 775.

However, the market internals don’t look as good as the absolute gains shown on the major indexes.

Many leaders either had bearish reversals or stalled out with choppy action for the recent days, seen in PCLN, AMZN, FB, DDD, SSYS, MA, not mentioning the previous leading stocks AAPL, MLNX, VMW which barely bounced from their recent year lows. Retailers also were the weaker ones as many closed in red; additionally, the IBD 50 lost 1.1% for the week. As much as rotation is going on, stock picking is becoming more challenging for momentum or swing traders.

In an overbought market with lots of random price action with fast speed and wild swing, it is good to be aware of big gap up or down reacting to earning news as HFT (High Frequency Trading) has been playing a big role that either bring them down or up.

Following first 30-minute rule helps avoid getting chopped off . Y0u can see the picture of the wild price action in ISRG CMG on my Twitter picture section. First 30-minute rule: some big gaps related to news can be hard to interpret in first 15-30 minutes of trading, so it is good to let stocks settle before jumping in.

It’s important to be nimble and be patient with the entries levels for cushion. Keep an open mind for any price change. Happy trading to all!

Here are a few charts with my notes to share:

SPY 151.24 Up 1.54 Chart of SPY daily chart with note 2-3-2013

PCLN 685.56 Up 0.09 %)Chart of PCLN daily chart with note 2-3-2013

MA 518.71 Up 0.31Chart of MA daily chart with note 2-3-2013

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Wise Words by Lao Tzu

“If you are depressed, you are living in the past;

If you are anxious,  you are living in the future;

If you are at peace, you are living in the present.”

Lao Tzu

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AAPL, Market and Twitter

Dear readers,

This is my first blog for year 2013, and I wish everyone

A Happy, Healthy, and Prosperous New Year!

Today is Friday, Jan. 11th, 2013, the eighth trading session for the year. We have had huge market rally with all major indexes closing near or at their five-year highs: SPX closed at 1,472, almost unchanged; Nasdaq at 3,125.63, up 3.87; Dow at 13,488.4, up 17.3. A few recent strong sectors were weak seen in industrial, banks, and biotech; some technology stocks had good days led by FB, NFLX, RIMM, and BIDU. Meanwhile, some retailer stocks have showed lackluster action, such as LULU, TIF, M, and VFC. The rotation seems to be running out candidates soon.

WFC pulled back some after reporting its earning, similar to AA‘s post earning price action. To me, it’s somewhat warning sign as they both were sold off on the earning news after big run-ups.

Due to tremendous risk involved with trading during the earning season and option expiration week, please read those golden rules before your stocks report earnings: http://chartpattern.com/10_golden_rules.html

Ironically, if you’re a AAPL trader, its price action doesn’t make you feel that we are in such a bullish market. It might be one of the reasons that some traders including me are inclined to feel less optimistic about this market as AAPL closed at 520, near its four-month low.

Since I pointed out AAPL‘s toppy action on my chart back in Sept., it has been in a strong downtrend; therefore, it has automatically become the stock for me to short the most of time since then. You can see my AAPL daily chart with notes at the bottom of the page.

Just like many AAPL fans, I have tried to find reasons to believe that AAPL could rally with the market. I went to its stores and checked the business there, and I always saw busy crowds, especially the one in the Central Park in NYC during my New Year vacation. Indeed, a few AAPL store pictures I posted on Twitter seemed to have caused some upside moves before it reversed down. (I assume so, so please don’t laugh ;))

A few times when AAPL had a sharp bounce with wild gyration moves, I warned and even posted this proverb: One-day of sunshine doesn’t make it a summer. Gladly, I was told that my AAPL comments have saved some traders from being trapped. However, I also got bashed by a few traders who disagreed with me sometimes. They simply fall in love with the stock despite its bearish action.  They ignored such wisdom: “Markets are never wrong, opinions often are.”

I noticed that some well-respected traders don’t post their trades on Twitter, and I thought it is very wise. Not everyone has to trade everyday or day trade. When I used to post entries or exits during the trading hours, I received many replies asking questions about my trades, including basic knowledge for trading. It was very stressful and even opportunity costing because HFT (or High Frequency Trading) dominates trading world and it often causes sharp and fast mores with wild swings on many stocks. To me, nice trading requires good observation with clear thinking!

Now I tend to follow Jesse Livermore‘s wisdom: “I never hesitate to tell a man that I am bullish or bearish. But I don’t tell people to buy or sell any particular stocks.”

There are various trading methods and strategies involved with different trading plans and time frames for traders. Any one of them can work out well as long as traders are skilled with good risk management. I don’t follow others’ trades, so their market views are more important than their entry points or exits. Copying others’ trades eventually leads to failure in trading if not understanding the reasons behind.

I appreciate so many wonderful people on Twitter who have been supportive and encouraging. Sometimes different views on stocks suggested by others have helped me stay objective instead of being stubborn; and also, they have made me feel that it is worth spending time to do well-illustrated charts or write blogs about my market view even though my eyes might hurt after spending long hours on the computer.

In retrospect, it is interesting to recall how I started with Twitter!

In the past two years, I kept hearing about Twitter being mentioned by my favorite characters on CNBC.  Last year in March, my sister came to U.S. and lived with me for a few months. I was surprised that my quiet doctor sister enjoyed sharing her pictures and posts passionately on Chinese Twitter – Weibo by SINA. I then realized that Twitter had become such a popular social media place.

I signed up with Twitter in April, 2012, and started sharing my posts. I easily found a few well-known/popular traders to follow. But in the first week, one of them who is well known for his ego blocked me on a day when I posted opposite comments. What? Is this how I got treated by someone when I have just began to tweet? – That harsh experience has taught me that I needed to give new followers or chances before rejecting them. (My suggestion for new Twitter users: pick a favorite avatar for your profile instead of an egghead for credibility purpose.)

I love this motto by William Arthur Ward:

“Before you speak, listen.
Before you write, think.
Before you criticize, wait.
Before you quit, try.”

To me, Twitter is a great place for traders to share and learn from each others, but it’s not for making competition or bashing others in order to gain followers or to prove one’s superiority. Many of us as traders also enjoy sharing our passion in other areas in life, such as food, photos, or sports. But sometimes it’s uneasy to deal with unreasonable trolls on the internet. Today I burst into tears after I tried to put up with someone who kept attacking me as I made bearish comments on AAPL. It was not first time I dealt with it. Finally I had to push the “BLOCK” button, my second time. – Yes, it took me a while to do it for I prefer to be a classy lady who has tough mind with a tender heart. In real life, I never let negativity bother me for too long although I can be sensitive once for a while for being a woman.

I do my best to stay balanced by following Tao De Ting‘s teaching:

“Displaying self-righteousness, one reveals vanity.
Praising the self, one earns no respect.
Exaggerating achievements, one cannot long endure.”

I really enjoy people’s posts which are kind, objective, humorous, entertaining, educational, or informative. I smile every time when I see cute kids’ pictures posted by others. As the number of my followers grows on Twitter, I feel more responsible to bring real value and objective comments to the stream. I believe in treating others the way I want to be treated, and love everyone around me, and people in the world.

People first, then money.” – Suzie Oman says.

Thanks for reading and understanding, and wishing you best luck on trading! – May Peace, Love, and Prosperity be with us Forever!

Here is my AAPL one-year daily chart with notes at all major turning points:Chart of AAPL daily chart with major notes 1-11-2013

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Michael Bublé – Grown Up Christmas List

I wish everyone

A Safe and Merry Christmas! Happy Holidays!

No more lives torn apart

That wars would never start

And time would heal all hearts

Every man would have a friend

That right would always win

And love would never end

This is my grown-up Christmas list!




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Choppy Market Continues While Tech Giant AAPL Action Disappoints

– Happy Hanukkah!

Don’t take tips of any kind, no matter where they come from. I trade on my own information and follow my own methods. Keep the number of stocks you own to a controllable number.” – Jesse Livermore

 The price action for U.S. market has been similar to last week as it remains a stock picking one with the rotation going on. Last week, SPY was chopped around at 141 – 143. By last Friday, the Dow was up 81 points; the S&P was up 4 points to 1,418.07; SPY closed at 142.41 near its higher trading range for the recent weeks, helped by the better job report and financial sector being outperformed.

However, tech giant AAPL was the biggest story of the week when it was sold off so hard by wiping out most of its previous gain since its November outside reversal. I am not surprised by its bearish reversal from 594ish since I pointed out to watch its resistance area on the tech leaders we watch closely.

My last post stated as below:

 “I’ll watch those resistance levels for these stocks:
SPY near 143; GOOG resistance area 700-705; AAPL 590-600, AMZN 250-255; PCLN 665-675. Any rejection from this level on heavy volume could spell some trouble.”

Indeed, they all came off those resistance levels! 

AAPL dropped 60 plus points from its recent high of 594ish which points loss surpassed my expectation since the broad market was holding up well. AAPL broke down every pivot point I was watching until it hit the low of 519ish before snapping back and then down. Some traders tried to catch the falling knife from 572, but HFT was way too fast than many could handle.

Its action just demonstrates that anything could happen to darling stocks once they are out of favor and after their charts are damaged technically.

Closing at 533.25 near its recent low, AAPL is still at risk of selling off further. I have 485 as the next downside destination if it breaks 505 which is its recent low.

GOOG and PCLN came off from their resistance levels modestly. But GOOG’s Friday close at 685 was an alarming sign, and breaking 680ish could see a similar plunge to what AAPL did, IMO. Could my target 625 be seen once GOOG does that?

SPY could see 143-144 as next upside level according to its chart.

Some leaders which made new highs have been choppy with wild swings, such as DDD, SSYS, requiring to be babysat. After what happened to QCOR, MLNX, AAPL, etc, which stock would be safe?

FCX got plunged on the merge news to its recent low, but 28-29 could be its selling exhaustion bottom as the next support.

NFLX closing at 85.98 had wild quick bounce from 75 to 90 on the Disney news, but 90 is my upside target based on my chart. Chasing at its toppy area could be risky unless it broke out 90 on heavy volume.

FB has been holding well, and it seems to be building a bull flag before next upside move soon.

During the holiday season, the trading volume continues to be anemic for the choppy market. HFT or High Frequency Trading easily plays tricky game on traders. Most stock leaders have been acting weak while the broad market held up, confusing majority of people.

With all has been said, It is good to trade smaller by following the price action instead of one’s opinions. Choose only a few stocks you’re familiar with to trade unless there are good setups on the stocks you find.

Some wise traders choose not to tweet or chat much when concentrating on trading during market hours. Many traders have already learned this important lesson: the Less Noise and Opinions, the More Profit!

So let’s be flexible and objective since Mr. Market is always right.  Best luck on trading!

Here is my SSYS chart to share:  http://stks.co/aG0N

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