Dorm Room Daytrader

May 2, 2008

Surging through resistance.

Filed under: Trading — naufal @ 4:44 am
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More macroeconomic reports and overall investor sentiment helped the market rally in all sectors but energy, which was hurt bad by Exxon Mobil (XOM)’s lower than expected earnings. Aside from that sector, the market had a huge up day, as SPY ended up 2%. More importantly, however, SPY closed above the long term 139 resistance it’s held since January and the longer term 140 resistance its held for two years now. If these gains are kept and the market continues rallying, preferably with higher volume to indicate institutional investor involvement, we will be entering a new overall uptrend. Look for a retracement in the coming days to 139-140, and if the market is able to bounce off of that level with no problem, the uptrend is confirmed.

IMCL is in the midst of what seems to be a long term cup and handle pattern beginning in early March. It is bouncing off of its trendline support well right now on high volume and with high price spikes. There is increasing accumulation, indicating increasing momentum, and I think it should break out soon, which is great because it would break out right near its resistance around 41, driving the stock all the more higher.

The huge commodity parabolic run up, in oil and ag’s particularly, has ended, at least temporarily. This transfers the momentum into the dollar’s appreciation, and with currency valuation come run ups in techs. One specific tech sector I’m focusing on is telecom’s. AT&T (T) and Verizon (VZ) have netted me great gains in just the last two days and I think there’s still some momentum left in them.

T seems to have just broken out of a long term rising head and shoulders pattern, and it is giving its 40 resistance a run for its money. If it can use its breakout momentum to rally above resistance on high volume, the sky is the limit for T. A May40Call for T might be a very profitable trade.

VZ had a head and shoulders pattern at the same time as T, and broke out in a similar fashion, confirming my intuition about tech run ups. VZ is making a run at a strong historical support level at 40, and if it can rally above it on high volume, 40 should be very strong and stable support, off of which a base setting up a parabolic run up is very likely.

Qwest (Q) is my favorite telecom play, as its breakout brought it above strong resistance at 5.20. There is hugely increasing volume as the stock rises and rises and a breakout soon is very plausible. There is also heavy accumulation that I think should push the stock to at least 6.15ish. Call options on this stock can be extremely profitable.

Kelly Services Class A (KELYA) has a very bullish chart. It seems to be beginning an exponential run up, with great volume involvement, off of a base located at newly developed support. It also just experienced a 50/200 DMA bullish cross. With no resistance in sight, this stock could trend upwards big in the next few days.

China Mobile (CHL) seems to also be rounding off of a base with huge potential upside. Not only is the price action indicating this possibility, but the volume is following the pattern perfectly, as is highlighted on the chart. There is heavy recent accumulation and the stock just experienced a 50/200 DMA cross, so its price action for the next 5-10 market days seems very bullish.

New Oriental Edu & Tech (EDU) seems to be beginning a rounding base pattern, as well. It also is experiencing heavy accumulation and just had a 50/200 DMA cross, setting the stock up perfectly for a potential breakout. The fact that so many stocks are forming similar patterns and having DMA crossovers simultaneously is a very bullish signal for the overall market.

iShares Spain Index Fund (EWP) is also setting up a rounding base pattern with huge upside potential if a breakout occurs. It seems to be breaking out of a possible cup and handle pattern, as well, but needs to rally above 65 resistance on high volume for any confirmation. There is very heavy accumulation into this index fund, and that can perhaps supply the momentum needed to carry this stock through resistance and into 52-week high territory. There is heavy volume on the up days in the last two days, which is a good sign. Wait for confirmation before participating in this stock, however.

Heico (HEI) could break through 53 resistance with the momentum gained from its 50/200 DMA cross today and its heavy increasing accumulation. A breakout could result in big gains.

Leapfrog (LF) is one of my favorite stock plays. It has been trending upward very well since January, while the market has just plummeted. It broke out of 7.60 resistance recently and seems to be setting up a perfect rounding base pattern off of which exponential gains could result. High volume rallies and today’s 50/200 DMA crossover could provide what it needs to drive this stock all the way up to 9.50 and even more.

Putnam Master Int Trust (PIM) is approaching resistance at 6.30 on high volume and what seems to be a great base pattern. Today’s 50/200 DMA bullish cross could provide the momentum it needs to get over that level and go up for big exponential gains.

Compania de San Bashi (SBS) broke out of resistance recently and is setting up for more gains. It just had a 50/200 DMA crossover as well, so that could push the stock higher soon. Volume is huge on the last two days, which were both up.

If the last few months have brought you a jaded perspective in regards to the market, here’s some motivation. Take a look at net liquidating value on the top left. Keep in mind I started trading at the end of January with $6500.

Get money, son.


April 17, 2008

Another move upward… are the bulls back?

Filed under: Trading — naufal @ 8:35 am
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Some good earnings today propelled the market upward for almost a 3% overall gain. Looking at SPY, it bounced off the downtrend line well, confirming it to be at least temporary support. I’ve drawn in falling resistance, parallel to this downtrend support line, and I’ll be looking for SPY to break this channel trend, whether upward or downward. It bounced well off the 50 DMA today, which is another good sign, but yet again, volume was missing. If the market retraces back big within the next few days, we’ll see how good of support the 50 DMA offers; otherwise the next strong support level is that downtrend line. If that line is ever broken on medium to high volume, we’re going back down to January and March lows, and that will be the market bottom. If SPY can break out of that channeling resistance today, particularly if it can finally do so on high volume, the 138.00 resistance level is in sight and can be taken out. Breaking out of the 138.00 level on medium to high volume confirms a bullish trend, and that the market bottomed back in March. It’s earnings season, and as financials start to report their write-offs and losses, prepare for high volatility days. This type of market isn’t very conducive to technical trading, but if you watch overall trends, you should do fine.

I am looking at quite a few stocks to buy in the next few days, if the market doesn’t show too much weakness. One such stock is Diodes (DIOD). It is channeling upwards well, from its March 17 bottom that correlated with the Bear Stearns (BSC) crash. There is heavy accumulation occuring as the price trends upward, and yesterday’s big move up was on high volume. The 50 DMA is starting to point back upward now, and if DIOD can break its channel resistance line on high volume, this would be a great play. I am considering buying right now, before any confirmation. Cut your losses at the 24.00 support level.

BJS Wholesale (BJ) is another great long candidate. It is caught in a rising wedge, and moved upward big yesterday. All it needs is a breakout from resistance on high volume and this stock can rake in big gains. It has to happen soon, as the wedge is almost at a point. My only concern is the lack of volume, and thought volume is one of my biggest indicators of price movement confirmation, the overall lack of volume pervading the market the last few weeks has left me turning a blind eye to a few instances. Also, its 50 DMA crossed its 200 DMA on the bullish side, which is a fantastic signal for break outs coming soon. Cut your losses at the wedge support line.

NX Quanex (NX) has been trading horizontally since its big move up last November. Yesterday, it finally broke that important resistance on high volume, so I’m looking for a nice uptrend for this stock to develop. There is lots of accumulation occurring and the price bounced off of the 50 DMA brilliantly. Cut your losses just under the resistance level it broke.

John Hancock Private Equity Fund (HPI) is caught in a rising wedge and bouncing off of the 50 DMA. Volume is low, but there has been ridiculous accumulation in the last few weeks, and it’s really pushing me to buy this stock. Cut your losses under the 50 DMA.

Taiwan Fund Inc (TWN), my favorite long stock right now, broke out of a wedge pattern yesterday on high volume and closed at its high. It has been forming bases very well and volume is following the trend, an extreme rarity in this market. It is a fund that invests in Chinese and Taiwanese equities, so look for Baidu (BIDU)’s resurgence as a possible fundamental aid to this great technical chart. Cut your losses at the 200 DMA, but don’t worry you won’t have to, CMF is at ridiculous levels around 0.4.

Exide Technologies (XIDE) is channeling upward and moved up on high volume yesterday. Great accumulation occurring and a great base has formed to trend off of for a few weeks. Also broke resistance today. Great play.

Enernoc (ENOC) went up 35% yesterday on very high volume and if it can break through its channel resistance at around 14.00 on high volume, it should be in for even more gains. Accumulation is rising, as well. This is a stock, like a lot of the others I’ve mentioned, that isn’t ready for purchase quite yet, but might be a good play to throw on your watch list.

American Superconductor (AMSC) is trending well in a rising wedge and just had a big up day on strong volume. If it can break out of that resistance, this is a great looking intermediate term stock play. Lack of accumulation troubles me, but price action is most important, so we’ll see if it is able to break out. Its 50 DMA crossed its 200 DMA on the bullish side, which is a great break out signal. Watch this stock for the next couple days.

I’ve been daytrading a lot, and I obviously can’t post those plays, because they’re in and out within 20-30 minutes, but once the market calms down a bit, I should be looking at more intermediate and long term plays. Feel free to ask any questions and dood luck trading.

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