I bought into FMCN at $57.30 before the FED announced the 0.25% cut. Maybe I'm stupid but I expect good numbers keep coming out from FMCN. As well, I committed about 2/3 of my position only. So I may still want to add to my position.
The FED might have disappointed many investors, but, it is doing what it needs to do, but not to please every single investor. Yes, there maybe more rate cuts in 2008, but anyway, a Christmas rally may end for now.
Many sectors reversed to drop almost simultaneously when the FED announced (only) a quarter point cut. Even strong stocks, like solar energy stocks retreated. Quite a few of them retreated with high volume as well. The market has rebounded quite a lot since the end of November, guess they need more substantial good news to go up from here. But Christmas usually is slow, I don't see any one will be making significant move in Christmas, so expect a slow and slightly down market from now on to the end of the year.
Well, since end of 2007 is fast approaching, I guess it's time to sit down and think about what theme may play out in 2008. Let me get back to this topic and brainstorm about this topic from now.
Besides, I'm still holding my FXP that I bought at $83.50. I guess a high $70's is not difficult (it's $73.65 already), just not sure if I can go back to break even in December......
Tuesday, December 11, 2007
Saturday, December 1, 2007
FXP
I'm being very lazy these days, as I should have updated my position on Tuesday that I bought FXP again at $83.50. As you see i'm not hiding my position here to make up a good looking gain, I'm sitting at a loss of more than 15%.
This coming week is pretty critical. As DIA and SPY both tested the most highest daily EMA (in this case it's the 100-day). Many people might think the 200-day EMA should be the most important one as a test. I do not totally agree, as I saw on many charts that quite often the stock (or ETF/index) will test the most highest daily EMA from below and eventually heads back down.
I would say, a stock is resuming upward trend if:
1. After it breaks through the 200-day EMA with hugh volume, it doesn't drop below that again
2. Eventually the shorter-time EMA is above longer-time EMA (20-day > 50-day > 100-day > 200-day)
3. The uptrend may still be quite choppy until the stock/ETF makes new high
Of course, you may say, to wait till it shows all these characteristics I already missed a big move, that probably can be a hugh amount. Well, unfortunately trend following is not to find the bottom and get onto the bottom. A trend needs time to develop, so using a trend following technique you can never find a bottom.
To quickly find bottom or top I guess you need to use techniques of swing trading. I'm not good at that so I won't get into it here.
So when should I cover my FXP? Will China market drop given that US Fed will reduce rate on Dec 11 very likely? I want to use financial and brokerage stocks as the first measure.
Looking at XLF, in mid-Sept the Fed lowered the rate by 50 basis points, XLF went up from around $32 (when people started to anticipate a rate cut) to as high as $36, about 13%. Using the same time period we can see:
C: up from $45 to $50, about 11%
BAC: up from $48 to $53, about 10%
WFC: up from $33 to $38, about 15%
JPM: up from $43 to $48, about 12%
WB: up from $45 to $52, about 16%
MER: up from $68 to $77, about 13%
MS: up from $56 to $69, about 23%
GS: up from $165 to $220, about 33%
LEH: up from $50 to $65, about 30%
BSC: up from $100 to $127, about 27%
I don't want to include CFC or WM as they dropped so much that I guess you don't need to see them. The above 10 stocks (5 banks, 5 brokerages), only GS and LEH did not drop below the lowest price shown above. JPM and BSC dropped below the lowest price but not by too much. All the rest dropped by quite a lot from that lowest price. Let's take a quick comparison of new low price to last low price of the worse 6.
C: down from $45 to $30
BAC: down from $47 to $42
WFC: down from $33 to $29.50
WB: down from $45 to $37
MER: down from $68 to $50.50
MS: down from $56 to $47.50
That is not surprising to me, as usually when the Fed started to reduce rate, the weak sectors usually will continue to drop further. Anyone who thinks one rate cut from the Fed will save the economy is simply naive.
Now let's take a quick look of the 6 above and XLF due to the anticipation of rate cut on Dec 11.
XLF: up from $28 to $31, about 11%
C: up from $30 to $33, about 10%
BAC: up from $42 to $46, about 10%
WFC: up from $29.50 to $32.50, about 10%
WB: up from $37 to $43, about 16%
MER: up from $50.50 to $60, about 19%
MS: up from $47.50 to $52.50, about 11%
HHmmm, not much difference than the last rate-cut rebound. I don't think history will repeat exactly the same way, that is a stupid assumption. But at least these stocks have to show that they will not drop below the last lowest price first, before I can say they are really coming back. If they fall back to their lowest price, I will think about putting in some money in UYG maybe.
So given the US is not very clear, China may continue its volatile characteristics for a while. A Christmas rally may be true, but what about after Christmas? Anybody thought about that?
This coming week is pretty critical. As DIA and SPY both tested the most highest daily EMA (in this case it's the 100-day). Many people might think the 200-day EMA should be the most important one as a test. I do not totally agree, as I saw on many charts that quite often the stock (or ETF/index) will test the most highest daily EMA from below and eventually heads back down.
I would say, a stock is resuming upward trend if:
1. After it breaks through the 200-day EMA with hugh volume, it doesn't drop below that again
2. Eventually the shorter-time EMA is above longer-time EMA (20-day > 50-day > 100-day > 200-day)
3. The uptrend may still be quite choppy until the stock/ETF makes new high
Of course, you may say, to wait till it shows all these characteristics I already missed a big move, that probably can be a hugh amount. Well, unfortunately trend following is not to find the bottom and get onto the bottom. A trend needs time to develop, so using a trend following technique you can never find a bottom.
To quickly find bottom or top I guess you need to use techniques of swing trading. I'm not good at that so I won't get into it here.
So when should I cover my FXP? Will China market drop given that US Fed will reduce rate on Dec 11 very likely? I want to use financial and brokerage stocks as the first measure.
Looking at XLF, in mid-Sept the Fed lowered the rate by 50 basis points, XLF went up from around $32 (when people started to anticipate a rate cut) to as high as $36, about 13%. Using the same time period we can see:
C: up from $45 to $50, about 11%
BAC: up from $48 to $53, about 10%
WFC: up from $33 to $38, about 15%
JPM: up from $43 to $48, about 12%
WB: up from $45 to $52, about 16%
MER: up from $68 to $77, about 13%
MS: up from $56 to $69, about 23%
GS: up from $165 to $220, about 33%
LEH: up from $50 to $65, about 30%
BSC: up from $100 to $127, about 27%
I don't want to include CFC or WM as they dropped so much that I guess you don't need to see them. The above 10 stocks (5 banks, 5 brokerages), only GS and LEH did not drop below the lowest price shown above. JPM and BSC dropped below the lowest price but not by too much. All the rest dropped by quite a lot from that lowest price. Let's take a quick comparison of new low price to last low price of the worse 6.
C: down from $45 to $30
BAC: down from $47 to $42
WFC: down from $33 to $29.50
WB: down from $45 to $37
MER: down from $68 to $50.50
MS: down from $56 to $47.50
That is not surprising to me, as usually when the Fed started to reduce rate, the weak sectors usually will continue to drop further. Anyone who thinks one rate cut from the Fed will save the economy is simply naive.
Now let's take a quick look of the 6 above and XLF due to the anticipation of rate cut on Dec 11.
XLF: up from $28 to $31, about 11%
C: up from $30 to $33, about 10%
BAC: up from $42 to $46, about 10%
WFC: up from $29.50 to $32.50, about 10%
WB: up from $37 to $43, about 16%
MER: up from $50.50 to $60, about 19%
MS: up from $47.50 to $52.50, about 11%
HHmmm, not much difference than the last rate-cut rebound. I don't think history will repeat exactly the same way, that is a stupid assumption. But at least these stocks have to show that they will not drop below the last lowest price first, before I can say they are really coming back. If they fall back to their lowest price, I will think about putting in some money in UYG maybe.
So given the US is not very clear, China may continue its volatile characteristics for a while. A Christmas rally may be true, but what about after Christmas? Anybody thought about that?
Monday, November 26, 2007
Christmas rally?
I feel like haven't been writing for a long time.... Anyway.
People are still arguing about will there be a Christmas rally. Of course they mean a broad base rally. Well my take is if there is a rally it probably will only be limited to a few stocks, but not the broad market.
The market generally takes only the combination of the following 2 sets of conditions. {no news, good news, bad news} and {trends up, trends down}. So you see there are mainly 6 scenarios. Over the last week or so I believe we were experiencing the combinations of bad news/trends down and no news/trends down.
Let me use a few ETFs to check how are we going from here. Let's start with SPY.
SPY was once about $155 back in mid-July, of course it crashed down to around $145 due to sub-prime news with extremely high volume. After that it went back up to as high as $157.52 by end of September, with volume back to normal. And then since end of September it started crashed back down again to currently $141. So, SPY did not make a higher high compared to mid-July, as well not with a significant volume. Currently the 100-week EMA (about $140) is a testing point (I don't want to say support level because it may not support it), and the 20-week EMA is the first resistance (currently about $149). If it cannot get support at the 100-week EMA, not good for the short term my friend.
QQQQ is a bit better, but given the broad market is not doing good, it's hard for QQQQ to go up by itself.
DIA has very similar experience like SPY in the second half of 2007, so I don't repeat in here.
IWM is even worse as it already dipped below the 100-week EMA. Testing the 200-week EMA here is quite possible (which is currently about $68.50).
FXI is fighting to stay above the 20-week EMA, but given the Chinese government wants to slow the stock market a bit, it's hard for FXI to go up much in the meantime.
EEM as well is fighting against 20-week EMA, it dipped below that by the end of today with quite an amount of volume, so testing the 50-week EMA of about $131 is possible.
XLF already dropped below the 200-week EMA, with many US banks keep making new lows, even if XLF is not going to go down by much from here, it doesn't seem to have any steam to go up much. In the near term it may try to break through the 200-week EMA of about $31.80. My guess is it will fail and stay below the 200-week EMA for a while, until there is obvious good news in this sector.
XHB is no better. Back from the beginning of June this year, XHB actually dropped faster than XLF. If you use a daily graph you'll see it started to drop below all 4 major daily EMAs. From then on, it never crossed back up above the 50-day EMA. Over the last 6 months or so it dropped about 50%. This drop is pretty significant as we are talking about a sector here, not one individual stock. I don't think it will keep dropping in this kind of speed, but it will need quite a long time to confirm the bottom.
XLU, on the other hand, is near its yearly high. Well this is understandable as when market gets weak, people go to sectors that are defensive, and utilities is one of those.
Finally GLD. It took off nicely from about $65 back in August to recently above $80. People always think gold is a good hedge of inflation. I personally don't think it is that simple. As the gold itself does not produce more value for you, so to fight inflation I believe the better way is to bet on good companies and keep switching to good companies. Or on the other hand target on good and stable companies that consistently increase their dividends.
What may rally from here to Christmas and the beginning of 2008? Well I cannot tell. I can only say, in the meantime, most stocks would go down more often than go up. Therefore, the probability that you correctly pick a poor stock that will go down is higher than to correctly pick a good stock that will go up. So for now I'll stay with my strategy of, making use of different ETFs, specially the Ultra and Ultrashort ETFs but not individual stock.
People are still arguing about will there be a Christmas rally. Of course they mean a broad base rally. Well my take is if there is a rally it probably will only be limited to a few stocks, but not the broad market.
The market generally takes only the combination of the following 2 sets of conditions. {no news, good news, bad news} and {trends up, trends down}. So you see there are mainly 6 scenarios. Over the last week or so I believe we were experiencing the combinations of bad news/trends down and no news/trends down.
Let me use a few ETFs to check how are we going from here. Let's start with SPY.
SPY was once about $155 back in mid-July, of course it crashed down to around $145 due to sub-prime news with extremely high volume. After that it went back up to as high as $157.52 by end of September, with volume back to normal. And then since end of September it started crashed back down again to currently $141. So, SPY did not make a higher high compared to mid-July, as well not with a significant volume. Currently the 100-week EMA (about $140) is a testing point (I don't want to say support level because it may not support it), and the 20-week EMA is the first resistance (currently about $149). If it cannot get support at the 100-week EMA, not good for the short term my friend.
QQQQ is a bit better, but given the broad market is not doing good, it's hard for QQQQ to go up by itself.
DIA has very similar experience like SPY in the second half of 2007, so I don't repeat in here.
IWM is even worse as it already dipped below the 100-week EMA. Testing the 200-week EMA here is quite possible (which is currently about $68.50).
FXI is fighting to stay above the 20-week EMA, but given the Chinese government wants to slow the stock market a bit, it's hard for FXI to go up much in the meantime.
EEM as well is fighting against 20-week EMA, it dipped below that by the end of today with quite an amount of volume, so testing the 50-week EMA of about $131 is possible.
XLF already dropped below the 200-week EMA, with many US banks keep making new lows, even if XLF is not going to go down by much from here, it doesn't seem to have any steam to go up much. In the near term it may try to break through the 200-week EMA of about $31.80. My guess is it will fail and stay below the 200-week EMA for a while, until there is obvious good news in this sector.
XHB is no better. Back from the beginning of June this year, XHB actually dropped faster than XLF. If you use a daily graph you'll see it started to drop below all 4 major daily EMAs. From then on, it never crossed back up above the 50-day EMA. Over the last 6 months or so it dropped about 50%. This drop is pretty significant as we are talking about a sector here, not one individual stock. I don't think it will keep dropping in this kind of speed, but it will need quite a long time to confirm the bottom.
XLU, on the other hand, is near its yearly high. Well this is understandable as when market gets weak, people go to sectors that are defensive, and utilities is one of those.
Finally GLD. It took off nicely from about $65 back in August to recently above $80. People always think gold is a good hedge of inflation. I personally don't think it is that simple. As the gold itself does not produce more value for you, so to fight inflation I believe the better way is to bet on good companies and keep switching to good companies. Or on the other hand target on good and stable companies that consistently increase their dividends.
What may rally from here to Christmas and the beginning of 2008? Well I cannot tell. I can only say, in the meantime, most stocks would go down more often than go up. Therefore, the probability that you correctly pick a poor stock that will go down is higher than to correctly pick a good stock that will go up. So for now I'll stay with my strategy of, making use of different ETFs, specially the Ultra and Ultrashort ETFs but not individual stock.
Tuesday, November 20, 2007
sold my SVA
Yes, I sold my SVA at a loss of about 20% at $4.83. I ran against my original thinking because the markets don't look right. And when markets don't look right smaller stocks can get kill much faster. So to be safe I rather take a loss now and wait for better timing to get back in strong stocks.
So in the meantime I have no trading position.
These days I think a safer way to play with it is to go long and short ETFs. Too bad I missed the UltraShort Financials (SKF) totally due to the fact that I had experience of couldn't trade it due to the very low daily volume. Anyway, a miss is a miss. But I'll keep an eye on any ETF I can play with.
Articles here and there are still arguing recession or not. I don't know if there will be recession in US, I only know investors placed their votes in the markets. Look at all the 4 major ETFs (QQQQ, DIA, SPY and IWM), all of them are below 100-day EMA, except QQQQ all of the other 3 are below the 200-day EMA. Even today they rebounced a bit with high volume, it doesn't help them to get back above a meaningful support at all. So how can I believe we are not in trouble here?
Remember I said I'll keep an eye on NTES? Its rival GA reported earnings last night and got slaughter today by 25%. NCTY and SNDA in the meantime are not looking very good too. Just that NTES holds the 100-day EMA. Interesting, it seemed to me it finds the support above the 100-day EMA, which is pretty good under this market condition.
Other than ETFs, still waiting for chance to get some AAPL, RIMM, BIDU or even CTRP. I'm almost thinking buy and hold them for a while and at the same time, go in and out with the ETFs of long and short to take the advantage of any decline. Anyway, will see.
So in the meantime I have no trading position.
These days I think a safer way to play with it is to go long and short ETFs. Too bad I missed the UltraShort Financials (SKF) totally due to the fact that I had experience of couldn't trade it due to the very low daily volume. Anyway, a miss is a miss. But I'll keep an eye on any ETF I can play with.
Articles here and there are still arguing recession or not. I don't know if there will be recession in US, I only know investors placed their votes in the markets. Look at all the 4 major ETFs (QQQQ, DIA, SPY and IWM), all of them are below 100-day EMA, except QQQQ all of the other 3 are below the 200-day EMA. Even today they rebounced a bit with high volume, it doesn't help them to get back above a meaningful support at all. So how can I believe we are not in trouble here?
Remember I said I'll keep an eye on NTES? Its rival GA reported earnings last night and got slaughter today by 25%. NCTY and SNDA in the meantime are not looking very good too. Just that NTES holds the 100-day EMA. Interesting, it seemed to me it finds the support above the 100-day EMA, which is pretty good under this market condition.
Other than ETFs, still waiting for chance to get some AAPL, RIMM, BIDU or even CTRP. I'm almost thinking buy and hold them for a while and at the same time, go in and out with the ETFs of long and short to take the advantage of any decline. Anyway, will see.
Saturday, November 17, 2007
FXP and TWM
They increased as I expected on Friday, just that not by a lot and since the market rebounded to closed higher, I sold my two positions.
Bought FXP on Wednesday at $74.24 and sold on Friday at $82.51.
Bought TWM on Wednesday at $67.98 and sold on Friday at $72.51.
Not a lot but I'm still satisfied.
Market these days can turn around very quickly, although I think there are still a bit more downside from here, but these ETFs can still whipsaw by a lot. At least as I said, I never think of holding them for long term, no way you want to bet on an index that goes to zero on a long term.
Previous strong stocks held up pretty well on Friday to the end, except BIDU and the several shipping stocks. BIDU seems like doesn't want to go too low, as I said before, I am still looking for opportunity to get back in, unless I see another Chinese search engine really haunts BIDU's leading market share in China. In this case, will NTES be that engine? well I don't know, but I'm surprise that NTES holding above 20-week EMA pretty well after unimpressive earnings report, massive sell off throughout last week and bad earnings from competitor NCTY on Friday (note that NCTY is another Chinese online gaming stock that dropped 30% on Friday). I'll keep an eye on NTES for now.
Let me screen through stocks that I'm watching on this weekend and see which may come out as the strong stocks in the next wave.
Bought FXP on Wednesday at $74.24 and sold on Friday at $82.51.
Bought TWM on Wednesday at $67.98 and sold on Friday at $72.51.
Not a lot but I'm still satisfied.
Market these days can turn around very quickly, although I think there are still a bit more downside from here, but these ETFs can still whipsaw by a lot. At least as I said, I never think of holding them for long term, no way you want to bet on an index that goes to zero on a long term.
Previous strong stocks held up pretty well on Friday to the end, except BIDU and the several shipping stocks. BIDU seems like doesn't want to go too low, as I said before, I am still looking for opportunity to get back in, unless I see another Chinese search engine really haunts BIDU's leading market share in China. In this case, will NTES be that engine? well I don't know, but I'm surprise that NTES holding above 20-week EMA pretty well after unimpressive earnings report, massive sell off throughout last week and bad earnings from competitor NCTY on Friday (note that NCTY is another Chinese online gaming stock that dropped 30% on Friday). I'll keep an eye on NTES for now.
Let me screen through stocks that I'm watching on this weekend and see which may come out as the strong stocks in the next wave.
Wednesday, November 14, 2007
Market swings
Well I have to acknowledge that I don't remember I have seen such a big swing up and down of stock indices since tech bubble burst in 2000/2001. If you are brave and very skillful or lucky to catch the swing you probably have earned a lot only over a few days.
There are diverge opinions on where market is heading. One opinion from bulls is tech stocks usually are strong by end of year, however, what do you mean by usually? What about I tell you "usually money market fund provides positive returns", and only to see that GE told investors that they can liquidate their money from the money market fund for 96 cents of a dollar. Usually doesn't mean always. History may not repeat.
People don't get it wrong. Technical analysis is not to confirm will history repeat. You have to understand technical analysis from another angle.
People use technical analysis to try to find clues about where the smart money is going and anticipating. It is nothing do to history or whatsoever. Therefore, a perfect technical analysis does not just analyze some statistics or charts, but line-up those analysis with the actual situation you are encountering.
Okay a little update on my portfolio. Still holding SVA, Tuesday's downward movement worries me a bit, as the markets rallied so much but SVA dropped, doesn't look very promising, I'll keep an eye on it.
Besides, I bought into FXP and TWM before noon. I acknowledge I got into a bit late or early, as before noon actually was almost the highest prices throughout the day. If I got into it right at the opening I will be much better. But since I want to confirm the sentiment of the strong stocks that's why I got into a bit late.
I have no intention to hold the two ultra short for very long, just a swing or two to the downside like we had late last week will do me good.
The market today did show weakness to me, provide that GOOG opened up by $13 only to see it closed at down by $19. Or BIDU opened up by $25 and closed with only up by $2.55. Or AAPL opened up by $7 and closed down by $3.85... The list goes on specially to tech stocks and Chinese stocks. Anyway I feel uncertain about a strong tech Q4.
There are diverge opinions on where market is heading. One opinion from bulls is tech stocks usually are strong by end of year, however, what do you mean by usually? What about I tell you "usually money market fund provides positive returns", and only to see that GE told investors that they can liquidate their money from the money market fund for 96 cents of a dollar. Usually doesn't mean always. History may not repeat.
People don't get it wrong. Technical analysis is not to confirm will history repeat. You have to understand technical analysis from another angle.
People use technical analysis to try to find clues about where the smart money is going and anticipating. It is nothing do to history or whatsoever. Therefore, a perfect technical analysis does not just analyze some statistics or charts, but line-up those analysis with the actual situation you are encountering.
Okay a little update on my portfolio. Still holding SVA, Tuesday's downward movement worries me a bit, as the markets rallied so much but SVA dropped, doesn't look very promising, I'll keep an eye on it.
Besides, I bought into FXP and TWM before noon. I acknowledge I got into a bit late or early, as before noon actually was almost the highest prices throughout the day. If I got into it right at the opening I will be much better. But since I want to confirm the sentiment of the strong stocks that's why I got into a bit late.
I have no intention to hold the two ultra short for very long, just a swing or two to the downside like we had late last week will do me good.
The market today did show weakness to me, provide that GOOG opened up by $13 only to see it closed at down by $19. Or BIDU opened up by $25 and closed with only up by $2.55. Or AAPL opened up by $7 and closed down by $3.85... The list goes on specially to tech stocks and Chinese stocks. Anyway I feel uncertain about a strong tech Q4.
Sunday, November 11, 2007
Where will market go?
Despite the 8.7% increase in my SVA, market was choppy on Friday. Strong stocks like GOOG, BIDU, AAPL and RIMM fell fast, came back a bit and fell fast again. Shorter term EMAs of SPY, DIA, QQQQ and IWM were all going downward with heavy volume.
So, where is market heading to? Well I would say in the short term it is hard for the market to go higher, it probably will either go down a bit more or channel between certain range. We should lower our entry points for strong stocks and wait for the market price to come to your entry point, not raise your entry point to catch the market price. For example, in the meantime I'll take the 20-week EMA as the first support of the strong stocks. Base on how strong the stock you believe, you can adjust from there.
Chinese stocks slowed down by a lot as well, as Chinese government wants them to slow down. After all, the Chinese government is not stupid to let the market crash and do nothing (not that mean they can perfectly prevent it from crashing). As said, if my SVA goes up too fast I'll sell and look for opportunity to buy it back.
U.S. financials did not stop going down, in fact, they speeded up last week, leaded by Citigroup, Merill Lynch, Wachovia and Washington Mutual. I'm still waiting for a good entry point to step in with some money, just that it sounds like it's still not the time yet. But if there happens a very strong down day with tons of selling, I think I'll kick in some money, that's the idea of "buy when blood on the street".
So, where is market heading to? Well I would say in the short term it is hard for the market to go higher, it probably will either go down a bit more or channel between certain range. We should lower our entry points for strong stocks and wait for the market price to come to your entry point, not raise your entry point to catch the market price. For example, in the meantime I'll take the 20-week EMA as the first support of the strong stocks. Base on how strong the stock you believe, you can adjust from there.
Chinese stocks slowed down by a lot as well, as Chinese government wants them to slow down. After all, the Chinese government is not stupid to let the market crash and do nothing (not that mean they can perfectly prevent it from crashing). As said, if my SVA goes up too fast I'll sell and look for opportunity to buy it back.
U.S. financials did not stop going down, in fact, they speeded up last week, leaded by Citigroup, Merill Lynch, Wachovia and Washington Mutual. I'm still waiting for a good entry point to step in with some money, just that it sounds like it's still not the time yet. But if there happens a very strong down day with tons of selling, I think I'll kick in some money, that's the idea of "buy when blood on the street".
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