Tiger Gao Market Watch: 05/24/2009

Follow the trend and make money,but how ?

Follow the trend and make money. That's so easy to say, but hard to do. Right ?

So here is my thinking on how to follow a trend, using the NASDAQ chart as an example.

New higher high are formed in the next formed uptrend B, C no worry
The next uptrend D didn't form a new higher high, a warning sign.
So now the up trend wave E must form a new higher high, otherwise, the uptrend since March 9 may be in danger
From the chart, wave E will make a new higher high, very expectable, refer to my previous analysis as well [1]
As long as the reaction wave doesn't make new lower lows, the uptrend should be safe. So far, this rule works very well

Regarding last Friday's final pushing up, it is very expectable, as predicted in my previous post [1]. Another reason is the divergence between Euro and the US market, as mentioned before, US market will follow the Euro finally[2].

Usually, such final pushing up is very bullish, signals the bulls will get mad. That's why I predicted Monday will gap up.

I am so happy I have warned the bears to sell QID once QID broken down 38 , so far so good.

PPCO seems break out as predicted [3], although the volume is low.

EXEL should be fine if the gap can not be filled in a week.

FAZ is heading to $2, as predicted [4]

[1] expectable higher high

[2] Euro and stock market

[3] PPCO breakout

[4] FAZ to $2

What's your edge ?

What's your edge ?

That's the question we should ask ourselves, if we want to be successful in any thing including investment in the financial market.

If we don't have the edge born naturally, we need to

be focused very well
managing our time very well
work harder
never and ever stray away from your target and task

That's very challenging and not easy to do. Therefore, not everyone can be as successful as he/she should be.

How to short a stock (ANDS as an example)

How to short a stock, using ANDS as an example:

1. After reaction, the stock's next rally can not make a new higher high. ANDS only runs up to 7.20, much lower than previous 8.43. WARNING sign.

2. But the next reaction breaks down the previous low 5.21. That's where we should enter our shorts.

A quick profits from 5.20 to 2.05 in just several days.

How to buy and sell (EXEL as an example)

One rule for selling and buying stock is to buy at the support and sell at the resistance. See the EXEL chart as an example.

It is obvious that 6.11 is a key resistance, so you should take profits around that level say 6.10, and you got the chance to buy back at lower price.

Just updated Monday's Gap prediction

What a nice week for Bulls, even though it is short, at least that's my feeling.

A nice consolidation so far

Hopefully, the bulls can push the U.S. stock market close high. Euro is still strong, which is good for the bulls.
Some weak bulls took the profits so that they can sleep well over the weekend.

TBT drops like a stone falling from the sky. Hope our friend Ben has already took profits of TBT.

GM sinks hard too. But the volume of $1 calls and puts surged! Just wondering who are buying these options, either call buyers or put buyers win, or both give their money to the option writers. Over the weekend, GM may throw out some surprises .... Crossing my fingers. So fun to watch the GM show.

More are coming over the weekend. Enjoy !

Historic Charts of Star Stocks

I will list here some historic charts of star stocks that I have gathered from my trading and chart reading activities over the past years, so that we may discover future star stocks, and grow with the potential star company.

Trading and Investing Ideas

I will list here some trading and investing ideas that I have learned hard from my trading and investment activities over the past years:

1. Buy a stock at the support, and sell a stock at the resistance. Look at EXEL as an example.
The reason is simple: if the support is broken down, you can cut small loss quick. Usually you will be able to buy back at lower price if you sell at the resistance level.

2. Short a stock when

the next rally after the reaction can not make a new higher high
but the reaction after the next rally breaks down and make a new lower low than previous low
Here is an example using ANDS chart.

3. What will ultimately determine the stock price

4. The best way to invest your money

5. cockroach theory

6. Useful trading softwares

7. Trick in investing

8. My day trading secret

9. When you are right, how to sit tight

10. My absolute selling rules

11. 3 ways to trade stocks

12. Some ER play reviews

13. 80-20 and 50-50 rules

14. Take advantage of the market corrections

15. The danger in a bull market

16. What a good lesson for those who always trade in a hurry

17. A gambler's heart - 1

18. A gambler's heart - 2

19. What I have learned from high frequency trading
20.The right thinking with the investment
21.Random market thoughts
22. Trade the stock with a humble heart
23. Expectations
24. a Reflection on the blog and trading
25. Sit tight

Technical Analysis Tips

I will list here some technical analysis tips that I have learned hard from my trading and chart reading activities over the past years:

Gap up, then run up or run down today ?

Will today be a gap up and run up day or run down day? You name your bet !

You already know my bet, right ?

Happy Friday ! Today is the last trading day of the month !

A Gap up this morning signals a good start for bulls, as predicted yesterday before the market close [1]

Oil hits $66, a 6 months high. Precious metals climb up as well, and gold hits 974.7. EURO shoots up straight after a consolidation, and it is above 1.41, my goodness.

Yesterday's hanging man [2] pointed to a very expectable new higher high in the near future.

The U.S. economy sank at a 5.7 percent pace in the first quarter, which is bad.

GM is dropping again, as predicted yesterday, GM will soon break down $1 benchmark. If you want to try your luck on GM, here is my idea: buy the GM June $1 calls at about 5 cents, and wait to see if the calls die or 10-20 bagger ? It's high risk, but high return as well.

PPCO is still struggling to jump over 2.25. Volume is surprisingly low.

EXEL gains energy again.

PDS shoots above $6 now, one of our 10 bagger list [3]

[1] predicted gap up

[2] Hanging man

[3] 10 bagger list

A hanging man is formed in NASDAQ,new higher high is expected

A hanging man is formed in NASDAQ today, the new higher high is expected in the near future, that's my today's conclusion and the close market remarks.

From the NASDAQ daily chart above, it is obvious that:

A hanging man is formed in NASDAQ today, usually it signals that the new higher high is coming soon
NASDAQ has so far stood well above the 200MA for three days, a bullish sign
These three days combined toether formed a powerful and bullish pattern, indicating possible breakout and run up
Today's volume is healthy, not too big, neither too small
breakout point is 1773.13 [1],once broken out, should run up big for a while

Some friends may think the market is insane now. It really is. But only insane market can make some guy rich from successful trading. The key is to follow the trend, no matter how insane the market is. That's why some guy can buy stocks dirty cheap as well as be able to sell stocks at dirty high price.

I checked the TIAA Real Estate annuity tonight, it droped 14.58% so far this year. So the commercial real estate is still going down, and will bring down the financials, banks, and the general market again. However, not now, may be untill FAZ becomes about $2 [2]. Today FAZ closed below $5, really indicating the potential to the $2 level.

[1] Breakout point

[2] Hoping FAZ down to $2 level

Nice bounce back day so far

It seems my last night's market close remarks are making sense so far. Hope the market can hold the gains, and continue to go up tomorrow.

Euro continues climbing up.

PPCO still poised for a breakout of 2.30. It seems some resistance at 2.25.

EXEL gets into the consolidation after a nice gap up. Very huge volume today. The correction may continue for a while.

QID still need to hold 35, and FAZ need to hold 5.

GM's chart looks very ugly. It could break down $1 based on the chart.

Our friend Ben mentioned TBT. Personally, I don't think the bond bubble will burst this year, especially if the economy continue sucks and the recession continues. As mentioned before, commercial real estate is a bomb for the stock market and the overall economy and may drag down the banks and financial again. better watch and learn ..

The market entered into a very interesting period, I think. More are coming tonight.

Have a good trading day.

A failed bounce up day ?

This morning's gap up is pretty impressive. But very soon, the gap is filled. Moreover, the indexes are turned to RED. Is today a failed bounce up day ? Let's watch and learn.

For the market sentence, I still think correction continues, but bulls are still in control, and a leg up to make a new higher high than previous is very expectable [1] .

EURO has a nice run up so far. Oil is above 64 now. Remember before, I have mentioned if divergence happens between EURO and US stock market, US stock market usually follow EURO. Let's see if this time, the US stock will follow the EURO.

EXEL in our watch list [2], has a nice gap up this morning, so far up ~28%. I expect it can breakout 6.11 soon.

PPCO [3] continues to hold well above 2.2, very positive sign. Once 2.30 is broken out, should run up for a while, regardless of the volume.

GM reports that bondholders would get an increased stake in the company if they agree to not fight plans for a quick bankruptcy turnaround. A positive sign. SO far, GM stock price performs well because it never breaks down $1, the benchmark price so far. I expect a up wave in GM if the general market is OK. So may be some short term opportunity in GM. But high risk. ABSOLUTELY EXIT GM ONCE $1 is broken down.

[1] new higher high expectable

[2] EXEL watchout

[3] PPCO watch 2.30

Will the bulls still have a leg to run up ?

My conclusion is yes. I still think the market correction continues, but bulls are still in control[1] like last Friday.

There are several things are worrysome:

Bond market slump
GM bankrupcy
North Korea crisis ...

However, I still believe "Price makes news." The market will go where it need to go, no matter what.

From the above NASDAQ and S&P 500 charts, we can observe the following bullish patterns:

Bullish flag in the making
Higher lows so far
Double bottom formed during the correction
Volume shrinks during the correction

So far, I don't think the bulls need to worry. But, as a caution, IF

SPX breaks down 875
NAZ breaks down 1650

bulls need to exit for safety.

Pay attention to QID and FAZ, if market tanks again, they are good to buy in.

PPCO up 6.16% in a bloody market correction day, not bad at all. But still with low volume, may be a concern here. Keep watching. The inital call of PPCO is here [2]. The second PPCO call is here [3].

[1] Bulls are in control

[2] 1th PPCO call

[3] 2th PPCO call

Really nice intra-day reversal

QID closed just above 36.

I will review where the market plan to go tonight with charts.

Tomorrow's gap prediction has been updated.

Too busy today with the work.

Tiger

Today is not a good day for trading

As I mentioned this morning, the market will fluctuate a lot today to seek the next direction.

QID now stands above 35. If it can break out 36, then it may run for a while.

FAZ still below $5.

PPCO continues holding well with very small volume.

A little rest for bulls here ?

Good morning. Happy Wednesday!

Today the market gapped down, as predicted yesterday [1].
But very soon, the market is gradually changing to GREEN again. Sounds similar ? The market is still internally very strong and bullish. I don't expect a big correction today although there might be a lot of fluctuations today.

Last night, Euro does through a correction. Oil has jumped above 63. We need to drive less again. I am hating to go to gas stations again. The global stock market shoot up very well last night, partly due to ye yesterday's US stock market rally. Hang Seng index climbs up an eye-catching 5.26%. Amazing !!!

GM says bondholder offer fails and the bankruptcy is VERY likely now. But it's stock seems well supported around 1.20. But I don't want to play it now. More risky than yesterday[2].

PPCO looks good so far, the volumes need to surge [3] more, but the price holds very well so far.

Today's market will have a lot of fluctuations, that makes me hard to predict today's market close, but I still shoot the best guess as usual [4].

[1] gap down

[2] risky GM now

[3] PPCO volume surge

[4] the best guess

ER Play Review List

I will review some nice ER plays here so that we can learn from them and improve our ER play skills. ER stands for earnings report, it may beat or miss the estimate. As a result, the stock price may up/down dramatically.

1. PCLN ER play in May of 2008.

2. GOOG ER play in April 2008

GM - Day trading chart review

During the correction, if the downtrend channel is broken out, a massive short term run up is expectable. The chart shows GM on May-26-2009, facing the bankrupcy .... GM jumps up from 1.25 to 1.84 in 45 minutes.

Good Day Trading Charts Review List

I will review some nice day trading charts set ups so that we can learn from them and improve our day trading skills.

LUD: May-26-2009

1. GM: jumps up from 1.25 to 1.84 in 45 minutes on May 26,2009.

Is mad bull coming back again? - Close remarks

Today the bullish run up is very impressive, bulls really win. I hope bears don't get burned.

The DASDAQ chart shows a bullish flag breakout, need to re-confirm, but very possive sign
As mentioned before[1], either 1773.13 or 1664.19 are important points, breaking out either one will bring in a strong moving wave, so far, it seems 1773.13 will be broken out and make a NAZ new higher high than 1773.
IF QID can not hold above 35 well, it will drop more. IF FAZ can not hold above 4.5 well,it will drop to the $3 level. So be careful, if you are holding them.
PPCO as mentioned before[2], very possible to break out 2.2 once the volume surges! So keep watching it.

[1] NAZ 1773.13

[2] PPCO

Tomorrow's Gap Prediction is just updated

Tomorrow's Gap Prediction is just updated

Tonight, will post some charts and see where the market will go.

Nice day trading opportunity for GM today.

the break out of PPCO with a very low volume is very interesting [1], need more confirmations....But really a positive sign, with some bad news. It really need to be above 2.2 for a breakout.

[1] PPCO breakout

Nice run up, but GM is weak

So far the market runs up very well. FAZ has broken the $5 bench mark for a while. Will it comes to $2 in the near future ? QID formed a "death crossing", DUG is below 19.00 now. Euro bounced back very nicely. Oil is above 61 now and the European market has been dragged up by the US stock market 's bullish run up so far today.

I noticed GM is pretty weak this morning, but as planned before [1], I bought in some GM shares below 1.20 to test some water.

Here, I want to compare the charts of GM and BAC before in March, see below.

My conclusion is:

technically, GM could run up to $4, or more and become the next BAC, 5 bagger from here
fundamentally, GM is in a worse situation.

So be careful !

A nice gap down this morning,but may be a up day

As foretasted three days ago [1], the market really gapped down this morning.

But very quickly, the bulls make the index in green, indicating the internal strength of the market. EURO starts a strong re-bounce after hitting ~1.386. The world market including European, china, Hong Kong are all down last night.

As concluded last Friday [2], the bulls are still in good control. So be careful, if you are shorting the market very HEAVILY.

For QID, watch 39 level closely, if it can broke 39 out well, it could go up, otherwise, no way to climb up big.

Tiger Gao Market Watch