2 Aluminum ETFs running hot

iPath Dow Jones UBS aluminum subindex total return ($JJU)

PowerShares DB Base Metals Fund ($DBB)

These 2 ETFs own aluminums in their portfolio. The first one is a pure play on aluminum futures, while the second one contains copper too.

What is interesting is that these 2 funds have appreciated in value since the steep drop while the aluminum companies like Alcoa Inc and Chalco are still trading at their depressed levels.

This goes to show that Alcoa Inc is poised for a steep climb in the coming week, and I strongly recommend Alcoa Inc for the month of March.

Alcoa Inc $AA swing trade.

$13.30 - $15.1 First trade.

$14.2 - $16.5 Second trade.

$15 - $20 Third trade.

What a rallying stock chart looks like

This stock is one crazy stock, rising 3X over the past 4 months.

United Airlines options players have netted 20X from their options bets. I believe some options players who invested $10000 worth of $15 March Calls when they were selling at only $0.15 are now millionaires. The rest of us can only stare with our mouth wide open.

No doubt this is a speculative play. If you are interested in more speculation, try MGM stock. $20 Jan 11 options are selling at a cheap price 50cts per contract. If MGM were to reach $25, you would make 10X. If MGM reaches $30 by then, you would net 20X. Not too bad.

WYNN Resorts $WYNN would most probably rally next week

WYNN Resorts posted extremely strong earnings last week. The stock has been in a trading range of $60 - $65.

Its recent strong earnings would most probably push its stock to a higher trading range as shown in the chart below.

I am a buyer of WYNN Resorts at any price below $65.

Bank Of America Corp $BAC rally continuation

Bank Of America Corp would probably continue its rally next week. It will face its first resistance test at $17.20

Should it face many sellers there, look for a pullback reentry at $16.30

ISM readings should dictate the trend for next week. The economy is recovering. Watch out for the next rally.

Alcoa Inc Bullish Hammer

Let the chart speak for Alcoa Inc. $AA (daily chart)

On Friday, Alcoa Inc dived southwards in early trading as traders are uncertain whether the economy is in the right track. Trading was very light. Alcoa Inc managed to close just about its previous close. Creating a bullish hammer in the process. What may happen on Monday is that Alcoa Inc would most probably open above the high of this hammer (about $13.45) and if the ISM reading is good, Alcoa might actually make a run up.

Given that there were many positive news for the aluminum industry which have not affected Alcoa’s stock price, ISM would be the main factor that would allow Alcoa Inc to explode past that stubborn resistance at $13.90.

Next week should be the week that Alcoa Inc soars.

ISM index may rise on Monday

The manufacturing indexes are showing hints that the ISM for February has risen yet again.

This is a report from Danske Research.

ISM index would lead the market next week. It is released at 10am on Monday.

Stocks that would be affected are mainly industrials and materials.

apple computer inc AAPL finally looks like a solid buy.

apple computer inc AAPL has shown that it is not going to form the head and shoulders pattern that I posted previously. (Check the APPLE section) Scenario 1 seems to be taking place.

Recently, Morgan Stanley reiterate its bullish stance on apple computer inc. It even gave Apple a bullish target of $325, but I rather look at its $240 target for now. That $325 scenario is over optimistic, it assumes that IPAD is going to rock the future. However, personally, I doubt that the IPAD is going to be that popular. But apple computer inc never fails to surprise us with their product.

Anyway, the chart speaks a thousand words. AAPL has defied all odds, and with Morgan Stanley and many other analyst lining up to pump this stock, we as the small guys should join in the line and load up on AAPL. The support is at $180 should AAPL drops drastically. However, the upside is $240, and maybe even $280 in the near term. The reward-risk ratio is too good.

I am bullish on apple computer inc. AAPL is the tech stock to buy.

Weekly Review ending FEB 26

This week ended with a long list of bad economic data.
BAD NEWS:
Consumer Confidence
Unemployment Claims
Housing Sales

Good News:
Approved Jobs Bill
Inflation is not a threat
Bernanke saved the market, reduced speculation
Interest rate is staying at unusually low level
Chicago PMI up, prediction for ISM to be up

As investors, we can see that the BAD NEWS outweigh the good news. The bad news show a weak economic recovery as the jobless issue is not addressed by the government well. As a result, consumer confidence was bad.
As for housing sales, it is a general trend that housing sales are weak during the December and January season as people do not usually buy houses during Winter. Most sales are done during Spring and Summer, so there’s no worries for this.

As for the good news, the Jobs Bill could create and save another 2 million jobs. The Chicago PMI and the various manufacturing indexes last week help us predict the ISM that will be released next monday. And the prediction is a positive ISM once more.

The week ended higher eventhough the bad news were really bad. It shows that the majority of investors are not swayed by these bad news which are lagging indicators. The see saw action this week proves that liquidity of stocks is really low as the market was so volatile while the volume was small.

Most probably, the big boys were bullying the small retail investors by burning them with margin calls and scooping up their shares at such low prices.

Next week, we need to see the ISM. A good reading of 58 would boost the markets to new highs.

This week good trades were Bank Of America Corp and all financials. Hedge funds are really keen in buying financials as seen by its remarkable rise, even though the housing recovery seems to threaten financials the most. This can be seen as a leading indicator. Hedge funds are betting on an economic recovery and they love to bet on banks that were the hardest hit.

Bad trades were Alcoa Inc, it broke the nice triangle pattern downwards, as a result, it dived to a low of $12.80. The big boys scoop up lots of Alcoa Inc in the past 2 days.

Alcoa Inc surprisingly underperformed the market on Wednesday. It was one of the only 2 DOW stocks that went down while the other Dow stocks were green.
Not surprisingly after that, 2 option plays were seen.
1: A strangle $12 - $13
2: A bullish call buying of July 15 contracts. 36000 contracts traded hands, and one block was 27000 contracts. Only one big investment bank could have done that. The derivative department will soon face regulation by the government is playing with Alcoa Inc.

There is something going on with Alcoa Inc that has resulted in this dirty Wall Street manipulation. (this is an unfounded conspiracy) Option market is the best place to check out this manipulation due to its lax regulation.

Casino stocks are trading at a tight range after releasing their bad earnings for their supposed strongest quarter as that is the holiday season. Start accumulating Casino stocks at this low price. They are going to be volatile soon.

Retail sector continues to shine even though consumer confidence index was low. MACYS M rose from 15.6 to 19, a remarkable rally despite this poor retail sentiment. The market is really acting strangely. Contrarians are playing this. When there is good news, stocks go down, when news is bad, stocks go up. Wierd wierd stuff.

I am adding Micron Technology into my Tech portfolio. I will talk about it in greater detail next week.

I am still holding Alcoa Inc AA, Bank Of America Corp BAC, Las Vegas Sands LVS.

I will continue to accumulate Alcoa Inc AA at this low level. I have cancelled my short recommendation on US Steel. The steel sector is too strong. Eventhough US Steel is slated to report poor earnings for this entire year, it is still a cheap stock compared to its peers, hence its price may even increase. It has a target price of $90 by analysts. I would just avoid this stock and play other commodities stocks such as FCX, AKS and AA.

Alcoa Inc AA Buy Confirmed yet again

This is the 6th time I am promoting Alcoa Inc AA. It is currently the best DOW stock as it has the highest expected returns.

Swing trading range. $13.3 - $15.3 (15% returns)

Why Alcoa Inc? It is the only commodity stock that has not broken upwards to the elevated trading zone as shown above.

Even United Steel has broken upwards to its new trading zone. FCX too.

Alcoa Inc has been forgotten by the portfolio managers. Fret not, this should be the last time it gets pressured by the sellers at $13.90, I strongly feel that Alcoa Inc will rise to the new trading range.

Especially that the Durable goods rose 3%. This is significant for Aluminum sellers as Durable goods include transportation like aeroplanes. They use up alot of aluminum.

Alcoa should be trading within $14.20 - $15.3 next week.

Las Vegas Sands LVS is in a tight trading zone. BUY below $16.4

I like trading Las Vegas Sands LVS stock. It is currently in a tight trading range.

The middle line is the trading signal. Every time LVS breaks below this trading line, I will accumulate LVS shares. The support is very strong at $15.5.

I sell some shares whenever it crosses above the middle line. Especially at $17.8 - $18.1

However, I do own some shares to keep long term. But for now, LVS will be in a trading range till the next earnings release.

Buy below $16.5, Sell above $17.8

Keep doing that. You could make about $4/share by the next rally. However, you may also miss the rally. So this is the risk of trading within the zone.

When the 200SMA (the lowest MA) breaks through my buy zone, I will stop swing trading within the zone and keep my positions long till $22.

Dow looks set to rally

The DOW really wants to rally. Traders started pumping the DOW when it was resting around its 38.2 Fib level, the long wick proves that Investors find the current price too low. They are scooping up lots of shares at this price.

I think tomorrow, there may be a slight dip in the morning, followed by a bull run.

Alcoa Inc trying to touch 200SMA

Alcoa Inc is making a dive to its 200SMA currently at 12.68, and I think it should rise to 12.75 tomorrow.

So if the DOW do retrace in the morning to 10130, then Alcoa Inc AA will retrace to 12.75 before making its upward move.

Buy more to invest at $12.75. Take profit at $15 for swing traders and $25 for investors.

DOW retracing to 50 FIB LINE

The DOW seems to be retracing to the 50 FIB line currently located at 10130 which is also a previous resistance.

This looks like a strong support, and I truly believe the DOW will rebound from there.

Today should be a down day, tomorrow, there might be a morning dip to touch that FIB line 10130. And I will add positions there.

Unemployment is a lagging indicator. Manufacturing indexes are leading indicator. This is why I affirm my bullish views. Manufacturing indexes are good.

Micron Technology MU bullish sentiment

Today, MU rose 5% after I initiated a stock watch on it. I will continue to watch how this stock trades before looking for an entry.

The top line is a resistance which MU failed to break through strongly today. The bottom line is a support level.

Continue to watch MU. I prefer it to make a new swing high. Perhaps when it breaks $9.5

Alcoa Inc AA chart update

Alcoa Inc AA has failed the first ascending triangular pattern. The stock is severely underperforming the Dow. Today, DOW made a good move upwards as expected, it should be headed to 10500 in the next few days.

Alcoa Inc AA unexpectedly drop, it was the one of the only 2 stocks of the DOW that went down. There is no clear reason for this. Some believe it is due to the break down of the triangle pattern which is seen as a bearish signal.

Bullish signals for Alcoa Inc.
Aluminum price increase (94.5cts/lb)
Stock closed slightly above support of $13.05

Short Term Trade: $13.05 - $15.30

This stock is now the most undervalued DOW stock with 60% upside potential.

Bank Of America Corp Bullish continuation

Bank Of America Corp BAC continues to head upwards. It is breaking the double top created by the last 2 candles.

Above is the daily chart. BAC may be able to pop to $17.1 the first resistance. If it breaks $17.1, it may jump to the next resistance of $18

Dragon Stock Watch: Micron Technology Inc. NASDAQ: MU

This is a new stock that I will be covering. It fits the Dragon portfolio as MU has a upside price target that is 60% above the current price.

For now, I will just watch how MU trades.
Dragon Tip 1: Do not trade a stock that you are not familiar with. Allow yourself to familiarize with the stock for at least 3 days.

Market Update. Stocks to watch

Financials held up really well today. BAC retraced to $15.8 as expected.

Materials slide. Alcoa Inc AA has a technical break down as a result. The triangle pattern is gone. However, it is still holding its $13 support well. Closing strongly at $13.20 while the DOW slid at the last moment.
Century Aluminum CENX earnings was disastrous sending the stock down by 10% today. Will be watching that stock for support and buy to invest.

Retail unexpectedly held well too. Macys M went up 1% despite the poor consumer confidence index. Walmart WMT traded sideways.

DOW stocks that were badly hit were Boeing BA, Caterpillar CAT, Alcoa Inc AA. Most of these were the industrials stocks. It seems that hedgefunds taking advantage of the poor sentiment to scoop up financials sector.

Casinos stocks took a beating too. Most of them slide 5%.

Watch to buy
Alcoa Inc AA
Bank Of America Corp BAC
Century Aluminum CENX
JPMorgan JPM
Wells Fargo WFC

These stocks have tested their support today.

Tomorrow, we are expecting housing sales, and Bernanke testimony. Expect continued volatility as traders look for signs of the next bullish rally.

DOW is resting on support. There has been a trading range of 10300 to 10500 from November to Decemberr, this should continue on.

This is the DOW daily chart. The circled trading zone was the November to December trading zone.

SENTIMENT: VERY BULLISH

The Correction is almost over. Make way for the bull.

What is happening to the market now is a 10% correction.

The rally has started. This should break the January highs of 10700 and test 11500 before a major correction to 10700 again.

The market is recovering as evident from the many economic indicators. Unemployment indicator is always a laggard. The manufacturing indicators are showing major positives.

Empire state index, Philly index, Richmond index, Michigan index are all showing positive growth in the manufacturing industry. Consumer confidence is a lagging indicator as well. And it should improve significantly next month as predicted by the manufacturing indexes.

The Fed is getting ready to increase the interest rate, so this is the last chance for a quick bull rally. After that, it will be a slow bull run or should we say a cow run.

The market has tanked heavily since January, and it has regained its footing recently until China blew it up. However, China cannot really stop their growth just by their tightening policies, they are going to grow really fast. 10% GDP growth again.

Tomorrow, we will see the housing sales which is expected to be positive. Bernanke testimonies will be watched by Wall Street.

All bull runs always begin with a sudden drop, followed by a series of long green candle.

Once the bull starts running, it won’t stop. A bull run is in the making here. Witness it.

SPY Chart Update FEB 22

Keeping the technical analysis on the broad market simple, I only show 2 support/resistance line.

The candle is well supported above the 50SMA.

This is the SPY daily chart. Bullish scenario would mean breaking of the January Highs. All investors are hoping for that scenario. Because if it drops here, it looks like a head and shoulder which is ugly. We do not want an ugly chart. So Traders need to pump this up this week to the highs.

Double dip scenario is unfounded. Economy boosters are seen at every corner.

Unemployment has peaked at 10.0… Credit cost declining, manufacturing up.. China tightening.. FED increased discount rate. Bernanke is smart… he tested the market at its lows…

Bullish on the market to the next earnings season. Buy now, sell on the earnings. That’s the plan.

Las Vegas Sands good BUY

The first target was almost reached, but the stock dropped just before.
Stock has crossed my first resistance. Looks good from here. LVS is a buy.

Apple INC AAPL head and shoulder formation or … ?

Apple is a buy at $180

Watch whether the head and shoulder formation would be formed. I would not short APPLE as it has good fundamentals, but I would be watching for a retracement for a BUY TO INVEST at $180.

Bank Of America Corp faces resistance

There is resistance at 16.33.

Look at the trend line, Bank Of America Corp might be pressured by channel traders who would be shorting BAC at $16.33

Support is at $15.8

Alcoa Chart update. Still in bullish triangle zone.

It is getting very tight now. Any news impact would kick start this bull run. Alcoa Inc breakout target is $15.30 for traders. Investors will hold this till $25.

Market watch Feb 23

Today was a rough day, market was trading at a close tight range.

This is the DOW 5minutes chart.

2 scenarios exist for tomorrow. The dotted line shows a correction of DOW to the support at 10300.

The solid line shows a trading range, that DOW would consolidate given no economic news.

2 Major news will be released tomorrow. Consumer confidence and the Richmond Manufacturing Index. Positive Richmond manufacturing index would boost all industrials and materials stock, financials will also continue to soar. Consumer confidence strength would benefit retails the most and all other sectors as well.

Continue to stay long Financials, Industrials, Materials. Stay out of Telecom, Utilities.

There was great strength in bank stocks today. Most of the recommended banks are up 2%. JPM and BAC.

Metals were weak as the dollar strengthened yet again.

Aluminum price has touched 96cts/pound today, this signals more upside for Aluminum stocks which are severely underpriced now.

Watch for CENX earnings tomorrow. This would affect all aluminum stock. Earnings released at 11am.

Stay bullish on
Alcoa Inc AA
Bank Of America Corp BAC
Citigroup C
Las Vegas Sands LVS
MGM Mirage MGM
WYNN Resorts WYNN
JPMorgan JPM
Wells Fargo WFC

Alcoa Inc AA Rising triangle Breakout formation. Strong Buy.

Alcoa Inc Analysts’ projection

BUY recommendation:
JPMorgan $25 Dec 11
Morgan Stanley $22 Dec 21
Barclays $22 Dec 21
Goldman Sachs $19 Jan 8 (NEUTRAL recommendation)
BMO Feb Market Perform
UBS Feb 2
CITI $17 Feb 2
Deutsche Bank Feb 8

The reason for the strong support lately could be due to the latest 3 banks scooping up shares for their clients below $14. The breakout will send us towards $15.3 first target, and $18 next target.

There is obvious accumulation going on as seen by the rising triangle with thinning volume as the triangle is squeezed. This is a very bullish scenario. Furthermore, the candles are all supported by the 20 SMA. Another bullish sign.
Notice the 4 long green candles in the triangle, those are sure signs of institutional buyers scooping up shares. The latest scoop was at $13.20 and $13.5
This is going to break out in by next week. We should be able to see $14.80 next week. My target is $15.30. And if the DOW rallies to 10800, then my target is $18.

Alcoa is a laggard; it is always slower than the DOW by a few days.
Fundamentals are sound. Alcoa is going to be highly profitable in 2012. Normalized earnings expected to be $2.50. Potential of $4 earnings per share by 2015.

Dividends expected to be raised by the second half of the year to an annualized rate of $0.50 which would definitely prompt more funds to buy this stock as the dividend yield would rise to 3%. The expected returns on this stock is going to be very high. Dividends will increase to $1 by 2015.

Notice the money flow index is rising upwards. It is currently at 37.15, when it crosses 50, it is a confirmation of a bull rally.

Aluminum demand will rise

The signs are out there. Aluminum demand is going to soar. This is why aluminum price remains high even though there is a large contango in this metal.
The LME stock is currently at record highs of 4.6mln as futures investors are eyeing the expected increase in Aluminum prices years ahead.

Global demand in 2009 was at about 32mln, and this year it is expected to rise to 36mln tons. There is no need to worry about the high stock level at the LME warehouse as the demand is just too high.

China’s demand was 14mln tons last year. Far higher than the estimates of 10mln tons that analyst predicted 5 years ago.
"BEIJING - China's demand for aluminum products will reach 6.78 million tons in 2005, and continue to rise to 7.66 million tons in 2006, Vice-Chairman and Secretary General of China Nonferrous Metals Industry Association Pan Jiazhu noted at a recent international aluminum conference in the US.
Over the long term, demand will hit 8.43 million tons, 10 million tons and 14.3 million tons by the year 2007, 2009 and 2020 respectively, predicted Pan, adding that the growth rate of"

China’s demand is already in excess of 14mln tons which was the demand predicted for 2020! We are 10 years earlier.

Chalco, China’s largest aluminum miner said that China’s demand is expected to grow by 23% this year. They are expecting demand to be 17.5mln tons.

However, do note the supply capacity that China has. It is currently at 17.5mln tons, and she is increasing it to 19.5mln tons by this year, and to 21.5mln tons by 2012. If demand continue rising, China may be in a shortage. Furthermore, the country is now limiting new licenses for smelters due to concerns of power outages in the cities.
Europe is going to shut down more than half of their supply capacity of Aluminum as the power bills are getting to high. They would be importers of Aluminum soon.
As power and energy becomes a major concern, aluminum metal is in high demand for anything that moves. Trains, aeroplanes, cars, trucks, ships and aerospace requires lots and lots of aluminum.
This is one metal that will experience a price surge in the near future as energy becomes more expensive. This is why I think the stock levels in LME will grow even higher and higher. Soon, Goldman Sachs may be setting up an ETF fund to purchase physical aluminum for storage, selling it in the future at perhaps $2/pound.
Global demand of Aluminum is expected to soar to 50mln by 2015 and to 70mln tons by 2020!

The signs are everywhere out there on the internet.

Jan 29: Alcan Ceo says aluminum demand will recover in the next three years.
http://www.sourcejuice.com/1299294/2010/01/25/Alcan-CEO-aluminum-demand-recover-next-years/

Feb 1: Chalco Expects 23% China Aluminum Demand Gain, Citigroup Says
http://www.chinamining.org/Companies/2010-02-01/1265005198d33923.html

Feb 8: DJ Alumina CEO Says 2010 Aluminum Demand Expected 10% Above 2009
http://www.tradingmarkets.com/news/stock-alert/awc_dj-alumina-ceo-says-2010-aluminum-demand-expected-10-above-2009-762130.html

Feb 19: Aluminum demand in Asia may rise
http://www.bloombergutv.com/industry-news/other-industry-news/45234/aluminum-demand-in-asia-may-rise.html

Thus, Aluminum stocks will be the best pick of the year.

2015 target for these aluminum stocks

Alcoa Inc AA $60
Century Aluminum Company CENX $85
Aluminum Corp. of China Limited (ADR) ACH $150
Kaiser Aluminum Corp. KALU $100

Consider one portfolio of Aluminum stocks diversified.
The following price targets are based on these assumptions.

BY 2015,
- Aluminum global demand rises to 50mln tons
- Aluminum priced at $1.5/pound at LME
- No financial meltdown

Which banks are bullish on Aluminum?
- Barclays, Deustche, Goldman Sachs, Credit Suisse, Citi,
JPMorgan
Which banks are bearish on Aluminum?
- HSBC.

Start loading up on Aluminum stocks today at these cheap prices. And ride it through the next 5 years. China is going to experience yet another booming year and it will keep happening especially as it braces itself for the year of the water dragon in 2012.

tradedragon Weekly Update FEB 16-19

Monday: President’s Day
Tuesday: Bull Rally due to Bullish sentiments in Europe
Wednesday: Materials profit taking, Financials soar.
Thursday: Philly Index surprise, Unemployment down
               Market rose. Bank Of America soar.
Friday: Market opened low, FED increased discount rate.
           Option expiration day, low volatility.
           Steel soared.

It was a bumpy short week, and mostly bullish week.
Option expires today, thus most stocks ended up hovering around their whole number region. JPMorgan JPM could not move beyond $40, MGM Mirage and others too…

Even the DOW closed at 10400.xx a whole number too.

Commodities are in a rallying trend.
March Copper contracts shot past 3 week high and spot price found support at $3.30.
Aluminum rose to $0.94, a breakout above $0.95 will send it to $1

Dollar index rallied when Fed announce their plans. However, it is starting to reverse its trend.
EUR/USD ran up 150pips to $1.36 from a low of $1.345.
A bullish trend is expected for EUR/USD as the dollar starts weakening again amid strength in the stock market.

Inflation fears were subsided after Core CPI showed negative for the first time in many years. CPI also increased 0.2%, less than expected.

The economy looks healthy again as the FED move can be seen as a confidence booster in the financial system. For this recovery play, invest in Financials, Materials, Industrials, Retails as these sectors tend to yield the highest returns during this period of economic recovery.

Underperforming sectors include Utilities and Telecom

If you are in to this TECH rally, consider APPLE AAPL, Intel INTC, Sandisk SNDK and AMD. These stocks are still a great buy as they are able to yield 30% returns by year end.

Speculative sectors include airlines and gaming. Watch Delta Airlines DAL, and Casino stocks as usual. WYNN Resorts, Las Vegas Sands, MGM Mirage and Melco Crown Entertainment MPEL.

Good Trades for the week.

Long Bank Of America Corp BAC: $14.8 - $16.0
Long Citigroup C: $3.20 - $3.40
Long Alcoa Inc AA: $13.5 - $13.90 

Current holdings:

Long Alcoa Inc AA $13.5
Long JPMorgan $39
Long Intel $19.5
Long MGM Mirage $10.5
Long WYNN Resorts $61.5
Long Las Vegas Sands $15.5
Long Melco Crown MPEL $3.7

Long EUR/USD $1.346

Will do some technical analysis for potential breakout stocks for next week.

Option Pain Study

Let us see a few stocks that passed the option pain theory.
Option pain is a theory that Option Sellers would want their Options to expire worthless, killing the Option Buyers. Stocks would hover around the Option Pain level, which is the value that would give the most losses to Option Buyers.

Here’s one stock. MGM Mirage

Mgm rose 2% today to hover around $11

Here’s another one. JP Morgan JPM

JPM is now trading at $40.

And here’s a classic example. Sprint is performing so badly in the market, yet today it rose 6% to kill all put buyers at $3.5

Now Sprint is trading at $3.6

Alcoa Inc AA option pain is at $15, but I don’t think there’s enough power for the option sellers to push price up that high. So I guess what they would do is to buy shares and let the price hover the nearest option level, either $14 or $13. However, there is more pain at $14.

Market Dip Buy to Invest opportunity

The stock market will be on sale tomorrow, and many stocks can be bought at a good discount.

Alcoa Inc AA is still showing a strong bullish chart. However, due to unforseen surprises by the Fed clowns, the market is going to take a beating tomorrow. Alcoa Inc should be supported at $13.25 - $13.30 and if there is buying in the general market tomorrow after a sell off, then Alcoa should close around $13.50.

The Option Pain of $15 did not work. I guess that theory can be dumped into the bin for now. I will look for another Option Pain stock next month to test it again.

Financials would most likely be sold off as the discount window affects them the most.

Watch gaming stock, look for an entry point for MGM Mirage, Las Vegas Sands since these 2 casinos have already reported their earnings.

MGM Mirage earnings shows positive growth of the company. It is now a stable company. Buy MGM if it goes below $10.

EURO chart

This is the Euro weekly chart. The EURO has slammed through many supports and it is now hovering about this support that is formed in August 2007.

Will the EURO begin its ascend again?

EURO is correlated to the stock market. Strength in EURO signals weakness in dollar index. And that means stock market will rise.

Fed increases discount rate, and what does this mean?

Market players are panicking at Wall Street as clients want out of stocks fearing the market will plunge.

I think there is going to be an overreaction to the news.

What does this news mean? Market players believe that this means the interest rate is going to be increased in the near future, nearer than expected. It could happen in September. While most people have been predicting Fed will only do this by December.

What does this do to stocks? Interest rate goes up, portfolio managers have to readjust their portfolio weightage. Perhaps they have to move some money out of stocks and change them to riskless assets like Treasuries which may give higher interest rates. They lower the risk for their clients and yield the same expected returns. (read on portfolio theory)

However, this is assuming that the returns are going to be bad for stocks. The interest rate is still 0-0.25% as of now, why are investors running away so early? The market is not ideal, some investors are just irrational. Perhaps they would like to run to other markets instead of US as the returns are now higher in another market.

It boils down to returns on stocks. Interest rate increase affects portfolio decision. Since we know what the portfolio manager might do – sell stocks, buy other investment vehicle, that is why traders start lowering the market value. And when that happens, the returns on stocks are now the same as the new portfolio. And everyone is happy.

Note that this would only happen once the interest rate changes. Not when we are speculating when it would change. I think any dip caused by this news is a buying opportunity.

Market Outlook February 19

Today, the Fed raised the discount rate to 0.75%. One good thing is that financial condition has improved, and it is bad as this strengthens the dollar and reduce lending.

Commodities may be strained in the short term, however, any dip is seen as a buying opportunity. There is no reason to panic. Just hold your shares and ride through the weekend.

Stocks to buy remain the same. My favorites are Alcoa Inc, Las Vegas Sands, MGM Mirage.

Bank Of America ran up really fast, expect a bit of profit taking.

Economic data to watch:
CPI

The next rally is still in place. Dow could actually make new highs by the first half of the year.

Today candle action is good for all sectors but the Fed latest news may change the situation. It was supposed to be a super bullish day tomorrow as indicated by technical analysis. However, Fed decision may strangle the rally for awhile.

Pre-market February 18

The unemployment data is really bad. 473000 claims.
PPI rose, too much inflation.
Overall today sentiment is really bad.
Avoid long trades.

Most probably Dow will descend today.

Dragon Stock Picks February 18

Bank Of America Corp BAC broke through the 50SMA line on the daily chart. This is a bullish move attributed to the positive economic data.
Credit card default is declining. Charge off at 13.25% from 13.5%
Mortgage modification increased, less risk of default.
Normalized earnings of $2.30 achieved by 2012.
Stock target = $25

Citigroup C rose on revelation that John Paulson and friends have been scooping up more Citigroup shares. This is a bullish move as many industry experts follow Paulson trades after he made a killing in the bear market by shorting financials.
Citigroup target $4.50 by June.

JPMorgan Chase & Co JPM stock remained at $40 as traders look at the Dow Jones Index which is currently at major resistance. A break over 10320 would be a bullish move for JPM. JPM together with other financials will rise in as the recovery road becomes clear. Investors are waiting for a dividend raise which will boost this stock to $50.

Wells Fargo & Company WFC remains one of the Financials industry’s favourite stock. It is Warren Buffet’s baby together with Bank Of America Corp. Wells Fargo has superb management resulting in a stable and profitable bank even during the crisis. WFC is a steal at this price levels. Target is $34 by June. Not as much as Bank Of America Corp, but less risk.

Las Vegas Sands LVS trading in an uncertain manner as traders await the earnings release. Some traders are shorting LVS due to the Sell on the news sentiments.
Watch LVS earnings. Good earnings signal a target of $22.
Singapore casino is a definite booster for LVS as traders await news of Adelson’s comments about the Singapore casino. The other Singapore casino is already open.

Dell will most probably be following Hewlett Packard’s lead as HPQ posted earnings that beat forecast. Dell is undervalued as traders have been keeping the price down due to its poor performance in previous quarters. However, the cyclical renewal of computers will definitely boost Dell’s earnings. Dell target $17 by June.

Alcoa Inc AA is trading in an ascending triangle pattern. A breakout above $13.90 would easily yield a price target of $15.10 for a quick 8% gain. Alcoa target $20 by June. Aluminum price is stabilizing at high levels.

United States Steel X is descending due to profit taking of the materials sector. X may have weak fundamentals, but it is in a strong sector, thus it would naturally rise with the sector. Stay away from this stock. Look for short opportunity when the stock makes new highs. If you are bullish on steel, trade AKS or FCX instead.

Other dragon stocks

MGM MIRAGE MGM
WYNN Resorts WYNN
General Electric GE
Melco Crown Entertainment MPEL

Alcoa Inc AA Buy again

This is the daily chart for Alcoa Inc AA.

It is obvious that this is a rising triangle formation waiting to breakout. The pole is $1.20 long, so a breakout above $13.90 would give this a swing target of $15.10

Watch the economic news tomorrow. If unemployment claims decline to 430,000 load up on Alcoa Inc AA.
If unemployment claims is above that but below 470,000, watch Alcoa Inc AA chart closely. Strength in the general market would boost Alcoa to at least $14.

Aluminum cancelled warrants are increasing, meaning that demand for physical aluminum is increasing.

Alcoa Inc AA is a good buy now.
For higher risk play, consider CENX, earnings release next week. CENX moves 1.3X more than AA.

This week is option expiration, usually stocks will close near the .00 levels, Alcoa should close near $14 as the options expire, this would allow puts to expire worthless.

Buy Alcoa Inc at $13.6 to $14.2

Alcoa Inc Option Pain $15

This is Alcoa Inc option pain. Notice the number of $14 Puts is so much higher than that of $14 calls?

Naturally, investors would want the puts to expire worthless since it is worth much more about $6mln worth of stocks.

Yet, this is not really that large, $6mln worth of stock compared to Alcoa Inc daily volume of $400mln a day! However, Option pain takes into account other option contracts as well, not only the $14 contracts

Let us see whether Alcoa will break $14 before option expiry date. If this proves right, then we will witness Option pain theory.

Investors generally want options to expire worthless, that’s the theory. So you can see the $14 PUTS are still worth something if the stock is below $14 on option expiration.

Buy Alcoa Inc AA at $13.5

Market Update February 17

The Dow Jones is facing major resistance at 10315.

Economic data was very good.
Industrial production beat estimates 0.9%
Housing Start went up

Bank Of America Corp BAC went up to $15.55
Material stocks decline as investors start collecting profit since the Dow is at resistance.

Bargain hunters. I will still buy Alcoa Inc AA.

Support is at $13.60 and $13.50

Alcoa Inc should rise above $14 if Dow breaks its resistance. Watch Dow closely.
Dow support is at 10150, 10200.

Watch gaming sector as Las Vegas Sands release their earnings after the bell. Good earnings will signal an uptrend rally for gaming sector.

Stocks to watch:
Bank Of America Corp
Alcoa Inc
Las Vegas Sands
MGM Mirage

Bullish on financials and materials.

Note that this is option week.

Bank Of America Corp Buy Confirmed

Bank Of America Corp BAC made a solid bullish move today. It closed above its 200SMA which was a key resistance.

Expect more bullishness as the general market is improving. Traders expecting DOW to test January highs again.

Option pain for Bank Of America Corp is at $15, so expect BAC to be in a trading range between $15 - $16 for this week.

Chart is quite bullish. Same chart as before.

Key Resistance: $15.50
Support: $14.80

Alcoa Inc Buy Confirmed

Alcoa Inc AA has a bull trend that is confirmed today when it broke key resistance at $13.60

Tomorrow, Alcoa Inc will face another resistance at $13.90 and it looks set to be broken.

Another bullish factor is that the option max pain for Alcoa Inc is currently $15. Read more about option pain for this. Basically, option pain indicates where the stock would want to hover near its expiration date. This is because the option market is a zero sum game. This gives more strength to support Alcoa Inc bull rally to $14.80 which is our first target level.

Aluminum price is now higher than November level at 95cts. I expect Alcoa inc to show really strong bull power tomorrow.

Investment buy confirmed. Keep holding all your Alcoa shares that you have bought at $12.9 and $13.15

Day trading ideas: Alcoa Inc AA buy $13.70 to $14.20

Break out will most likely occur with a swing trade target of $14.80.

See how Alcoa Inc AA bounced off the 200SMA and it closed above the 20SMA today. Very bullish.

The candle is also a bullish one a hammer waiting to pound that resistance level.

Confirmed BUY Alcoa Inc

Market Update

Stop trading shorts.

Remember, in a good bullish market, stay out from shorts.

So today good trades are:

Bank Of America Corp BAC
Alcoa Inc AA
Las Vegas Sands LVS

Trading Picks for February 16

Market update

Nikkei: Down, fear of China’s policy
FTSE: Up. Bullish on miners, banks. (Rebound play)

EUR/USD: 1.3590 (hit a low of 1.3515) Bear trend detected.

Forex Chart powered by CMS Forex

Commodities went up. Copper up 1%, aluminium up 0.5%, nickel and lead went up 2%

Expect more uncertainty this week as market seeks to find grounds for the next rally.
Dow jones will be pressured by the strengthening of USD and I believe that it will retest 9850 before popping up for new highs in May.

In London Market, Barclays Bank (+4%) led the financials up as it announces that it will post ‘big profits’. However, other banks like Lloyds, HSBC did not rally much.

Sideway trading expected tomorrow. China’s policy tightening will continue to keep investors skittish.

Look for weakness in commodities and short them if they rally. Steel has been going up due to strength by Rio Tinto and BHP which received upgrades from Credit Suisse.

Apparently, Metals have received lots of brokers upgrades lately. They are no doubt a good play in this recovery, however, China’s tightening will take effect soon and this uplifting rally will be short lived.

Looking at BHP and RIO trading pattern in London today, a bearish gravestone doji was formed. That is a red flag for a short term bear trend testing lows again to confirm the support.

Expect commodities to retest their support once more before a real rally can emerge.
There is a rumor that China is concerned with the sudden price surge of commodities prices. She should be as China is the largest importer of commodities especially metals. China is starving for Iron as her Ores are low grade as compared to those found in Australia and USA.
This could be why China impose this monetary tightening to ease the demand of metals so that the price stops increasing or even decrease.

China is expected to close a deal for 2010-2011 contract pricing for metals. The market players know this and they may want to lower commodities prices lower in lieu of this rumor.

Short term trend for commodities sector is thus down.

Meanwhile, other sectors like Financials are heavily undervalued and Gaming sector is also still a good buy. Especially those casinos exposed to Macau.

Trading pick for February 16

Long Bank Of America Corp BAC
Long all Large Cap Banks – Wells Fargo, JPM,
Long MGM, LVS, WYNN, MPEL
Short United States Steel X, Caterpillar CAT

Neutral Alcoa Inc AA, CENX, Freeport-McMoRan Copper & Gold Inc FCX

Bank Of America Corp rise of the Superbank

This video should interest most Bank Of America Corp investors. It retells the story of how Bank Of America rose to become a super power in Wall Street.

Insights of some of the secrets and scandals behind the economic meltdown.

This video is by PBS, broadcasted last year.

Bank Of America Corp long term Buy Pick

Bank Of America Corp (NYSE: BAC) Bullish Pick
Reiterate Buy call.

Trading at only 1.2X tangible Book Value, vs WFC and JPM which are trading at about 1.8X Book Value. Should be trading at 2X tangible Book Value in this economic recovery.

Here is Bank Of America Long Term Chart review. This is a BUY call for investors planning for a high return stock pick.
Here is the investing Swing Trading Plan for Bank Of America.

BUY Bank Of America $14.60 (now even lower at $14.50)

First Target Sell $18.2       24% gain
First Buy Back $17

Second Target Sell $20.8   22% gain
Second Buy Back $18.2

Third Target Sell $24.5      34% gain

Start account: $10000
Projected Returns on investment:1.24*1.22*1.34-1 = 102%

Estimated investment period ---- 1 year.

Projected account after investment period: $20200

See Bank Of America Corp long term daily chart.
It is going to bounce upwards and rally.

Weekly Review. Stock Picks. Best Pick: Bank Of America Corp.

Next week outlook
- Industrial data expected to be positive
- Unemployment expected to decrease
- Euro zone scrutiny

Most likely scenario:

Commodities are in a bear trend, Gold, Copper, Silver are at major resistance level, they will most likely decline.
Commodities need to find their bottom, especially when the US index is going up due to the weak Euro.

Bearish on commodities sector.

Financials continue to be undervalued. Banks have taken a huge beating starting with the Volcker plan. However, it seems like they have been overdone. Concerns of the Greek bailout have hit US banks too. Financials are oversold and would be the first one to pick up steam for this upcoming rally.

Retails are also being sold furiously by investors as they are mostly overbought in the latest December rally. Correction is taking place.

Stock Picks:

Short

United States Steel X
Caterpillar CAT

Long

All large caps banks

Bank Of America Corp BAC
Citigroup C
JP Morgan JPM
Wells Fargo WFC
Goldman Sachs GS
Morgan Stanley MS

Best Pick for next week:

Bank Of America Corp BAC

In keeping my trading plan simple, I will only focus on 2 sectors for next week. Watching too many sectors would only be a distraction.

In general, short Materials, long Financials.

Last week trading plans went quite well.

Good trades:

Alcoa Inc (NYSE: AA)
AA Short $13.50 - $13.10
AA Long $13.10 - $13.55

Las Vegas Sands (NYSE: LVS) and WYNN resorts (NYSE: WYNN)
LVS Long $15.5 - $16.6
WYNN $61 - $61.5

Bad trades:

Bank Of America Corp (NYSE: BAC)
BAC Long $14.80 - $14.5   (-30cts)   HOLD LONG

United States Steel (NYSE: X)
X Short $47 - $48 (-$1)                   HOLD SHORT

Bad News last week
- China tightening credit
- Greek bail out may cause the Euro zone to collapse
- Results in strengthening of USD – stocks, commodities weaken
- Dubai CDS increasing risk

Good News last week
- Unemployment data brightens
- Materials demand increasing
- Greek bail out aid 




Disclaimer: All picks are solely based on my own opinions. Consult your own financial advisor for trading ideas.

NYSE Trading Floor Tour

This is a video showing you what the stock exchange looks like.
Watch the specialists controlling market prices. People like to call them the Market Maker who plays with our emotions, forcing us to panic sell and panic cover.

United States Steel X Short Pick

If you are looking for a stock to short in this uncertain market, you do not want to short a stock with good fundamentals. This is because if the market rallies, that stock would rally really hard.

You would want to short a relatively weak fundamental stock. And this stock I have chosen is United States Steel (NYSE: X).

Let us take a look at United States Steel X fundamentals.

Earnings Estimate for Q1 2010: – $1.54  Full year: –0.17
Actual Earnings Q4:-$1.86 Q3:-$2.11 Q2:-$3.28 Q1:-$3.84

“Commenting on U. S. Steel’s outlook, Surma said, “We expect to report an overall first quarter 2010 operating loss in line with the fourth quarter 2009 as gradually improving business conditions are not yet fully reflected in our operating results.”

And 4th quarter is usually the strongest quarter, so Q1 earnings might actually be worst. X always release earnings lower than estimates.

In 2005, United Steel made $6 per share and the stock declined from $70 to $33. We might be seeing the same trend coming again. See the chart below.

This is a short term short play. Why X is doing so well now is only because the sector is quite strong. No doubt. But Goldman report shows that profitability for X is a distant dream.

Commodities are going to be hammered as China tightens their policies.

If you are bullish on Steels, BUY AKS. it is a much better pick. You could pair trade AKS and X. Short X and Long 2 units of AKS.

Cover X at $35-$40.

This is a Short recommendation. Understand that there is extremely high risk involved in shorting stocks. We are going to be in a bull market soon, so careful with shorting.

Start covering as soon as it profits.

Short United States Steel X at $48, Cover at $35

Day trade trend: BEARISH.

How to draw Fibonacci Retracement

Here is a video showing how to draw Fibonacci Retracement in general.
I do not really use the same method as him, but in general this is how we draw Fibonacci retracement lines.

Premarket roundup

China’s tightening policy is going to affect commodities stock real bad as they depend on china’s demand.

Thus stay away from Alcoa Inc AA, CENX, AKS.

Short United States Steel X at $47

Banks will naturally be weak as general market is weak.

Look for low entry as the market should spike up next week when it reopens on Tuesday.

(Mini Bear Market, refrain from long activities, however do watch market datas too)

Day Trading Stock Picks 12 Feb

Careful day trading tomorrow, there is going to be a long holiday, and investors may close positions. Traders may take advantage of any slight weakness to drop the market.

Economic data: Retail sales (most likely very positive)

Trading action: Pump in the morning trade, dump in the afternoon trade.

FAST MONEY pumped Alcoa Inc AA, saying it is a buy.
Careful of buying Alcoa at this level.
Support: $13.50, $13.3, $13.1
Resistance; $13.9, $14.4, $14.8

Day trade: Buy Alcoa Inc AA $13.50 – Sell at $13.9

Bank of America Corp: Reiterate Strong Buy.
Support: $14.6, $14.4
Resistance: $14.8, $15, $15.3

Day trade: Buy Bank Of America Corp BAC $14.6 – Sell at $15

Casino stocks: Watch for bullishness
Las Vegas Sands LVS $16.9 - $17.5
WYNN Resorts WYNN $65 - $66

Bullish sectors: Financials, Materials

Comments on other sectors.

Looking for other sectors ideas, please post your sectors in the comments.

Disclaimer: All ideas are solely my opinions, consult your financial advisor for more info.

Best gains from my picks this week

Weekly top gains

WYNN $61 - $61.5
LVS $15.5 - $16.8
CENX $11.5 - $12.54
AA $13.15 - $13.58

Poor gains

BAC $14.63

Careful of a sell off tomorrow as we approach a long holiday.

Monday is a holiday.

Tomorrow Trading Pick:

Bank Of America $14.65 - $15.05
Let’s see if Bank Of America can close the week with a dragonfly doji candle.

Bull Rally Part 2 2010

We might be at the foot of this next rally of 2010. The first rally started January and ended about mid January.
We have heard lots of bears calling a market top starting early December, however, the market kept climbing and climbing. Then finally these bears’ words came true when the Dow was at 10700.

20 days of selling sent the Dow spiraling downwards to 9800. And now we are back to 10150. This shows that the general trend is still bullish.

We had that Dubai, now Greek, what else? Anymore?

Remember Dubai? Market plunge, then it rose higher?
Similarly, Greece, we will go higher than that.

Why the bull?

Economic data: Awesome.
GDP  --- Good
Unemployment rate --- Good
Unemployment claims --- Good
Credit default --- excuse me Marc Faber, you sure USA, UK will default its debt? Try harder.
Credit Cost --- Good (see Goldman report)
Home prices --- Increasing. Good.

Plans: Great
Interest rate increase --- end of the year. Expected
Obama job bill --- Awesome
China tightening policy --- bad… but no matter how they tighten, their growth just keeps escalating.
Greece help --- unclear, but should be like Dubai and Spain

What to expect:
Uncertainty --- getting lesser
Unemployment --- jobs are going to be added soon
Recovery --- slow but still faster than expected

Sectors that should gain the most:
Base metals
Financials
Industrials
Retails

Bank Of America Corp bullish pick

Bank Of America Corp is showing strong support at $14.4 level. It is ready for a rebound tomorrow.

BUY Bank of America Corp as a long term play stock.

SELL LEVELS: $17.1, $18.1, $19.1, $20.8

BUY BACK LEVELS: $16.5, $17.1, $18.5

Tomorrow Day Trading Stock Pick

Bank Of America Corp

$14.60 - $15.15

BULLISH market only with Good Unemployment report

Today, DOW tested its support trend line, and bounce from it, signaling a good strong support.
The candle formed is a bullish hammer to dragonfly doji mix.
There is an upward trend line, and its strength will be determine by tomorrows series of economic news.

Most important: GREECE BAILOUT.
And of course the unemployment report. Currently estimates are at 460000. If report is at 440000, there should be a strong bull market tomorrow. See the Dow Chart for direction. 

Resistance: 10080, 10150 and 10200
Support: 10000, 9950, 9880

BULLISH STOCKS:

ALCOA INC AA
BANK OF AMERICA CORP BAC
LAS VEGAS SANDS LVS
MGM MIRAGE MGM
WYNN RESORTS WYNN
CENTURY ALUMINIUM CENX
WELLS FARGO WFC

BEARISH STOCKS:

UNITED STATES STEEL X
SPRINT S

Market is sideways short term, uptrend longer term.

Best stocks play:

ALCOA INC AA $13.15 - $13.9
BANK OF AMERICA BAC $14.5 - $15
LAS VEGAS SANDS LVS $15.6 - $16.9
WYNN RESORTS WYNN $61 - $65

DOW JONES BULLISH TRADE

Dow close just below the Fibonacci 61.8 level. However the close is higher than the 2 previous highs, this indicates a possible rally tomorrow.

Watch for strength in ASIAN market, and European markets. There will most likely be positive news for Greece as no europeans would want to see it drag the EURO down.
Tomorrow DOW wants to head towards 10200, possibly closing at 10110.


The longer term view is still unknown, but there should be a short term rally.

Stocks to buy:
ALCOA INC AA
LAS VEGAS SANDS CORP LVS
WYNN RESORTS LIMITED WYNN
MGM MIRAGE MGM
AVIS BUDGET GROUP CAR

Other Stocks:
AKS, FCX, AAPL, INTC

Airlines sector seem to shoot up quite a bit. Wait for earnings to be released and look for an opportunity to short that sector. For a quick glimpse, looking to short Delta DAL at $16. It is dangerous to short it now. It could even be a long play.

UAL Corporation highest gainer 16% today

This is interesting, airline sector is sky rocketing for its round 2. It sky rocketed before, and then it dipped, now it is rallying again.

I will analyze this sector soon and figure out whether this is a good play, or finding a shorting high.

ALCOA BUY ZONE achieved $13.15

Bought ALCOA INC. $13.15,

Resistance seen at $13.90, trade some at that level.

Support at $13.50.

Alcoa Inc. is an investing play for the longer term.

MARKET OUTLOOK:

Worries about Greece bailout. Inventory went down sharply in December, meaning more production needed. 1st Quarter outlook for materials now raised.

Aluminium price is moving upwards. If this is a rebound, Aluminium may rise to new high prices. Watch the 94cts level, if broken, AA will rise to $15

Bulls are going to play today.

Poor economic sentiments are fading away. Traders are going to pump the market again.

I am bullish today.

ALCOA BUY ZONE increased to $13.1 to $13.2

ALCOA Bearish chart, BUY to COVER zone

I shorted AA in mid day trading today as there is apparent weakness in the DOW 10000 level.

It is understandable that the sentiment now is fear, and when there is fear, bears grow in power. Bears feed on fear. Thus even though Alcoa is a great buy at this cheap price, fear causes panic selling. Investors are skittish, calling their dealers to sell their shares. Perhaps, they are looking for other safer alternatives such as USD.

Nevertheless, Alcoa does shows strong bull power when it dives to $12.90, however, since this is the 4th time we are heading to $12.90, the bears could be really strong, causing the bulls to bow down and give way.
If such a scenario happens, I think AA would dive to $12.7 where it belongs. Look at the chart, there is strong support there too. And also look how AA price acts before a steep rally.

We are in the midst of the start of a rally. The bulls are bowing down humbly, only to start charging and building investors confidence when the Economic climate gets better.

TRADE ACTION:
BUY TO COVER AA at $12.75 (monitor, if dow gains strength, cover immediately)
BUY TO INVEST AA at $12.75. You can close your eyes for one year, it might be $25. This is a stock pick.

BULL CASE: Recent Price target raises by analysts. Materials will gain in a recovery market no matter how slow. This is because production will start picking up.

Bear case: It is a bear market. Other sector might be a better buy.
 

Disclaimer: This stock pick is based on my opinion. Do your own due diligence before making your investment. Contact your own financial advisor for investment advice.

Market is uncertain. Bears are stronger.

Due to the fiscal situation in Europe, global markets are uncertain. Investors are selling their shares, collecting the profit from the rally.

At this point, charts are not going to help much. Though the bull case is now very weak.

All stocks are correlated to the Dow Index, thus despite how good the stock can be, if the DOW drops, there is bearish pressure on that stock. This is because portfolio manager will reweigh their portfolio as other stocks (in the DOW) have better value than that stock.

The Dow Index looks like it could go towards 9600. This depends on this week’s trading. If stocks rebound tomorrow, then the correction has ended.

Stocks that are good play tomorrow.

Alcoa Inc. AA Buy to cover at $12.85  BUY at $12.8
Bank Of America BAC Average in BUY at $14.2

That’s it.

Alcoa Inc may be testing its 200SMA at $12.80 tomorrow. It is thus the best play if the stock moves down there, it is a buy.

Close all long trades. Bear market coming

Close all the day trades for long. Congrats if you made profit from WYNN, LVS, AA.

Bear market as seen by weak DOW chart.

Correction to 9600 may happen. Close all day trades. Short AA.

Bank Of America Corp Bullish Chart

Bank Of America Corp formed a bullish hammer on Friday, it went to lower lows, but it closed strongly above the strong support at $15 with high volume which signals the end of the short bear trend.

Bank Of America Corp is my favorite stock.

Day Trading Plan: BUY BAC at $14.95 – SELL at $15.6

Swing Trading Plan: BUY BAC – SELL at $18.1

Investing Plan: BUY BAC – SELL at $45 (after 4 years)

Stay long with Bank Of America Corp BAC. Financials are trading at a steeped discount.

DAY TRADING PICK: WYNN RESORTS

Day Trading Stock Pick for Monday

WYNN Resorts has the best fundamentals across my stock picks, and it has the best chart pattern.

A morning star (not so perfect) is forming, only confirmed with an up bar on Monday. Traders would want to make this happen on Monday to pump the price in lieu of the earning release the following week.

Trade:

BUY at $61.4 – SELL at $65
80% accuracy

Watch premarket, do not buy during Pre-Market if Pre-market is higher than $61.5.

BULL CHART:
Stoch moving above 20 line
Stoch rebounded from the 50% Fibo Line
There is strong support at $61 as seen by the resistance at the left side of the chart.
Volume is increasing, showing buying interest, traders would not let this fall too low.
Morning star forming

BEAR CHART:
20, 50 SMA are resisting stock price from moving high.
Stoch is actually crossing downwards

WYNN Resorts is my top day trading stock pick for Monday 8 February.

DISCLAIMER: as always, do your own due diligence before making your trade.

STOCK PICK: ALCOA INC AA stay long

Economic news was not so pretty but not bad as well.

If you have bought Alcoa Inc AA on the support line, $12.60 on Friday, then you are safe to play this until $14.80.

The bullish hammer shows great bullish strength.
We should be expecting more short squeezing as this stock has been severely oversold.

However, metals continue to be weak, thus I will stay away from metals for now and invest in other sectors like gaming.

Mining companies like Rio Tinto are advancing 1% in Aussie trade.

Alcoa Inc AA day trading suggestion.

BUY $13.2 – SELL $14.8
70% accuracy

Weekly Review and the Week ahead

This is a review of our previous week to learn what went wrong, what went well and what could be improved upon.

Good Calls:

Short ALCOA INC. AA at $13.8 to $13.1    5% gain  
Short United States Steel X at $48 to $44  10% gain

Long Bank Of America Corp BAC at $14.8
Long Las Vegas Sands LVS at $14.95

Bad Calls:

Long Las Vegas Sands LVS at $16.9
Long Bank Of America Corp BAC at $15.15

I was overly bullish last week, thus I made 2 early Long purchases. I should use the DOW chart to determine the market direction. Overall it was a good week as we made from the shorting of materials.

THE WEEK AHEAD

I will be watching the Financial sector which was oversold. The fundamentals of that sector are really good, the sell off was a trading scare and the institutions must have accumulated.

I am wary of Material stocks such as Alcoa Inc, though the chart looks good, however, they will be affected hugely by the commodities trade. Aluminium price has been diving down from a high of $1.05 to only 89cts now.

I am bullish on Casino stocks such as Wynn Resorts WYNN, MGM Mirage MGM, Las Vegas Sands LVS and Melco Crown Entertainment MPEL.
This sector will be a day trader’s playground next week. Expect volatility come monday. The charts suggest that this will be bullish throughout the week and it could test previous highs. This is because, MACAU gaming revenue just keeps increasing. That is why all these stocks are strong as they have exposure in the Macau gaming market.
I think WYNN would be the best play.

Tech sector continues to amaze with their bubble rally. There is no doubt high growth in this sector, attributing to their enormous premiums which have been flagged as overvalued.
Watch Apple Inc AAPL, Microsoft Corp MSFT and Intel Corp INTC.
This is currently not my favorite sector as the stocks are trading at premiums. In a recovery play that we are seeing now, they have the least upside as compared to Materials and Financials and definitely Casinos.

Dragon Stocks Next Week:

Las Vegas Sands                         LVS
MGM Mirage                              MGM
WYNN Resorts                           WYNN
Melco Crown Entertainment       MPEL
BANK OF AMERICA CORP             BAC
Wells Fargo & Company             WFC
JPMorgan Chase & Co                JPM
Goldman Sachs Group                GS
Intel Corp                                 INTC
Avis Budget Group Inc                CAR

These stocks are suitable for day trading and investing.
I will be providing chart analysis for the stocks that I intend to trade.

Disclaimer: These stocks recommendation are solely based on my opinion. All traders are advised to conduct their own due diligence before making a purchase decision.

What is PUMP and DUMP?

ALL ABOUT PENNY STOCKS? NO to PENNY stocks. Invest less than 10% of your portfolio in PENNIES. They are PENNIES after all.

We have heard about pump and dump stocks. What exactly is a pump and dump?

Here is an interesting video that almost truly describe a real pump and dump stock trade that goes bad.
This is why I would advise against playing with PENNY stocks. They definitely give good gains, but why take the risk.
Trade real NYSE and NASDAQ stocks that have higher liquidity and you can still make 10% weekly, which allows doubling of your capital every 2 months.

This is also true for a bullish market that has gone over bullish.
Traders pumped the market from November to January, allowing their clients to dump, dump, dump.

Now that stocks are back to lows, they will pump it again. The cycle continues.

Enjoy the video.

Wynn Resorts, Limited STRONG BUY

Here are excerpts from the latest earning conference call October 2009.

“Steve Wynn: In the summer, things started to change. Macau picked up and in the last few months, Las Vegas because of our high-end business, has -- and I’m spilling over into October a little bit, but to give you a general impression, if things continue the way they are, we are going to equal or beat 2008 in Las Vegas and we are going to equal or beat last year in Macau. All things considered, that isn’t as bad as it might have been and so it’s one of these strange -- if for example in Las Vegas with Encore we had achieved our average room rate of $300 with a 91% occupancy, our revenue per occupied room would have resulted with normal margins and $150 million more annually in EBITDA at the rate we are going. It would have been $120 million to now and another $30 million in the last 20% of the year
… …
(talking about Depreciation and Interest)
In 2008, for example, to talk about capital structure and what it means, there is such a focus by the press. So many people on this call, our competitors who are on the call and the press focus so intensely on top line numbers, market share, EBITDA -- we forget for a moment with all the rhetoric that it doesn’t really mean a thing. What matter is how much money is left. You’ve got to pay interest. You’ve really got to pay depreciation. In our business, the carpets wear out, the equipment has to be replaced. Depreciation is a real expense in our business and when you don’t spend it, you are hawking the future. You are losing the kind of environment that gives these businesses their franchise.”

WYNN Macau market share is about 14-18% currently. It has decreased from 20% due to MELCO CROWN MPEL City Of Dreams casino.
However, with the opening of ENCORE Macau in Spring, WYNN Macau will gain back their market share. Note that Macau gaming revenue for the month of November, December and January was at record high year on year.
October 1.59bln (42% increase)
November 1.5bln (50% increase)             
December 1.48bln (48% rise)
January 1.67bln (65% rise)

2009 Q4 Gaming revenue is 4.57bln

2009 Q3 Gaming revenue climbed 22.3% to $3.81 billion

So we should expect a much better casino revenue in Q4 for WYNN Macau.

Similarly, the Las Vegas market is also increasing, however, they do not release their revenues as often as Macau.

WYNN Resorts stocks are on sale now at $61.35, this is a big discount counting the growth that WYNN is able to sustain. This is with the opening of WYNN Encore in Macau.
To reiterate that more is not always better, Las Vegas Sands may have more properties and the upcoming Singapore Casino is surely a steal, however, as Steve Wynn says, the most important thing is the money that is left after paying off the depreciation and interest. High interest payment pose a risk in gaming stocks financial statement. This is evident as seen from MGM Mirage lackluster performance and was almost at the brink of bankruptcy.

WYNN has started 20cts regular dividends.

WYNN is the most premium brand in the casino industry.

ANALYST targets $70-$80

STRONG BUY at $60 level.

Short term profit target is $65 (week), longer term, $80