Michael Jordan's Headfake. Just when you think he is going up to shoot, he comes down and drives to the basket. SLAM DUNK!

Let's start off with a recap of last week trading. Monday, most people on the street were anticipating for the breakout of the resistance. Many analysts talked about the 12770 and everyone knew about it. Opening was slightly up to the positive side and by mid day, we were very, very close to the resistance. Is this going to be the start of the new bull run? We were brought back down to Earth at the end of the day. Alcoa earnings was bad as expected, but sales were better than expected.

Dow was down slightly for the next two day which no big companies releasing earnings. Interestingly, unexpected low crude inventories sent Nymex crude oil to a peak of $112, breaking previous high. Looks like oil is never going to come back with the greenback going down like this.

Thursday snapped the losing streak but with limited upside. All eyes were on friday's GE results which might bring some daylight about the economy. Obviously, there were still quite a number of people who believed that we were not in a recession.

The "SLAM DUNK" news on friday came before the bell. GE earnings were disappointing, especially GE financials which should be widely expected.
(read:http://www.briefing.com)

Dow was down 1% at the opening and closed down 250points or 2.04%. For the week, Dow drops 2.3%. I believe we are going down next week or coming weeks and retest the support of 11900 to 12000.. Alcoa was down to to a low of 34.91, closing at 35.15. A 10% drop for the week. I hoped you have sold off Alcoa, as i have said, $35 is part of the range. Unless the range is broken, there might be a slight bounce.

Now, let's get ahead and look at next week trading opportunities. Johnson& Johnson, Intel are due to report earnings on tues. JP Morgan and IBM on wed, Merrill Lynch and Google on thurs and Caterpillar and Citigroup will cap off the week on friday. With GE, the bellweather of dow, showing us just how bad the financials are, I believe you should be shorting financials, any financial stocks in fact for long term. "An indication from major investment banks Goldman Sachs (GS), Lehman Bros. (LEH) and Morgan Stanley (MS) that each saw an increase in their Level 3 assets. Level 3 assets represent the most difficult assets to value. The notion that the firms might be unable to trade, or sell, the assets weighed on sentiment as there was a supposition that such difficulties could lead to further asset write-downs." (Source: briefing.com)

Important economic news like retail sales on monday, CPI and housing starts on wednesday. Well, i firmly believe the previous CPI was rigged. LOL I see inflation everywhere. The question is will Bernanke address inflation?

Personally I may want to go long on intel for next week but it does have some risk though. General market sentiment is weak. AMD showed a downward revenue revision due to fierce competition and technical problems. But I don't think that its an industry issue. Intel should therefore be benefiting from AMD's weakness. Earnings may be good and it is definitely poised for a breakout in prices.


Clearly, Intel is in an ascending triangle shape (read: http://www.investopedia.com/terms/a/ascendingtriangle.asp). With earnings coming out next week, I believe it will provide the catalyst for the breakout. Earnings will be afterbell, so movement on monday and tuesday must be closely watched. We wish to see it stay above the $22 mark, especially monday opening. If there is a strange gap open above $22, I think you should move in.
$24 looks to be a good exit price or you can choose to hold out for the week which I strongly don't recommend. It should be a one day breakout play. Dow formed a dark cloud cover for the week so exercise caution as financial sector could be really bad. You do not want to be caught by a broad-based selling. Economy data and financial sector may be the killer blows for the week.