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Lejun James Shao is the founder of www.myIRAs.net (http://www.myIRAs.net/), WhitePine Investment Inc of USA, and CEO of WhitePine Software Inc, Beijing, China. He was the top finisher in MSN's 1st US One Million Dollar Investment Contest, "Strategy Open Tournament," with a +45.88%... More
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  • Market Drop Is Imminent - It Could Start From Tomorrow

    Market moved up last week with Dow leading the gains, up 1.11%, followed by S&P 500's 0.88% move. NASDAQ trailed with 0.74% gain. So far this month, US stocks have another impressive runs as S&P 500 gained 4.65%, Nasdaq rose 4.56% and Dow returned 2.91%.

    Market started its tireless run from last November. It moved up seven months in a row. S&P 500's monthly gains, for example, were

    11/2012 - 0.28%
    12/2012 - 0.71%
    01/2013 - 5.04%
    02/2013 - 1.11%
    03/2013 - 3.60%
    04/2013 - 1.81%
    05/2013 - 2.98%

    But the run stopped in June and has been in trading range since then

    06/2013 - -1.50%
    07/2013 - 4.95%
    08/2013 - -3.13%
    09/2013 - 2.97%
    10/2013 - ?

    and now is at the top of its recent trading range and the drop will be imminent. See S&P 500 daily chart below

    My View - Market Drop is Imminent - It could start from tomorrow

    Here is Why

    1. The recent strength on Nasdaq is only supported by huge moves from few big blues such as GOOG, AAPL, AMZN, MSFT etc. But most tech stocks have been weak and this is particularly true for semiconductor, telecommunication, solar and new energy stocks. Many dropped big last week even market was up. The list is long:

    ATML, ALTR, CREE, RMBS, MU, FIO, OVTI, ONNN, MVDA, RFMD, CSCO, CIEN, JDSU, TQNT, FORM, STM, FSL, CY, SLAB, MLNX, BRCM, ADI, AMD, XLNX, SIMG, VTSS, PSMI, AMCC, PXLW, DIOD, PMCS, SWKS, RBCN, HIMX, MCHP, REGI, GPRE, GEVO, RVLT, GRPN, etc.

    On the other hand, gold stocks have been strong recently.

    2. The big blue tech stocks are all topped:

    MSFT - $35.73. Up $2.01 after company reported its earnings. MSFT has been in $27.50 - $35 most of the time since 2001 and now it is at the top of its 13 year trading range. We will see stock gradually moving down in the following weeks;

    AMZN - $363.39. Up nearly 10% after it released its earnings and reached all time high. On the other hand, stock tended to move lower after earning release as can be seen in previous quarters. That means, stock topped.

    GOOG - $1015.20. This stock is still quite strong and we will see how it will perform in the following weeks.

    3. Most of DJI 30 stocks are topped

    Eleven stocks are now at/near the tops of their recent trading ranges: CVS, DIS, INTC, JNJ, PFE, PG, T, WMT, XOM, GS, MSFT

    Three stocks are now at the tops of their uptrend channel: MMM, TRV, V,

    Seven stocks are or started their down trend: CSCO, HD, IBM, KO, MCD, UTH, UTX

    Five stocks are strong with break-out but may face pull backs: BA, AXP, GE, NKE, DD.

    On the other hand, VXX, the reverse of S&P 500 futures, showed the strength last week with no new lows even S&P 500 was up.

    Disclosure: I am long VXX.

    Tags: SPY, VXX
    Oct 28 9:36 AM | Link | 4 Comments
  • GLD - Bottom Is Here

    GLD - Chart reading: It is forming a reverse bullish H&S pattern and the bottom is at around 120 - 122 level. I will pull my buy trigger this week. May be tomorrow Monday 10/14/2013.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NUGT over the next 72 hours.

    Tags: GLD
    Oct 13 12:24 PM | Link | 16 Comments
  • Market Has Topped. Prepare For Market Correction

    U.S. stocks fell on Friday as investors puzzled over the Federal Reserves decision to maintain its stimulus measures as they heard opposing viewpoints from top Fed officials. Despite lower closes in the past two sessions, the major stock indexes ended higher for the week. The Dow rose 0.49%, S&P 500 gained 1.30% and the Nasdaq advanced 1.41%. For the month so far, all major indexes rose three weeks in a row and Dow was up 4.36%, S&P 500 gained 4.71% and Nasdaq leads the gains again, up 5.15% with one week to go.

    Our view: market cannot keep running like this for long. All major indexes are at the tops of their uptrend channel. See the daily chart for S&P 500 and weekly chart for Nasdaq below:

    Fundamentally, valuations are high with the S&P P/E ratio now at over 19 and the average over its 120 year history is only 15.

    US dollar is going to break down $80, its key support level:

    On the other hand, lower US dollars support stronger resource prices such as gold/silver, etc. We still stand for higher gold prices looking ahead. Last Wednesday's one day jump on GLD does not change the big picture that GLD should find bottom at around $120.00 level. See its daily chart below:

    Sep 22 12:05 PM | Link | Comment!
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