Trade Ideas for 8/21/08

A little bit of relief today, not enough to register even a single digit gain in the major indices, but I consider that quite a feat given how bad the sell-off was yesterday and also given today's early headlines of financial gloom and doom. In fact the XLF (the financial ETF) led. Not only that, there were huge breakouts in one of the most speculative sectors: the solars. A rally in the solars often precedes a rally in the general market because it indicates a high appetite for risk and the presence of momentum traders. Basic materials also did well today.

From its chart LVLT looks to be on its last legs, but I'd actually rate its chances highly. The longer the consolidation phase, the more explosive the subsequent move. Of course that move could be up or down; guess correctly and maybe make a bundle. Guess wrong and lose at most the amount you decided to risk. I'm more enthusiastic about LVLT than I am about STEC, which pulled back kinda far and closed near its lows. Still a valid signal, so it's staying on. Today's new addition is TTI. Oil and gas stocks have started to reverse, and this chart looks like one of the safer ways to play this potential trend. I only plan to offer at most 3 trade ideas on any given day (1 of which may be new), so if these stay beneath their Entry and above their Exit C prices, you'll see them again tomorrow.

Ticker	Entry	Exit A	Exit C	Chart
LVLT (Level 3)	3.43	3.07	2.93	Chart
STEC	11.21	10.67	10.34	Chart
TTI (TETRA Technologies)	22.07	20.88	20.21	Chart

Please refer to "How To Trade This System" (right-hand side) to read this table.