Trade Ideas for 10/27/08

The lows in the Dow held, and they may yet hold. Perhaps capitulation occurred pre-market Friday when futures were halted. Whatever the case may be, so far the putative 10/10/08 bottom has not been breached (at least not during market hours, which is what counts in this game).

No charts look good to me, and although SH was officially elected Friday, it had gapped so far up that I don't expect anyone to have been purchased it. Nevertheless, odds continue to favor downside, so if you did purchase it, there's no hurry to sell.

But I am open to the increasingly possible idea that the market is heading up from here. If indeed the market decided to triple bottom before reversing, it certainly did its job of fooling the maximum number of people. Especially Friday, when prior to open something happened that had never happened before: S&P futures went limit down, halting trade. TK of Trading with TK said in early October that to mark a bottom we needed a day that was unprecedented, like the Dow dropping 1,000 points or servers overwhelmed, swamped with sell orders, stranding brokerage customers. We've basically had both of these things happen, and still no definitive turn, which speaks to the enormity of this bear. But maybe tripping an exchange's circuit breakers will finally cause the turn to get going in earnest. Let's see. For those who want to take a chance, I suggest buying up to 0.8% of account equity in call options on the ETFs: SPY, EEM, IWM. Unfortunately November expiry is not for 4 weeks, add to that the unbelievable volatility and you get premia that will be on the outrageously expensive side.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
SH	94.91	93.40	-1.6%	87.89	Consider selling on a close < 90.87	Chart