Trade Ideas for 11/03/08

As a trader, these are the times I live for: incipient rallies. Sure, there are easier times to make money in the market, particularly in the middle of strong, steady moves, but there's something exciting about the end of a basing period as the market launches into the next phase. Especially after a difficult period; our reward for slogging through it is the rally at the end. Looking through my list of charts, pretty much all of them have either popped twice in the past few days or are consolidating after popping once. On the flip side, if a stock hasn't gone up this past week, it probably isn't going to.

The long-term trend is still down, but what has changed, by my read, is sentiment. Just as inflation is largely determined by expectations of inflation, so, too, does the market move based on how market participants expect it to. The tone has shifted to one in which people are talking about opportunities and not wanting to miss out; just a couple weeks ago it was gallows humor ("I opened up my brokerage statement and thought it was my telephone bill," etc.). It is now a time to be more patient with your holdings, consider risking more per trade, consider taking on more trades. Risk management works both ways: reduce your risk during adverse times, but increase your risk during times of opportunity.

We bought SSO and XLK Friday; these might pull back a bit before going up as they have hit a pocket of resistance, but I think it's OK to use a looser leash based on how the market has been holding up.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
PQ	8.07	9.95	+23.3%	8.99	Consider selling on a close < 8.36	Chart
AMAT	12.47	12.91	+3.5%	11.92	None	Chart
GOOG	371.01	359.36	-3.1%	346.19	Consider selling on a close < 352	Chart
SSO	32.31	32.04	-0.8%	27.49	Consider selling on a close < 29.58	Chart
XLK	16.92	16.65	-1.6%	15.74	Consider selling on a close < 16.27	Chart

So many great looking setups tomorrow. We may get a pullback into Tuesday or we might just pullback intraday and then take off. It's that kind of environment. I'm only offering a couple ideas, not because there aren't enough to go around, but because we're starting to have too many to keep track of.

Trade Ideas for 11/03/08

Ticker	Entry	Exit A	Exit C	Chart
IVN (Ivanhoe Mines)	3.06	2.59		Chart
EWZ (iShares Brazil ETF)	39.71	36.99	34.39	Chart

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