Trade Ideas for 11/28/08

We had a broad rally Wednesday: most, if not all, sectors rose, and some rose quite a bit (solars). We bought three new positions. The market has strung together a series of winning days for the first time in a very long time. I'm now inclined to believe that we'll see higher highs before we see a lower low (specifically last Thursday's panic low). That said, in order to recharge its momentum, the market needs to pull back.

The pullback might not happen Friday simply because of the holiday effect. So Friday might be a good time to do some profit taking; you can always re-enter the sold positions after the pullback is over on potentially lower entry prices (but, potentially higher as well). It's worth noting that the double inverse ETFs have pulled back to circa their 50-day moving averages, which provided support during the early November bull trap. The time is right for the bears to reassert themselves soon. I have to emphasize that I don't think they'll get very far, so the most I'd do is get flat; I would not go short because of what I perceive to be limited profit potential. The short side is a tired-looking chart; the last impulse took a long time to make a slightly higher high; this is a common look for 5th-wave moves that mark the end of an impulsive phase.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
GLD	74.27	80.38	+8.2%	79.27	None	Chart
LNG	2.94	3.12	+6.1%	2.63	Consider selling on a close < 2.86	Chart
AN	7.01	8.20	+17.0%	7.36	Consider selling on a close < 7.56	Chart
ACM	21.84	26.78	+22.6%	23.37	Consider selling on a close < 25.63	Chart
UGP	22.62	23.85	+5.4%	21.24	None	Chart
DBA	24.86	24.80	-0.2%	23.99	Consider selling on a close < 24.45	Chart
AMZN	43.46	43.96	+1.2%	39.59	Consider selling on a close < 40.28	Chart
EWT	7.63	7.71	+1.0%	7.25	Consider selling on a close < 7.50	Chart

The other possibility is that the pullback has already happened. Tomorrow's ideas have charts that speak to this possibility. GLD looks good for a re-entry. For more risk, look to DGP (double gold, but not even indirect ownership of physical gold) or SLV (silver). Silver tends to outperform gold when gold is rising. Alternatively, use CEF, which is a fund offering indirect ownership of a mix of gold and silver bullion. To keep record-keeping simple, of these permutations I'm only going to recommend GLD. I'd wait until after the first 45 minutes to enter any new positions.

Trade Ideas for 11/28/08

Ticker	Entry	Exit A	Exit C	Chart
GLD (StreetTracks Gold)	81.41	79.27	N/A	Chart
IBM	82.41	78.59	78.21	Chart
CATY (Cathay Bancorp)	21.01	19.29	18.41	Chart

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