Trade Ideas for 12/09/08

The market gapped up at the open and pretty much stayed put for the rest of the day. The 50-day moving average was resistance for today's advance, and the market has already begun consolidating. There may be some rangebound trading ahead, or a pullback, but Friday's lows look good. The rally we've all been awaiting is now underway (hurray!), giving long-term holders an opportunity to recoup a portion of their losses, and us traders one final chance to post a respectable return for 2008 (i.e., something greater than +15%).

Our long holdings did very well today, but if you didn't sell SMN Friday, you were in for a world of hurt at the open. It really illustrates the difference between trading short in a bear market and trading long in a bull: when the shorts make a parabolic 5th wave peak, they fall away with savage velocity, whereas a regular equity hitting its price peak will oftentimes roll gently.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
AN	7.01	10.16	+44.9%	8.46	Consider selling on a close < 9.76	Chart
VMC	64.01	74.00	+15.6%	69.47	N/A	Chart
DAL	8.88	11.02	+24.1%	9.89	N/A	Chart
ORI	10.01	9.93	-0.8%	8.98	N/A	Chart
JWN	13.06	13.29	+1.8%	11.25	N/A	Chart

The vast majority of charts look extended, but they may continue extending until the top of this short move. "This short move" is the first of a three-part B wave (i.e., wave a of countertrend a-b-c) that will eventually take us to the highs of 2009, concluding Primary B. The first wave is always the hardest to play; the smart play is actually to get out early because it doesn't last very long, and to wait for countertrend c to begin (as early as next week). Alternatively, you could hold through the countertrend b wave down; it should be quick and not too painful, but you'd need wider stops than what I provide. The most important thing to remember from now till the end of Primary B next year is not to be blinded by the rally, because ultimately it's a trap. You must be on guard. In that spirit, tomorrow's trade ideas, all of which tend toward the low-volume side.

Trade Ideas for 12/09/08

Ticker	Entry	Exit A	Exit C	Chart
OMCL (Omnicell)	12.12	11.41	10.81	Chart
ELP (COPEL)	11.46	10.85	10.19	Chart
ASTI (Ascent Solar)	4.51	4.20	3.95	Chart

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