Trade Ideas for 12/22/08

While we did end up with lower closes across the major averages, the price action was within Thursday's range. With the notable exceptions of the financial and basic materials sectors, the market held steady. The door remains open for further (limited) upside, even in the presence of considerable downside risk. So, mixed messages.

Coming up on a pair of holiday weeks, it's entirely conceivable that we'll get a moderately positive week or two on decreasing volume, in a repeat of Thanksgiving action. Recall, though, that the rug got pulled out from underneath the Monday following Thanksgiving, coinciding with the holiday's end. In this case, it's Monday, January 5th that the market is set to resume in earnest, as many participants are off until then. The upshot, by my read, is that to play the market now is to play for fun, to learn, but given the low reward-to-risk ratio, not a time to try for huge gains. Look to close out positions. If November 21 really was the low of Primary A, then we should see a sweet bear market rally unfold in the coming months. However, the markets need to pull back first, and the question now is whether or not the markets will get a little higher before that pullback begins. I myself will be taking next week off, so I expect to close out new and existing positions in fairly short order.

On Friday we sold NFLX, X, and JWN for losses. JWN exhibited some unusual action, leading to a decision by the NYSE to nullify trades. No new purchases.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
VMW	25.21	24.52	-2.7%	23.32	Consider selling on a close < 23.62	Chart
LIHR	16.21	19.35	+19.4%	17.10	Consider selling on a close < 18.56	Chart
TRN	15.21	15.47	+1.7%	14.24	Consider selling on a close < 14.91	Chart
GLBL	3.82	3.30	-13.6%	3.24	N/A	Chart
CHS	3.72	4.38	+17.7%	3.94	N/A	Chart
FAF	28.07	27.92	-0.5%	25.56	Consider selling on a close < 27.12	Chart
V	54.61	54.97	+0.7%	52.73	Consider selling on a close < 53.78	Chart

Like I said, prospects are dim, but you never know. On the first day of Thanksgiving week, a surge in bullish sentiment led to a strong Monday close, and the same thing could happen tomorrow. Here are a couple of charts that would benefit in such a case.

Trade Ideas for 12/22/08

Ticker	Entry	Exit A	Exit C	Chart
PFG (Principal Financial Group)	21.31	18.24		Chart
CSUN (China Sunergy)	4.21	3.74	N/A	Chart

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