Trade Ideas for 06/03/09

A one-day consolidation like we had today is sometimes enough of a pause before a strong rally continues. However, the day ended on a down tick and a break of the 2-day channel (see chart of SPY below), so the short-term message I'm getting is that more consolidation is required. But this might not be anything more than a gap down open followed by a rally right out of the gate. The broader message that the market sent with Friday's and Monday's 40+ point advance (on the S&P) is that it wants to go up.

RATE had a nasty open after a Citigroup downgrade, stopping us out, before rallying to new highs. I guess Citi & friends just wanted to scoop up some shares on the cheap? If so, it worked on us.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
DGP	18.68	22.18	+18.7%	21.29	N/A	Chart
SSO	25.06	27.72	+10.6%	25.29	N/A	Chart
ASIA	20.68	21.28	+2.9%	20.19	N/A	Chart
UYG	4.11	4.12	+0.2%	3.89	N/A	Chart
JACK	27.01	27.93	+3.4%	26.79	N/A	Chart
CPSL	2.26	2.67	+18.1%	2.39	N/A	Chart

While this is a mature rally, being almost 3 months old (bear market rallies last on the order of 2-3 months, and YES this is a bear market rally), it can still go pretty far in its late stages. We give the trend the benefit of the doubt, but hedge a bit by playing smaller size.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
ABK (Ambac)	1.38	1.30	1.24	Chart
FLEX (Flextronics)	4.31	4.06	3.89	Chart
VMW (VMWare)	32.38	31.58	30.90	Chart
FST (Forest Oil)	20.36	19.66	18.90	Chart

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