Trade Ideas for 09/28/09

On the third consecutive day of losses in the major averages, the pace of selling slowed. A more significant bounce took place in the afternoon so that prices closed off the very lows of the day. The day's candle was a spinning top, which implies indecision. The market could go either way from here. But with such a large drop since the Fed announcement and downside momentum slowed Friday, it “feels” like the market should bounce some more. Especially since the line in the sand—1040— held. If the S&P stabilizes next week above Friday's lows, it might even challenge the prior highs in the coming sessions.

However, if the S&P breaks Friday's lows, the market would be sending an incredibly bearish signal. It would increase the odds that Wednesday's top would be it: the end of the bear market rally, and the beginning of the second—and more ferocious—half of the stock market crash.

For Monday, if prices do stabilize above Friday's lows, consider taking partial profits in existing positions, but only if you have several shorts. Again, not too much, as there's a good chance that a major trend change took place with Wednesday's post-FOMC announcement crash.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
FXP	8.96	9.64	+7.6%	8.96	N/A	Chart
SRS	9.56	10.02	+4.8%	8.71	N/A	Chart
DUG	14.31	14.76	+3.1%	13.71	N/A	Chart
SKF	25.11	25.74	+4.3%	23.58	N/A	Chart
QID	23.17	23.21	+2.0%	22.06	N/A	Chart
TWM	28.06	28.82	+3.9%	26.65	N/A	Chart

A bit of a mix for Monday. Once again picking on China with FXP, this time it is a re-up. If you elect FXP Monday, set the sell-stop for all shares to 9.44. VXX is the other short-oriented pick. Also a couple of longs in case the market isn't done on the upside.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
FXP (Ultrashort Xinhua 25)	9.86	9.44	N/A	Chart
VXX (VIX Volatility Index ETN)	52.01	50.41	N/A	Chart
UNG (US Natural Gas Fund)	12.04	11.69	N/A	Chart
SSO (Ultra S&P 500)	34.16	33.33	N/A	Chart

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