Trade Ideas for 10/23/09

What a volatile session! After completing a 27-point drop early on, from 1101 to 1074, the S&P climbed back 21 points. On the back of yesterday's gyrations, this is turning out to be quite a wild week. This whipsaw may even continue: a similar series of back-and-forth price action occurred several weeks ago (highlighted in gray):

Under that script, the market reverses tomorrow and continues its descent. But that was a very unusual-looking pattern. The flip side is the possibility that wave 5 is currently underway. Yesterday I shared my interpretation of the current wave count, showing a completed 5. But as labeled in yesterday's graphic, wave 4 and 5 could've been red herrings, and really we had an irregular flat correction ending today. If so, new recovery highs would prove it.

The wild gyrations of the past few sessions do happen around turning points; the result is that it makes it extremely difficult to establish medium- and long-term positions. We certainly experienced that the past couple of days, as we entered several short ETFs (today's entries were SRS, EEV and DUG) and are in danger of getting whipsawed out of all of them.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SKF	24.37	23.45	-3.8%	23.32	N/A	Chart
AONE	24.31	23.89	-1.7%	23.22	N/A	Chart
TWM	27.58	27.32	-0.9%	26.43	N/A	Chart
SRS	10.07	9.40	-6.6%	9.38	N/A	Chart
DUG	12.33	11.88	-3.6%	11.49	N/A	Chart
EEV	12.42	11.93	-3.9%	11.67	N/A	Chart

Moving forward, the key levels are yesterday's high and today's low, but with such a wide range the market may just finish the week somewhere in the middle.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
DGP (Gold Double Long ETN)	25.56	24.90	N/A	Chart
DXD (Ultrashort Dow 30)	33.51	32.16	N/A	Chart

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