Trade Ideas for 12/07/09

After putting in a wild outside day on Thursday, the market did it again Friday, going even higher and even lower intraday. While doing so, it happily ignored resistance and support as well as existing dollar correlations.

Overnight, the market remained near Thursday's lows. Then at 8:30 AM ET, a significant surprise in the jobs announcement led to a 15-point jump in S&P futures in under 10 minutes. At the same time, the dollar started soaring and gold dumping:

About an hour and a half later, the S&P hit the peak of the day at 1119 and perhaps only then remembered that the dollar has recently been the linchpin of all markets. As the dollar continued climbing, the market fell all the way back down below where it was when the jobs report was announced, seemingly crashing. But as the dollar consolidated its gains in a sideways move, the S&P bounced hugely. Throughout the session, as the dollar rose, alternately climbing and consolidating, the S&P managed to rise disproportionately higher during the dollar's consolidation phases. Whereas, gold and the dollar remained in a tight inverse correlation, with every fall in sync with the other's rise in terms of timing AND magnitude. It's too early to say that the market has broken the dollar-S&P inverse correlation, particularly since the inverse correlation did hold in terms of timing. But Friday's action does put the correlation in doubt.

Our short holdings didn't stand a chance against the early surge and were swept away. This included our 1+ month-long holding TWM. We bought JDAS.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
JDAS	24.51	24.57	+0.2%	23.42	N/A	Chart
AONE	16.81	17.18	+2.2%	16.71	N/A	Chart
ARIA	2.36	2.44	+3.4%	2.21	N/A	Chart

A lot of variables up in the air make the market especially unclear at the moment. With every stab upward, prices are met with strong selling, yet support levels are holding in the upper half of the now 4-week trading range. The market hasn't been ready to truly break out of the range, but with the recent upward bias the ball is in the bulls' court.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
EXM (Excel Maritime)	7.54	6.92	N/A	Chart
ITRI (Itron)	63.11	61.69	N/A	Chart
PMI	2.21	1.99	N/A	Chart
GMO (General Moly)	2.36	2.20	N/A	Chart
SEF (Short Financials)	45.33	44.29	N/A	Chart

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