Trade Ideas for 09/01/09

At the open, the market fell to the lows of the day and remained choppy for the remainder of the session. The rally doesn't appear healthy, having stalled within a range the past week. At the same time it hasn't quite fallen apart either. Today's move down broke Thursday's lows, but only by a little bit. Some more follow-through is needed to seal the deal. Until that happens, whatever is holding the market up may have some more tricks up its sleeve.

Today we sold GS for a profit and bought SDS and TWM.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SDS	44.12	43.64	-1.1%	42.08	N/A	Chart
TWM	32.36	32.33	-0.1%	30.24	N/A	Chart
FXP	10.04	10.92	+8.8%	9.98	N/A	Chart
SRZ	2.19	2.21	+1.0%	2.04	N/A	Chart
VXX	57.34	59.00	+2.9%	56.06	N/A	Chart
REG	33.27	33.55	+0.8%	32.09	N/A	Chart
V	70.44	71.10	+0.9%	69.27	N/A	Chart
UYG	5.84	5.72	-2.1%	5.49	N/A	Chart

Getting a bit heavy on positions, so just a couple for tomorrow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
AUY (Yamana Gold)	9.37	8.99	N/A	Chart
ARIA (Aria Pharmaceuticals)	2.26	2.13	N/A	Chart

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

Trade Ideas for 08/31/09

As suggested, the market attained a new recovery high Friday. However, the high was marginal and immediately sold. Thursday's lows remain unbreached, and until that happens the bulls retain control.

We lost QID on a gap down open and bought V and UYG.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
GS	160.91	164.42	+2.2%	163.24	N/A	Chart
FXP	10.04	10.60	+5.6%	9.98	N/A	Chart
SRZ	2.19	2.32	+5.9%	2.04	N/A	Chart
VXX	57.34	58.51	+2.0%	56.06	N/A	Chart
REG	33.27	33.67	+1.2%	32.09	N/A	Chart
V	70.44	70.50	+0.9%	69.27	N/A	Chart
UYG	5.84	5.77	-1.2%	5.49	N/A	Chart

A few longs for Monday; no need to elect these if you already own some of the current longs. Upside action from here looks to be tricky. In case Thursday's low does get broken, a couple shorts.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
VLO (Valero)	19.38	18.79	N/A	Chart
AMR	5.88	5.64	N/A	Chart
ARIA (Aria Pharmaceuticals)	2.26	2.14	N/A	Chart
SDS (Ultrashort S&P 500)	44.12	42.08	N/A	Chart
TWM (Ultrashort Russell 2000)	32.36	30.24	N/A	Chart

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

Trade Ideas for 08/28/09

The market fell hard at the open—apparently wave 4 still had a bit more to run—before impulsing upward to close near the day's highs.

From today's lows it looks like a new series of higher highs and higher lows has begun. Again, the extended third wave leads me to believe that new recovery highs will be on the order of 10 points rather than 50 points. Furthermore it's not necessary for all sectors to make new highs.

We bought REG and SRS today, of which only REG remains. (BGU was day-only and triggered very late in the day; it didn't make sense to elect.) Wave 4 appears to have made a definitive bottom, so while this uptrend lasts prices should not fall below today's lows.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
GS	160.91	165.02	+2.6%	163.24	N/A	Chart
FXP	10.04	10.37	+3.3%	9.98	N/A	Chart
SRZ	2.19	2.17	-0.9%	2.04	N/A	Chart
QID	25.79	25.40	-1.5%	24.94	N/A	Chart
VXX	57.34	57.51	+0.3%	56.06	N/A	Chart
REG	33.27	33.21	-0.2%	32.09	N/A	Chart

No more shorts for the time being—it looks more and more as though new recovery highs are coming. If my read is wrong we already have a few shorts in hand to play.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
UYG (Ultra Financials)	5.84	5.49	N/A	Chart
AMR	5.88	5.49	N/A	Chart
ABAT (Advanced Battery)	4.22	4.04	N/A	Chart
V (Visa)	70.44	69.27	N/A	Chart

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

Trade Ideas for 08/27/09

Another day, another doji. But instead of a gravestone, we got a regular doji, and where it's positioned portends higher prices in the coming sessions. The chart has started to take shape, and it shows four waves up from last Monday.

Since the third wave of this impulse extended, there's little chance of the fifth wave doing the same. Nevertheless, new highs look probable, even if they end up being marginal. Furthermore, new highs may be sold immediately, like Monday's and Tuesday's. Since this is the fifth wave up, with little chance of extension, that's something we should consider doing also.

We were stopped out of PAL and into QID today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
GS	160.91	165.95	+3.1%	162.59	Consider selling partial positions into strength on new recovery highs in the S&P	Chart
FXP	10.04	10.39	+3.5%	9.65	N/A	Chart
SRZ	2.19	2.14	-2.3%	1.98	N/A	Chart
QID	25.79	25.51	-1.1%	24.94	N/A	Chart
VXX	57.34	58.95	+2.8%	56.06	N/A	Chart

Playing new longs seems a bit dangerous right now, but some charts look OK. BGU is day-only; sell by the close.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
CPF (Central Pacific Financial)	3.38	3.09	N/A	Chart
REG (Regency Realty)	33.27	32.42	N/A	Chart
SEED (Origin Agritech)	5.12	4.81	N/A	Chart
BGU (Large Cap Bull 3x)	47.57	45.99	N/A	Chart
SKF (Ultrashort Financials)	27.76	26.72	26.31	Chart
SRS (Ultrashort Real Estate)	11.94	11.37	N/A	Chart

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

Trade Ideas for 08/26/09

Hard to be too bullish looking at today's chart. This week has consisted of two consecutive dojis, both of which resemble gravestone dojis. The last time the chart looked like this was back in January:

Certainly the market has exhibited behavior consistent with turning points. Buy the dip, the investing paradigm of the past 4-5 months, worked less effectively these past two days, as each time the market gave back its gains quickly. Should the market reverse from here, one couldn't say it didn't give fair warning. However, the drop from today's high was stopped in fairly short order, indicating that there are buyers willing and able to defend support levels. Until those levels are breached, the bulls have the upper hand.

In another indication that the uptrend may be in trouble, we bought VXX today, and on impressive strength it closed near its high. VXX has been trending inversely with the market, so this is unusual.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
GS	160.91	164.94	+2.5%	162.59	N/A	Chart
FXP	10.04	10.25	+2.1%	9.65	N/A	Chart
SRZ	2.19	2.15	-1.8%	1.98	N/A	Chart
PAL	2.97	2.87	-3.4%	2.81	N/A	Chart
VXX	57.34	58.26	+1.6%	56.06	N/A	Chart

I'm carrying forward yesterday's shorts, but also throwing in a couple of longs that have decent-looking charts.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SRS (Ultrashort Real Estate)	11.94	11.37	N/A	Chart
QID (Ultrashort QQQQ)	25.79	24.94	N/A	Chart
SKF (Ultrashort Financials)	27.76	26.31	N/A	Chart
REG (Regency Realty)	33.66	32.14	N/A	Chart
GDX (Gold Miners ETF)	40.01	38.99	38.78	Chart

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

Trade Ideas for 08/25/09

Was that the top? Today's candle featured a negative close with a good-sized upper shadow, and such a formation after a strong run-up often indicates reversal (to some degree or another). But this market has shown great resilience and may go for another push higher.

Tough call on whether or not to include PAL in our current holdings, as it gapped up and ran pretty substantially at the open (over 10% above the buy stop) before falling. I'm going to err on the side of inclusiveness and just add it.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
GS	160.91	162.58	+1.0%	157.99	Consider selling some or all at the open, or use tomorrow's idea SKF to hedge	Chart
FXP	10.04	10.31	+2.6%	9.65	N/A	Chart
SRZ	2.19	2.15	-1.8%	1.98	N/A	Chart
PAL	2.97	2.88	-3.0%	2.81	N/A	Chart

Even if the general market hasn't turned over yet, some sectors look like they're done: China, for example, which we have covered with FXP. Tomorrow's ideas are all shorts along these lines.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SRS (Ultrashort Real Estate)	12.13	11.37	N/A	Chart
QID (Ultrashort QQQQ)	26.28	25.17	N/A	Chart
VXX (VIX Volatility Index ETN)	57.34	56.06	N/A	Chart
SKF (Ultrashort Financials)	28.01	26.20	N/A	Chart

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

Trade Ideas for 08/24/09

The market broke out of no-man's land to the upside Friday, and we are now witnessing either a parabolic blow-off top forming or the beginnings of a true bull run. As I mentioned some weeks ago, the upward wedge that's been building since the March 6 bottom would need to turn parabolic in order to resolve to the upside. This is the same path the market took after the drop on April 20. Next week is critical to determining the course of this piece of history.

However, multiple negative divergences in the underlying market lead me to believe that the rally's days are numbered. All the oscillators sport divergences on the daily chart; in particular the divergence in RSI is extraordinary. In the chart below, I have the 14-period RSI overlaid on the daily chart of the S&P:

This divergence suggests a short- or medium-term pullback. The next chart shows the long-term view:

So far the move since March 6 has fit into a textbook wedge-shaped corrective ABC formation. We ought to see a throw-over next week; what follows is critical. A throw-over that keeps continuing upward would force me to relabel the chart as 1-2 instead of A-B. A throw-over that fails immediately (aka parabolic blow-off top) would cause me to label the peak as C. Because I perceive the latter case as high likelihood, I want to reiterate my recommendation last week to sell out of any long-term holdings.

As for our holdings, Friday we sold SKF for a larger-than-budgeted loss on a gap down. Still holding FXP, as China failed badly to make a higher high, and I'm going to lower the stop for that one. I think it needs more room to play out.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
GS	160.91	163.51	+1.6%	157.99	N/A	Chart
FXP	10.04	10.13	+0.9%	9.65	Consider setting sell-stop back to 10.04	Chart
SRZ	2.19	2.18	-0.5%	1.98	N/A	Chart

Some long and short ideas for Monday. I don't expect the short ideas to trigger because the blow-off top scenario looks incomplete, but it could happen. Curiously, the best-looking longs for Monday are all car-related (noting that the #1 commercial use for palladium is catalytic converters).

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
AN (Auto Nation)	19.51	18.85	N/A	Chart
CPST (Capstone Turbine)	1.06	0.99	N/A	Chart
PAL (North American Palladium)	2.97	2.85	2.81	Chart
VXX (VIX Volatility Index ETN)	57.34	56.44	N/A	Chart
SRS (Ultrashort Real Estate)	12.13	11.21	N/A	Chart

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