Trade Idea for 9/5/08

Finally some direction in this market! Today's action in the S&P was significant not only because it broke and stayed below the consolidation range of the past few weeks, but also because it happened for seemingly no reason. That means the reasons were technical in nature, having to do with the natural rhythms of supply and demand, and not with a news event, which might be temporary. I would not be surprised if the S&P proved unable to get back to today's highs for several months.

We were officially stopped out of LVLT, UWM and NDAQ today, and we officially remain in BPOP and LYV. As I mentioned in today's note, consider selling all longs at this point. To try and stick it out from the long side is an uphill battle; the bears are fully in control at this point. Some charts in the financial sector look OK, but why pick that fight?

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
LYV	16.63	15.58	-6.3%	15.19	Consider selling, especially on a negative close	Chart
SDS	67.81	69.96	+3.2%	63.14	Consider moving some of the position to a breakeven stop	Chart
BPOP	7.67	8.18	+6.6%	7.99	Consider selling	Chart

Tomorrow's idea is a bet on how much farther gold has to fall before it decides to rally. Perhaps gold will rally from here. However, it does potentially have a seven-year run to correct, so downside is favored. In addition, I may add to SDS, QID, DXD or SSG in the next few sessions on pullbacks—with an eye to managing my risk. My thinking is, if there is to be a sustained downtrend, as today's breakdown portends, far better to get in early. The Russell and the financial sector have been the strongest lately, so I would avoid TWM and SKF.

Trade Idea for 9/5/08

Ticker	Entry	Exit A	Exit C	Chart
DZZ (Gold Double Short ETN)	35.91	34.49	31.95	Chart

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