Trade Ideas for 10/16/08

They sold the gap down this morning and kept selling, and in the last 5 minutes of trading, the selling even accelerated, and charts closed at their lows. Think maybe they wanted to punish the panic buyers?

Tomorrow's the big test. Can Friday's lows hold? At this point the correction the past two days has been so deep that I think the best we can hope for is a consolidation day tomorrow. A V-shaped reversal might be too much ask for. The silver lining is, consolidation would bring some excellent setups. By the way, my mom sent an updated DJIA chart with projections for the next few moves; here's the original post.

With today's washout, we didn't buy anything new and lost WFR. If the lows should hold tomorrow, it's still very possible that some of our holdings will touch below their sell-stops, only to bounce. To account for such whipsaws, you could treat the sell-stops as market-on-close, but recognize that that will increase your risk exposure. For purposes of tracking these holdings in the blog, I am sticking to the sell-stops as written (excepting action in the first minute of trading, of course.) Whatever you choose to do, don't be afraid to sell your positions. I could be completely wrong about Wave A having ended on Friday; that is why we have sell-stops in place and don't take on more than we feel comfortable with. Historically speaking, double bottoms are a common occurrence, but even more common are setups that look like double bottoms but end up being bear flags.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
JRCC	18.93	14.94	-21.1%	14.25	None	Chart
RIMM	62.38	55.75	-10.6%	50.21	None	Chart
FORM	18.46	16.02	-13.2%	15.26	None	Chart
WB	5.21	6.06	+16.3%	4.29	Consider selling on a negative close	Chart

Even with the severity of today's pullback, I still found a few charts that look OK.

Trade Ideas for 10/16/08

Ticker	Entry	Exit A	Exit C	Chart
TCB (TCF Financial)	19.92	17.82	16.38	Chart
IPHS (Innophos)	21.51	19.49	15.32	Chart
BJS (BJ Services)	14.21	12.14	10.87	Chart

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