Trade Ideas for 10/28/08

On Friday it was unthinkable that there wasn't a much lower low in the Dow given what happened in the futures market. Maybe it was a miracle, but it's probably a mistake to read too much into that stay of execution. If the market had taken flight at the open today and kept rallying, then I'd be singing a different tune, but instead the market struggled and gave a half-hearted rally, and then everything sold off hard right at the close. What that tells me is that there are no buyers. It looks to me like the bears are gathering for another push downward, so either join in or step aside.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
SH	94.91	96.20	+1.4%	88.21	Consider selling on a close < 91	Chart

As I said yesterday, odds favor downside, and that's why my ideas for tomorrow are on the short side. However, there is a major wrinkle, which is that the FOMC will make its decision Wednesday as to whether or not to cut interest rates. In my opinion, there isn't a problem with demand for credit, so who cares what they do. But every time the FOMC makes its statement, the entire market waits and listens. Some people play the FOMC decision, which requires paying attention Wednesday right around 2:15 pm. I personally think it's a good idea to close out most if not all of one's positions prior to the FOMC statement. It's not uncommon to see the market move in 3 different directions right after the announcement. My perspective is, why take on that extra risk? So if you do play any positions tomorrow, consider getting out by Wednesday around 2pm.

Trade Ideas for 10/28/08

Ticker	Entry	Exit A	Exit C	Chart
SKF (ProShares UltraShort Financials)	180.12	157.26		Chart
PSQ (Short Nasdaq-100)	85.86	81.78		Chart

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