Trade Ideas for 12/16/08

The market ran higher early on, and within the first half hour we got stopped into all our positions for the day. And that's when the day-long pullback began.

It's always a tough choice whether or not to participate in the first 45 minutes of trading. Fake-outs are more likely to happen then, but every so often we get a day when the market starts out strong and keeps running. Actually, that hasn't happened in a long while. One thing I try to do is put a maximum number on the early signals. If the market does end up running, I'll put on the rest of the signals, with potentially higher entry prices.

Gold surged $15/oz in a span of 10 minutes around 10 this morning, and spent the rest of the session consolidating that advance. I don't think it'll get that much higher than $900/oz during this leg of its run; even more damning is the prevalence of rising wedge formations in the miners, which often presage quick, sharp corrections. So be careful with LIHR. Note that I've tightened the stop on it. For the other positions, let's hope we hit the jackpot with a rally, but if not, remain disciplined and get out at whatever sell-stop you have chosen.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
JWN	13.06	12.13	-7.1%	11.25	Consider selling on a close < 11.87	Chart
MELI	16.12	15.10	-6.3%	14.74	N/A	Chart
LIHR	16.21	17.94	+10.7%	16.59	Consider selling on a close < 17.24	Chart
X	40.71	37.17	-8.7%	34.79	N/A	Chart
GLBL	3.82	3.55	-7.1%	3.24	N/A	Chart
CHS	3.72	3.40	-8.6%	3.04	N/A	Chart

So we got the invitation, arrived on time, but no one's at the party. Doesn't mean it won't start, but I think at this point I'm pretty much set. I might take on a few more positions tomorrow, but I'm going to be limiting my risk per trade to a paltry 0.2% of equity. Before taking on new positions, ask yourself if you've taken on the right amount of risk for the opportunity. This upcoming rally (fingers crossed) won't be the big one, but it could help put a little extra oomph in your 2008 return. At the same time, if it doesn't materialize, you don't want to destroy the return you've worked hard to build up this year. Finally, the Fed reports its interest rate decision at 2:15pm, and typically markets go crazy right afterward.

Trade Ideas for 12/16/08

Ticker	Entry	Exit A	Exit C	Chart
FAF (First American)	28.07	25.56	N/A	Chart
NFLX (Netflix)	29.11	27.22	N/A	Chart
LNG (Cheniere Energy)	3.46	2.99	2.79	Chart
V (Visa)	54.61	51.76	50.49	Chart

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