Trade Ideas for 01/09/08

Judging solely from the price change in the Dow, today was a losing day, suggesting further downside to come. But the consolidation took place in such a narrow range that it seems as though the market is ready for the next leg up. Indeed, the S&P, NASDAQ and Russell 2000 all had up days, though minor. Furthermore, our holdings, old and new, all broke out. This kind of divergence, where individual stocks are up a great deal while the averages enjoy a tight consolidation, is a very encouraging divergence, suggesting that the correction is over.

We bought both of yesterday's ideas and are off to a good start in the event of a broader market rally. Note that BKS broke below the sell-stop prior to being elected; thus today's low is the new sell-stop, and your position size should've been adjusted accordingly.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
VMW	24.11	26.93	+11.7%	25.18	N/A	Chart
BKS	18.17	19.33	+6.4%	16.36	N/A	Chart
CZZ	3.91	4.17	+6.6%	3.49	N/A	Chart

One of the most bizarre trends late last year was the rush into US bonds, with yields at zero for some short-term issuances. This doesn't make sense since the dollar itself is equivalent to a short-term bond yielding 0%; so why give yourself the additional opportunity cost of a maturity date? Now the bond bubble is disintegrating; TBT is the security for taking advantage of that. Also, I have a higher-risk signal in UWM. The signal will only work if the bottom of a shallow correction was hit today; otherwise it will get stopped out. But maybe it's finally the right time to be that aggressive.

Trade Ideas for 01/09/08

Ticker	Entry	Exit A	Exit C	Chart
TBT (Ultrashort Bonds)	42.97	41.38	39.44	Chart
UWM (Ultra Russell 2000)	21.11	19.61	N/A	Chart
PXD (Pioneer Natural Resources)	20.46	18.75	N/A	Chart
TS (Tenaris)	24.46	22.49	N/A	Chart

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