Trade Idea for 03/06/09

No reversal yet, despite yesterday's rally. The fact that the market fell so swiftly after an up day may mean that this bear leg is going for extension, which would be the worst case scenario in Elliott Wave terms (S&P 600-650). The day's motivating news event is tomorrow's jobs report number, which is supposed to be bad. But it's not the content that matters; it's the reaction. The market tends to overreact in anticipation; as a result, the news itself tends to be a reversal event because greed and fear so easily magnify themselves. The report comes out at 8:30 AM ET, an hour before the market open.

Brian Shannon at Alpha Trends has a great article on potential market moves in tomorrow's session. Tomorrow does feel climactic. We have the jobs report on the one hand, and on the other we have a market spiraling out of control. Brian, by the way, is one of the most disciplined day traders in the business, and even he has broken his rules and started buying in anticipation of the reversal (which hasn't happened yet).

A lot seems to be riding on tomorrow's action. There's potential for explosive movement either way.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
SWKS	6.61	6.92	+4.7%	6.14	Consider selling on a close < 6.62	Chart

Depending on tomorrow's verdict, some longs and shorts. Because of the high chance of reversal in the first hour of trading (Brian Shannon seems to think so, too), I would suggest at most a reduced position during that time.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SLT (Sterlite)	4.93	4.63	N/A	Chart
GVA (Granite Construction)	36.54	33.99	N/A	Chart
CME (CME Holdings)	191.58	180.89	N/A	Chart
DUG (Ultrashort Oil & Gas)	34.84	32.13	N/A	Chart
QID (Ultrashort Nasdaq-100)	67.74	63.54	N/A	Chart

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