Trade Ideas for 05/22/09

The selling continued into today, but just like last Friday, the pace of selling weakened into the close. We got quite a bounce in the final hour as a result. The S&P didn't violate any support levels, although it got close to doing so. The Dow, on the other hand, made a lower low today (however slight), a day after making a higher high. Buyers appear to be defending these levels, and it may take a few sessions to resolve, especially given the upcoming 3-day weekend. But the charts are displaying classic topping patterns: the inability to push higher, either a lower high (as yet unconfirmed on S&P/Naz/Russell 2000) or a lower low (Dow), and consecutive tests of support. Can this powerful rally continue in the face of these challenges? We'll find out soon.

We sold YGE in advance of earnings for a nice 3-day gain. No new purchases today as TWM gapped above the buy price and never touched back down. SKF never made it high enough, as financials (and real estate) actually enjoyed an up day.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
DGP	18.68	21.06	+12.7%	20.26	N/A	Chart
SSO	25.06	24.49	-2.3%	23.95	N/A	Chart
HNI	16.84	17.25	+2.4%	16.86	N/A	Chart

Tomorrow promises to be a low-volume day since it's the Friday before a 3-day weekend. If you want to trade, I'd look to the short side, but without much expectation since today ended on a strong uptick.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SKF (Ultrashort Financials)	46.87	44.48	41.12	Chart
SRS (Ultrashort Real Estate)	22.86	21.08	19.49	Chart

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