Trade Ideas for 05/05/09

The S&P gapped at the open, climbed all morning, took a mid-day break, and climbed again in the afternoon to huge new highs. While I did mention the possibility of new highs in my last post, a climb of this magnitude tests the credibility of my count:

While the expanded flat correction is a common formation featuring a B wave that extends beyond the start of the A wave, the level of today's high is about as far as it can go before becoming invalid. Couple that with the fact that tomorrow (May 5th) is the putative turn date, and we have a situation where the bearish case is pretty much pushed to its limit. That is to say, either today was the exhaustion day, and tomorrow we start descending rapidly, or else some other count is in play.

No new purchases today, but the aggressive short positions got toasted.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
DGP	18.68	18.90	+1.2%	17.96	N/A	Chart
GOLD	45.56	51.25	+12.5%	47.90	N/A	Chart

The shorts have one last chance, and that's tomorrow. (Also, long setups will need a day or two of consolidation to look tempting). These ideas have fairly high trigger prices and will require the market to tank in order to be elected.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SRS (Ultrashort Real Estate)	25.63	20.83	N/A	Chart
QID (Ultrashort QQQQ)	37.77	35.38	N/A	Chart

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