Trade Ideas for 05/26

The market rallied furiously from the open, which was a gap down. The pace of buying trailed off as the day wore on; nevertheless, price closed near the highs of the day on the major averages. As it has proven time and again, this is one well-defended market. The entire month, price has been locked in the 875-930 range on the S&P. The bears were unable to push below that range today; now we'll see if the bulls can carry the tape above 930 over the coming sessions.

At the open we were faced with a dilemma, as most of today's ideas had gapped near their buy prices. The post I wrote last August, Beware of Breakouts at the Open, applies here. Ideally the stocks trade up to their buy prices after the opening 45 minutes. There's no answer that always fits when they don't; if you wait for them to trade back down to the buy price, you aren't buying on strength anymore. If you buy above the new highs, you're paying more. Today, if you took the former route, you might've bought ASIA, TWM and SMN, and bought and sold FAZ for a loss; but if you opted for the latter, you stayed away. We also sold HNI for breakeven.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Additional Exit Guideline	Chart
DGP	18.68	21.01	+12.5%	20.26	N/A	Chart
SSO	25.06	25.70	+2.6%	23.99	N/A	Chart
ASIA	20.68	20.56	-0.6%	18.79	N/A	Chart
TWM	50.67	45.39	-10.4%	44.47	N/A	Chart
SMN	20.43	18.80	-8.0%	17.85	N/A	Chart

A couple of nice setups for tomorrow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
AMTD (Ameritrade)	17.54	16.94	N/A	Chart
GU (Gushan Environmental Energy)	2.84	2.49	N/A	Chart

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