Trade Ideas for 11/02/09

It appeared Thursday that the bulls may have dodged a bullet, but Friday reversed the prior day's gains and then some. We now have a rejection at the 50-day moving average in the S&P, and the Dow closing (narrowly) below its 50 for the first time since July. The possibility that the move down from the 22nd was merely a correction remains but becomes even more remote. The Russell 2000 is already on life support. If the nearer-term trends align with the long-term bear, be mentally prepared for powerful downside surprise.

In Elliott Wave terms, there are more than a few ways to count the move down from 1101 as a impulse wave. They tend to be variations of the following two counts:

The count on the left has the fifth wave down underway/nearing completion; the second count has the third wave underway/nearing completion. Next up, some kind of bounce. There's a positive divergence in RSI on the 30-minute chart between Wednesday's and Friday's lows, and in the recent past the slightest such divergence has led to monstrous rallies. The dollar has yet to make a higher high even as the major indices made lower lows, which is another divergence. Also, volume on the downside was high Friday, suggesting a selling climax. But if the bear market has truly resumed, down moves will extend. Putting it another way, if the market does bounce substantially on Monday, it would give more weight to the possibility that the move down has been a correction and not a serious resumption of the bear market.

That said, if the market does fall more Monday and closes near the lows, it would be a good opportunity to book partial (10-25%) profit in our existing short positions. In addition, I'm going to ratchet back the sell-stop on TWM and see if it can work as a longer-term trend holding rather than a trade. If you wish to continue treating it as a trade, use the alternate sell-stop.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM	27.58	32.10	+16.4%	26.99	Alternate sell-stop: 29.99	Chart
DUG	12.33	13.60	+10.3%	12.28	N/A	Chart
SDS	38.78	41.41	+6.8%	39.08	N/A	Chart
QID	22.51	24.16	+7.3%	21.93	N/A	Chart

In case the market does bounce Monday, I have some long ideas. Be careful not to risk too much.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
ACF (Americredit)	18.19	17.49	N/A	Chart
KRC (Kilroy Realty)	28.02	26.86	n/a	Chart
CEF (Central Fund of Canada)	13.46	12.99	n/a	Chart

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

Update 10/30/09

After a weeklong drop, the market roared back today, recovering much lost ground and closing at the highs. This was no sideways straggle but a sharp impulsive move that can resolve as either a last-gasp type of counter trend rally (i.e., wave 2) or the beginning of the next leg up, potentially to new recovery highs. Another wide-ranging up day tomorrow, especially with a strong close, would favor the latter. Given the way the Russell 2000 has broken down, however, I put more stock in the former scenario.

Sold today were EEV, SRS and DXD, the latter two for losses.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM	27.58	30.42	+10.3%	28.63	N/A	Chart
DUG	12.33	12.70	+3.0%	12.28	N/A	Chart
SDS	38.78	39.24	+1.2%	38.79	N/A	Chart
QID	22.51	22.96	+2.0%	21.93	N/A	Chart

Update 10/29/09

Tomorrow is the 80th anniversary of Black Tuesday, one of the most famous one-day crashes in stock market history. This might've been a bad omen as today the market made a wide-ranging move down (its third in four days). Remarkably, this plunge was done steadily; there weren't any waterfall declines. Just lower lows and lower highs. We may get a bounce tomorrow. But if the trend has truly changed—and it certainly appears to have done so—these bounces may be disappointing. Let's take a look at March when the medium-term trend changed from bear to bull:



I've used arrows to denote the pullbacks. Note that the initial pullbacks only barely entered the prior days' ranges; they were shallow and over with quickly. It won't necessarily play out inversely this time, but if it does, bounces will be very difficult to play (and for purposes of this system, not worth it.) Also of note, we actually got our big bounces last week, when the S&P rose from 1075 to 1095 and then again from 1075 to 1090—typical behavior prior to "the point of recognition." If we assume today is such a point, the next bounces we see may end up being sideways, e.g., 9 points instead of 20-25.

The possibility exists that the bear market rally has not yet finished. The major indices still have uptrending moving averages, even though price has fallen below the 50. So stay humble and continue to use sell-stops. We bought all of yesterday's ideas, but since two of these were re-ups, there's only going to be one new entry in the table.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM	27.58	31.64	+14.7%	28.63	N/A	Chart
DUG	12.33	13.28	+7.7%	12.28	N/A	Chart
EEV	12.42	14.01	+12.8%	13.11	N/A	Chart
DXD	33.51	34.39	+2.6%	33.12	N/A	Chart
SDS	38.78	40.96	+5.6%	38.79	N/A	Chart
QID	22.51	23.72	+5.4%	21.93	N/A	Chart
SRS	10.21	10.87	+6.5%	9.86	N/A	Chart

No official ideas for tomorrow. But if you feel light on short positions, you can try entering any of the current holdings on a pullback (i.e., market bounce), risking to the sell-stop listed in the table. The strongest charts of these are SRS and TWM; they're both around their October highs. SKF is another strong chart; on a pullback with that one, risk to 24.96. The flipside is the idea that DXD, being the laggard, has the most potential to "bloom" should it decide to follow the performance of its peers.

Trade Ideas for 10/28/09

Tuesday the market dipped down just a tad and consolidated. No Black Tuesday. Instead, we have a pattern of a large downdraft (several days' worth) followed by a narrow-range day, a pattern that has led to bounces in the past. At this point, I don't know whether a bounce will occur, and if so, whether it will be tradable. A major difference this time is that a sizeable minority of charts on my screen look terrible, so my guess is not a tradable bounce.

Regardless, if you hold many short positions, it would be prudent to book a little profit tomorrow and/or set sell-stops for some/partial positions at Tuesday's low. In any case, do keep a core holding. The possibility of a waterfall decline from here cannot be discounted. Once everyone expects a thing to happen, chances are it won't, because markets are perverse.

We bought QID today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM	27.58	29.67	+7.6%	26.99	N/A	Chart
DUG	12.33	12.53	+1.6%	11.79	N/A	Chart
EEV	12.42	12.85	+3.5%	11.67	N/A	Chart
DXD	33.51	33.63	+0.4%	32.09	N/A	Chart
SDS	38.78	39.50	+1.9%	37.17	N/A	Chart
QID	22.51	22.72	+0.9%	21.29	N/A	Chart

The market's at critical support. Failure could mean a sheer drop down. So far during this rally the market hasn't failed critical support yet, so in that sense tomorrow's ideas are long shots. Don't partake heavily of them. DUG is a re-up; if elected, set sell-stop for entire position to 12.28. DXD is also a re-up; sell-stop for that one is 33.14 .

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SRS (Ultrashort Real Estate)	10.21	9.62	9.19	Chart
DUG (Ultrashort Oil & Gas)	12.84	12.28	N/A	Chart
DXD (Ultrashort Dow 30)	33.93	33.14	N/A	Chart

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

Trade Ideas for 10/27/09

Today brought a lower high and a lower low, and, following the pattern of the past few sessions, featured a sheer drop in price at one point. The brakes were applied mid-day, and now price could be setting up for a kickback, maybe even something more. A third wide-ranging down day, on the other hand, would be unprecedented for this rally. Should it happen, it could prove to be the "moment of recognition" definitively signaling the end of the rally, and it could be devastating. Even now, the market has been successful in cultivating a sense of complacency within its participants. It seems as though there's an invisible hand keeping prices from falling too much in a single day. If you feel this way, recognize that the market has done its job. Note that Black Tuesday occurred on October 29, 1929, 80 years ago this Thursday.

Our URE hedge was a bust. We bought SDS and DXD. I'm using perhaps unnecessarily conservative stops on our current holdings, but the recent volatility makes me wary. If you wish to be more aggressive with the sell-stops, use today's lows.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM	27.58	29.01	+5.2%	26.99	N/A	Chart
DUG	12.33	12.74	+3.3%	11.79	N/A	Chart
EEV	12.42	12.43	+0.0%	11.67	N/A	Chart
DXD	33.51	33.64	+0.4%	32.09	N/A	Chart
SDS	38.78	39.16	+1.0%	37.17	N/A	Chart

A couple of short-side laggards for tomorrow, in the off chance it turns out to be a Black Tuesday. If you already own short positions, there's no need to pyramid heavily.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SRS (Ultrashort Real Estate)	10.21	9.19	N/A	Chart
QID (Ultrashort QQQQ)	22.51	21.29	N/A	Chart

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

Trade Ideas for 10/26/09

Friday capped off a volatile week, but looking back, the market has been in volatile trendless mode for two weeks now: going nowhere, but choppily. The market has experienced trendless consolidation periods of 1-2 week durations several times in the past few months, which has been its way of marking short-term tops. The difference this time has been the larger-than-normal range (30 S&P points, rather than 20) as well as the absence of doji candlesticks. This last observation means that the market has tended to close at the extremes of the range. Considering examples from the recent past, the next move is for the market to either make a higher intraday high before falling, or to begin falling without further preamble.

One other chart I want to share is that of the Russell 2000 the past two weeks. Price action reveals a potential dome top in the making, which can result in a sheer drop if fulfilled. The pattern is similar across the averages but pronounced here.



The volatility and closes at the extremes wreaked havoc on the daily setups. The losses that sting come from whipsaws, which we had plenty of, losing SKF, SRS and newly-purchased DGP, as well as AONE. SKF and SRS were stopped out by less than .10 early on. If you didn't get stopped out (likelier for SRS than SKF), new stops are at Friday's lows.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM	27.58	28.41	+3.0%	26.99	N/A	Chart
DUG	12.33	12.36	+0.2%	11.79	N/A	Chart
EEV	12.42	12.13	-2.3%	11.67	N/A	Chart

If the market should make new recovery highs, I have two long ideas we could play in URE and GE. Given the market's tendency to rebound off intraday highs, it might make sense to book profits should the market reach a new high. The other two ideas are shorts. If the market breaks below Thursday's low, these should trigger. However, if the trendless volatility should continue, we could see yet another whipsaw. Given these risky conditions, prudence suggests risking less all around.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
GE (General Electric)	15.59	15.09	N/A	Chart
URE (Ultra Real Estate)	6.02	5.72	N/A	Chart
DXD (Ultrashort Dow 30)	33.51	32.09	N/A	Chart
SDS (Ultrashort S&P 500)	38.78	37.17	N/A	Chart

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

Trade Ideas for 10/23/09

What a volatile session! After completing a 27-point drop early on, from 1101 to 1074, the S&P climbed back 21 points. On the back of yesterday's gyrations, this is turning out to be quite a wild week. This whipsaw may even continue: a similar series of back-and-forth price action occurred several weeks ago (highlighted in gray):

Under that script, the market reverses tomorrow and continues its descent. But that was a very unusual-looking pattern. The flip side is the possibility that wave 5 is currently underway. Yesterday I shared my interpretation of the current wave count, showing a completed 5. But as labeled in yesterday's graphic, wave 4 and 5 could've been red herrings, and really we had an irregular flat correction ending today. If so, new recovery highs would prove it.

The wild gyrations of the past few sessions do happen around turning points; the result is that it makes it extremely difficult to establish medium- and long-term positions. We certainly experienced that the past couple of days, as we entered several short ETFs (today's entries were SRS, EEV and DUG) and are in danger of getting whipsawed out of all of them.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SKF	24.37	23.45	-3.8%	23.32	N/A	Chart
AONE	24.31	23.89	-1.7%	23.22	N/A	Chart
TWM	27.58	27.32	-0.9%	26.43	N/A	Chart
SRS	10.07	9.40	-6.6%	9.38	N/A	Chart
DUG	12.33	11.88	-3.6%	11.49	N/A	Chart
EEV	12.42	11.93	-3.9%	11.67	N/A	Chart

Moving forward, the key levels are yesterday's high and today's low, but with such a wide range the market may just finish the week somewhere in the middle.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
DGP (Gold Double Long ETN)	25.56	24.90	N/A	Chart
DXD (Ultrashort Dow 30)	33.51	32.16	N/A	Chart

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

Trade Ideas for 10/22/09

A volatile day as the S&P opened with a slight gap down, made new recovery highs in short order, only to break through levels of key short-term support (yesterday and Friday's lows) by the close. The move up from the early October low appears to be over, with the possibility that the move from March is done as well. With potential capitulation in the dollar and the VIX, both of which crashed to new 52-week lows today before reversing (and in the case of the VIX, sharply so), the elements for an enduring decline are in place. A good confirmation would be a gap down tomorrow that doesn't get filled (indicating a stampede toward the exit). Anything less, and you probably can't count this market out. Since July, it's made a sport of snatching victory from the jaws of defeat.

Structurally speaking, I interpret the price channel of the past two weeks as a Wave 3 of great length. Once it broke down yesterday, the S&P completed Waves 4 and 5 in under 48 hours. Both of these waves were extremely short in duration and length, making it a great one-two punch fooling both bears and bulls:

As for our holdings, we sold the other half of SSO today, for a combined return of 3.84R. We bought and sold CHS for a whipsaw loss. And finally, we bought SKF. It traveled below the sell-stop early on, but since the difference was less than 2%, it avoided being scratched, and the low of the day becomes the new sell-stop.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SKF	24.37	24.77	+1.6%	23.32	Consider booking some (maybe 20%) profit around the 50-day moving average (26)	Chart
AONE	24.31	24.33	+0.0%	23.22	N/A	Chart
TWM	27.58	28.11	+1.9%	26.43	Consider booking some (maybe 20%) profit around the 50-day moving average (30)	Chart

Looking to add to short positions, plus DGP. In the event of market recovery, I'd suspect dollar weakness, and gold seems to be more sensitive than the market to the dollar. Any shorts that are elected, consider booking some profit around the 50-day moving average.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
DGP (Gold Double Long ETN)	25.69	24.97	N/A	Chart
SRS (Ultrashort Real Estate)	10.07	9.38	N/A	Chart
DUG (Ultrashort Oil & Gas)	12.33	11.49	N/A	Chart
EEV (Ultrashort Emerging Markets)	12.42	11.67	N/A	Chart
ZSL (Ultrashort Silver)	4.92	4.61	N/A	Chart

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

Trade Ideas for 10/21/09

The S&P broke down through the lower channel line and is attempting to recover. The action today was anti-climactic in that there wasn't much of an attempt to stay above the line, and after breaking down there wasn't much of a push up. This suggests weakness. We nibbled on the short side with an entry into TWM. If there's follow-through on the downside, we'll enter more short positions tomorrow.

Note that we did not elect CBAK because of the "disregard first minute of trading" rule.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SSO	32.68	36.63	+12.1%	35.99	N/A	Chart
AONE	24.31	24.52	+0.9%	23.22	N/A	Chart
TWM	27.58	27.41	-0.6%	26.35	N/A	Chart

The charts of the inverse ETFs are starting to shape up. In particular, note how the 50-day moving average of SRS has flattened out in recent sessions. While SRS can still drop from here (meaning market continues rising), a change in the direction of the 50 alerts us to the possibility of a medium-term trend change. On a different note, precious metals appear to be at a crossroads, so for tomorrow there are bullish (HL) and bearish (ZSL) plays on silver.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
HL (Hecla Mining)	5.11	4.67	N/A	Chart
CHS (Chico's)	13.86	13.47	N/A	Chart
ZSL (Ultrashort Silver)	4.92	4.63	N/A	Chart
SRS (Ultrashort Real Estate)	10.07	9.33	N/A	Chart
SKF (Ultrashort Financials)	24.37	23.42	N/A	Chart

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

Trade Ideas for 10/20/09

The S&P poked above 1100 today, successfully bouncing off that lower channel trendline. The top of the channel is around 1112 for tomorrow, and a break below today's low will take the average out of the channel. So let's wait and see which one breaks first.

We bought AONE today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SSO	32.68	36.99	+13.2%	35.99	N/A	Chart
AONE	24.31	23.63	-2.8%	22.79	N/A	Chart

Because of today's breakout, not many long ideas for tomorrow. For the short ideas, a break of today's high in each is acceptable but on the aggressive side; instead I've chosen entry prices that require more evidence of downside.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
CBAK (China BAK Battery)	4.64	4.41	N/A	Chart
TWM (Ultrashort Russell 2000)	27.58	26.35	N/A	Chart
SKF (Ultrashort Financials)	24.37	23.31	N/A	Chart
SDS (Ultrashort S&P 500)	38.31	36.94	N/A	Chart

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

Trade Ideas for 10/19/09

Early Friday morning, futures hit a new recovery high (equivalent to about 1099 on the S&P) and began falling sharply from there. The market opened on a gap down, and the S&P hit a session low at 1082. This was at the lower line of a channel that the market has been traversing the past two weeks. For the rest of the session, the S&P crept along this channel line.

As the above charts shows, twice before the S&P has done a 24-hour hover above the bottom channel line before launching toward the top of the channel. A break of Friday's low would make a logical early entry into a short position: far enough from the lower channel line to make it a true break of the channel, yet close enough to the current price to make it aggressive. The trend of the past two weeks suggests that it's slightly more likely the market continues up from here into the 1100s. For Monday we're keeping both possibilities in mind.

We sold MPG and a half position in SSO on Friday, both for a decent profit, although MPG gave back quite a lot of gains.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SSO	32.68	36.38	+11.3%	34.99	N/A	Chart

If the market should continue up from here, a marginal new high next week might be all that the bulls can hope for. In the late stages of a rally, I like to play high-beta/junk/momo tickers like MPG that can run far in a short amount of time, so that'll be our long side focus. We'll also be prepared for a break to the downside and the possibility that early Friday morning marked the high of the bear market rally.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
PAL (North American Palladium)	3.11	2.96	2.92	Chart
CPST (Capstone Turbine)	1.44	1.32	N/A	Chart
AONE (A123)	24.31	22.79	N/A	Chart
SVA (Sinovac)	8.58	7.92	N/A	Chart
FNM (Fannie Mae)	1.56	1.45	1.41	Chart
SDS (Ultrashort S&P 500)	38.31	37.49	37.24	Chart
SKF (Ultrashort Financials)	24.37	23.45	N/A	Chart
GLL (Ultrashort Gold)	11.71	11.44	N/A	Chart

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

Trade Ideas for 10/16/09

The Dow and S&P closed at new recovery highs on strength from the oil sector, but underneath the surface some divergences emerged. Financials, precious metals and real estate lagged noticeably. Also, there's been an interesting disconnect with the earnings results. In the past couple of weeks, the market rallied on results from Alcoa, Intel, and JP Morgan. However, these individual stocks have only fallen since the highs attained in their post-earnings after-hours sessions. Citigroup and Goldman Sachs took hits today after their results came out in the morning, and IBM took a hit with its earnings at the market close. (Google, however is up). So we're seeing that market leadership is not strong at the moment, and neither is sectoral leadership.

We sold DGP at the close, for a profit of 2.4R. Meanwhile, MPG went on a tear, and I have special exit instructions if you hold it.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
MPG	2.46	2.96	+20.3%	2.55	Sell on a negative close. On a gap up that opens above 3.25, set sell-stop to 2.95	Chart
SSO	32.68	36.90	+12.9%	34.99	Sell 1/2 on a close < 35.99	Chart

We might be near a turning point, or perhaps we'll see the lagging sectors catch up. Tomorrow is options expiration day, which tends to be slow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
TC (Thompson Creek Minerals)	13.41	12.94	N/A	Chart
PLD (ProLogis)	12.23	11.74	N/A	Chart
MI (Marshall & Illsey)	8.01	7.69	N/A	Chart
CPST (Capstone Turbine)	1.44	1.32	N/A	Chart
TWM (Ultrashort Russell 2000)	28.12	26.42	N/A	Chart
SDS (Ultrashort S&P 500)	38.31	37.24	N/A	Chart

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

Trade Ideas for 10/15/09

Note: Updated sell-stop for DGP

The Dow soared above 10,000 today on a wave of euphoria. We could be setting up for a serious push higher, or we could be at the edge of a major collapse. But we can only play what the market gives us, and at today's close there aren't any decent long or short setups using my system, at least on the major averages.

As for our holdings, a major ouch! goes out to today's open in FXP. We had budgeted a maximum loss of .26, to exit at 8.75 in a worst-case scenario. Today's gap down open at 8.44 meant accepting a loss of .57, or over twice our budget. That's a bad hit, not a catastrophe but definitely one of the worst gap opens we've had to accept. We also got stopped out of SRS, with a loss within budget. We got a gap up open this morning across the averages, and if you heeded my warning you would've avoided buying MPG. However, the stock itself did not gap up, so I'm including it in the table in case anyone bit.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
MPG	2.46	2.68	+8.9%	2.49	N/A	Chart
SSO	32.68	36.68	+12.2%	34.99	N/A	Chart
DGP	23.06	25.40	+10.1%	24.49	Sell on a close < 25.24	Chart

While the major averages don't offer any setups long or short, some individual runners have decent long setups for tomorrow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
PALM (Palm)	17.28	16.47	N/A	Chart
PAL (North American Palladium)	3.11	2.97	2.94	Chart
CPST (Capstone Turbine)	1.44	1.32	N/A	Chart

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

Trade Ideas for 10/14/09

We got a pullback today, but it was bought back, keeping losses across the major averages small. In the recent past, these mini-pullbacks have been about as much of a dip as the market allows before going on to higher highs:

After hours, the market has already gone on to new recovery highs. We'll see if this bleeds over into tomorrow's session; if it does, we can use today's lows as the sell-stop for our remaining longs. We sold RBY today for a small profit and bought SRS.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SRS	10.03	9.91	-1.2%	9.39	N/A	Chart
SSO	32.68	35.50	+8.6%	34.74	Set sell-stop to 34.99 on a gap up open	Chart
DGP	23.06	25.46	+10.4%	24.49	Set sell-stop to 25.10 on a gap up open	Chart
FXP	9.01	8.85	-1.8%	8.75	N/A	Chart

Beware of a gap up open tomorrow (hinted at by after-hours action). In such a scenario, wait 30-45 minutes after the market open before taking on new longs.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
PCX (Patriot Coal)	13.46	12.41	N/A	Chart
MPG (Maguire Properties)	2.46	2.24	N/A	Chart
QID (Ultrashort QQQQ)	23.11	22.23	N/A	Chart
SDS (Ultrashort S&P 500)	39.89	38.41	N/A	Chart

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

Trade Ideas for 10/13/09

Another very low-volume day saw the Dow inch to new highs, closer to the 10,000 mark. The Nasdaq and S&P failed to take out the September 23rd highs, although the Nasdaq-100 and SPY managed it. We bought FXP today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
RBY	4.54	4.68	+3.1%	4.59	N/A	Chart
SSO	32.68	35.63	+9.0%	34.74	N/A	Chart
DGP	23.06	25.13	+9.0%	24.49	N/A	Chart
FXP	9.01	8.97	-0.4%	8.75	N/A	Chart

Long setups look extended for tomorrow. Of course markets could continue upward but we'll at least participate on any upside with current holdings. Only short ideas for Tuesday.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SMN (Ultrashort Basic Materials)	10.51	9.79	N/A	Chart
QID (Ultrashort QQQQ)	23.11	22.23	N/A	Chart
SRS (Ultrashort Real Estate)	10.03	9.39	N/A	Chart

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

Trade Ideas for 10/12/09

What a difference a week makes. A week ago the market had tumbled 7 of the past 8 days for a total of 60 points on the S&P. This week, each day the market moved higher, in total recovering 50 of those lost points. While it would have paid to follow my suggestions to book early profits, it's important not to take this heart. The market appears to have demonstrated that the most it can fall is down to its 50-day moving average, upon which it will arise again, and powerfully. This is a misdirection. The market is capable of crashing, it simply hasn't chosen to yet. At this point, should it crash, you can be sure that short-sellers and buyers will rush in to cover/buy very early as that has been the pattern the market has trained its participants in.

This coming week I'm very wary. Things happen in October around this time; 10/11/07 marked the top of the market, while 10/10/08 saw a bounce of over 200 S&P points in three days (nearly 2,000 points on the Dow). This time around, Friday we saw the highest closing price in the Dow for the year. At the same time, it was among the five lowest-volume days, a startling divergence. Nevertheless, we wait for the market to show us what it has up its sleeve.

We lost HOLX on a nasty open Friday, stopped out by a penny. If you held on, the sell-stop should be 16.34. We also lost HL. I've tightened up stops on the remaining holdings.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
RBY	4.54	4.57	+0.7%	4.37	N/A	Chart
SSO	32.68	35.30	+8.0%	34.75	N/A	Chart
DGP	23.06	24.81	+7.6%	24.49	N/A	Chart

Mostly short-oriented ideas for Monday, but also a speculative long in TSTR.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SMN (Ultrashort Basic Materials)	10.51	9.99	N/A	Chart
FXP (Ultrashort Xinhua 25)	9.01	8.75	N/A	Chart
MZZ (Ultrashort Midcaps)	25.33	24.41	N/A	Chart
SRS (Ultrashort Real Estate)	10.03	9.58	N/A	Chart
TSTR (TerreStar)	2.23	2.04	N/A	Chart

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

Trade Ideas for 10/08/09

The market gapped up at the open, moved slightly higher then closed where it opened. We sold all our remaining short positions, SRS for a profit, TWM for a bit less than breakeven on a gap down open, and SKF and QID for losses. We bought HL, RBY and HOLX. PCX, which we missed, gapped above its buy price and never came down.

I couldn't find good setups for tomorrow. As insurance, tomorrow's ideas are shorts that shouldn't trigger unless the market crashes.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
HL	5.01	5.02	+0.2%	4.72	N/A	Chart
RBY	4.54	4.56	+0.4%	4.32	N/A	Chart
HOLX	16.71	16.72	+0.0%	16.36	N/A	Chart
SSO	32.68	34.93	+6.9%	33.68	N/A	Chart
DGP	23.06	25.18	+9.2%	24.33	N/A	Chart

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SDS (Ultrashort S&P 500)	41.01	39.07	N/A	Chart
MZZ (Ultrashort Midcaps)	26.06	24.49	N/A	Chart

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

Trade Ideas for 10/07/09

Today was a consolidation day, ending mixed with the Dow negative but most other indices positive. Not much new to add versus yesterday, although the after-hours action shows a decided upside bias.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SRS	9.56	10.17	+6.4%	9.63	N/A	Chart
SKF	25.11	24.48	-2.5%	23.99	N/A	Chart
QID	23.17	23.12	-0.2%	22.56	N/A	Chart
TWM	28.06	28.51	+1.6%	28.29	N/A	Chart
SSO	32.68	34.39	+5.2%	32.34	N/A	Chart
DGP	23.06	24.57	+6.5%	23.99	N/A	Chart

A bunch of longs for tomorrow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
HL (Hecla Mining)	5.01	4.72	N/A	Chart
RBY (Rubicon Minerals)	4.54	4.32	N/A	Chart
PCX (Patriot Coal)	12.51	11.89	N/A	Chart
HOLX (Hologic)	16.71	16.36	N/A	Chart

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

Trade Ideas for 10/07/09

The market rallied strongly today, and who knows what will happen next. On the one hand, recent history points to further upside into new recovery highs (see the chart in yesterday's post), but at the same time the market likes to fool as many people as possible and could decide to drop from here. We'll have to wait and see.

As for our holdings, we continue to hold until the market stops us out. Today we sold FXP for a profit and DUG for breakeven. Optionally, positions in the remaining shorts were reduced with today's negative close in each. We missed CSIQ as it gapped up above our buy price.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SRS	9.56	10.09	+5.5%	9.05	N/A	Chart
SKF	25.11	24.90	-0.8%	23.99	N/A	Chart
QID	23.17	23.24	+0.3%	22.56	N/A	Chart
TWM	28.06	28.58	+1.9%	27.27	N/A	Chart
SSO	32.68	34.18	+4.6%	32.34	N/A	Chart
DGP	23.06	24.64	+6.9%	23.06	N/A	Chart

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
LCC (US Airways)	4.51	4.24	N/A	Chart
VIVO (Meridian Bioscience)	24.43	23.85	N/A	Chart

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

Trade Ideas for 10/06/09

The market continued its bounce off its 50-day moving average and is now at a somewhat important decision point. A reversal from here strongly suggests the high was put in last month, and such a reversal has the potential to be powerful. However, this was true at several points in the recent past, and each time the bulls took the market to new highs. We'll soon find out if this time is any different.

We bought DGP and SSO today. Tomorrow may be an important test with respect to the direction the market will take over the coming week or two. As such, we will sell all of SSO on a negative close and consider selling up to half the shares in the short positions on a negative close.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
FXP	8.96	9.92	+10.7%	9.39	Consider selling up to 1/2 on a negative close	Chart
SRS	9.56	10.12	+5.9%	9.05	Consider selling up to 1/2 on a negative close	Chart
DUG	14.31	14.89	+4.1%	14.31	Consider selling up to 1/2 on a negative close	Chart
SKF	25.11	25.49	+1.5%	23.99	Consider selling up to 1/2 on a negative close	Chart
QID	23.17	24.10	+4.0%	22.56	Consider selling up to 1/2 on a negative close	Chart
TWM	28.06	29.71	+5.9%	27.27	Consider selling up to 1/2 on a negative close	Chart
SSO	32.68	33.22	+1.7%	32.34	Sell on a negative close	Chart
DGP	23.06	23.42	+1.6%	22.41	N/A	Chart

For tomorrow, QID is a re-up. If elected, set sell-stop on all positions to 23.87.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
QID (Ultrashort QQQQ)	24.72	23.87	N/A	Chart
CSIQ (Canadian Solar)	16.56	15.99	N/A	Chart

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

Trade Ideas for 10/05/09

Early on Friday, the S&P hit the 1020/50-day moving average target, and then spent the rest of the day keeping within a 10-point range above it. A bounce should take place in this range. Even if the market has gone back into medium-term bear mode, it would be a stretch to think that the market will immediately fall back into the mode of a year ago, when the S&P routinely shed hundreds of points per week. This is not to say that the market won't fall some more Monday, but I don't think it can get much lower without bouncing.

For our holdings, what this suggests is that it might make sense to book partial profits in the short positions, particularly if the market gaps down on Monday (and our shorts gap up). On another note, I just realized that the sell-stop I had for DUG last time (14.76) was in error, but it didn't affect our positions.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
FXP	8.96	10.43	+16.4%	9.39	N/A	Chart
SRS	9.56	10.70	+11.9%	9.05	N/A	Chart
DUG	14.31	15.56	+8.7%	14.31	N/A	Chart
SKF	25.11	27.00	+7.5%	23.99	N/A	Chart
QID	23.17	24.48	+5.7%	22.56	N/A	Chart
TWM	28.06	30.85	+9.9%	27.27	N/A	Chart

Gold/silver are in an interesting spot; they could go either way so for Monday I have ideas in both directions. UUP is not a great trader; it has a history of gapping big and doesn't move very much relative to its price (thus requiring a large dollar investment per dollar risked). I recommend risking half of what you'd normally risk if you choose to play it. Finally, we're going to probe the long side with SSO. It didn't work out last time, but if nothing else it's a way to hedge our current holdings.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
DGP (Gold Double Long ETN)	23.06	22.41	N/A	Chart
ZSL (Ultrashort Silver)	5.91	5.49	5.35	Chart
UUP (US Dollar Index Bullish Fund)	22.97	22.77	N/A	Chart
SSO (Ultra S&P 500)	32.68	31.95	N/A	Chart

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

Update 10/02/09

Today's action looks pretty stark on the daily chart: a red Marubozu candle 25 S&P points in length, strongly suggesting the end of the rally from March. Next stop: the 50-day moving average at 1020.

The intraday action, however, was a slow melt-down that seemed like it could bounce at any time. Prices appeared to stabilize around 1:30 ET, but in the last ten minutes, prices plummeted to new lows.

This kind of action is deceptive, as prices fall slowly but steadily, never quite making a higher high or higher low. Before you know it, the market's down 2.5%. After offering such big bounces the past few days, naturally the market didn't allow any today. If the market is very serious, we may not see a bounce tomorrow, either. Let's see how it all shakes out.

We sold SSO and AMCC, our remaining longs, for losses today. To lock in some of today's gains in our short positions, consider setting sell-stops on partial positions (say 20%) at the low tick for the stock (e.g., 23.14 for QID).

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
FXP	8.96	10.39	+16.0%	9.39	N/A	Chart
SRS	9.56	10.51	+9.9%	9.05	N/A	Chart
DUG	14.31	15.34	+7.2%	14.76	N/A	Chart
SKF	25.11	26.95	+7.4%	23.99	N/A	Chart
QID	23.17	24.34	+5.0%	22.56	N/A	Chart
TWM	28.06	30.42	+8.4%	27.27	N/A	Chart