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.