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.