Trade Ideas for 09/11/09

Major indices made new recovery highs today, and closed at those highs. All indices are overbought, although many times during this uptrend overbought conditions have been resolved by sideways consolidation rather than pullback. So the market can certainly continue powering higher.

At the same time, prices across these indices have been constrained by an ascending wedge shape since the March low. These indices are now very close to bumping the tops of their wedge trendlines. Below are 2-year daily charts of the DJIA, DJTA, S&P 500, Russell 2000, and NASDAQ Composite indices with the wedges drawn in. In addition, I present the chart of the XLF, which may have broken below the bottom of its wedge. While it's true that wedges often have to be redrawn as new price data comes in, with 4 touches, at least the upper trendlines of these wedges look solid. Since this trendline defines an upper price boundary, the market may not have much more upside left. So while we'll still continue playing the long side, I'm going to be a tad more conservative with sell-stops and offer fewer long ideas.



We bought SLB today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
HTZ	9.71	10.99	+13.2%	9.71	Consider setting sell-stop on partial positions at 10.47	Chart
ARIA	2.26	2.63	+16.4%	2.49	N/A	Chart
V	70.44	72.31	+2.7%	70.44	N/A	Chart
SLB	58.43	58.50	+0.1%	56.84	N/A	Chart

A couple of longs, plus let's probe the short side with the financials.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SKF (Ultrashort Financials)	28.11	26.39	N/A	Chart
SOLF (Solar Fun)	6.26	5.78	N/A	Chart
SCHN (Schnitzer)	58.13	55.99	N/A	Chart

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

Trade Ideas for 09/10/09

The market continues to chug along, nearing new recovery highs. The S&P rarely strings together 5 winning days in a row so I'm a bit wary for tomorrow, but the market is signaling higher prices. We sold SDS and TWM for losses and bought HTZ today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
HTZ	9.71	10.44	+7.5%	9.49	N/A	Chart
ARIA	2.26	2.56	+13.3%	2.37	N/A	Chart
V	70.44	70.48	+0.0%	69.42	N/A	Chart

Stockcharts has been down all day, but I still found a couple of charts that look good.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
MXIM (Maxim)	19.27	18.69	N/A	Chart
SLB (Schlumberger)	58.43	56.84	N/A	Chart

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

Trade Ideas for 09/09/09

At the open, the market hit its best levels of the day on a gap up. It fiercely protected gap support and spent the remainder of the day in a tight range. This action is very hard to read; today's consolidation action could have constituted the "pullback" I was waiting for. So let's let the market show us where it's going next.

Both POT and FRG gapped well above their buy prices at the open and were scratched.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SDS	44.12	43.13	-2.2%	42.99	N/A	Chart
TWM	32.36	31.74	-1.9%	31.32	N/A	Chart
ARIA	2.26	2.56	+13.3%	2.19	Consider setting sell-stop on partial shares at 2.37	Chart
V	70.44	70.95	+0.7%	69.42	N/A	Chart

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SKF (Ultrashort Financials)	28.91	27.25	26.43	Chart
GRO (Agria)	2.03	1.83		Chart
HTZ (Hertz)	9.71	9.33	N/A	Chart

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

Trade Ideas for 09/08/09

Monday's a holiday, so next week begins on Tuesday. Friday the market continued bouncing, reaching very overbought levels on declining volume. The close at the highs of S&P 1016 represents a 50% retracement of the 4-day drop from 1039 to 992. A pullback should follow from here. Whether the 4-day drop was the opening salvo of a much larger move down, or merely a correction within a series of higher highs and higher lows, hinges on whether the next pullback breaks below the Wednesday low of 992.

If the S&P were to break those lows, I wouldn't look too closely at the price targets I mentioned in my last post. The count as labeled yesterday no longer looks valid because of the size of the move up. Friday we sold VXX for a profit.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SDS	44.12	43.91	-0.5%	42.99	N/A	Chart
TWM	32.36	32.46	+0.3%	31.32	N/A	Chart
ARIA	2.26	2.35	+4.0%	2.13	N/A	Chart
V	70.44	70.36	-0.1%	69.42	N/A	Chart

A couple of short ideas in case the market drops on Tuesday. A couple long ideas as well, including a gold play with FRG.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
SRS (Ultrashort Real Estate)	13.28	12.28	N/A	Chart
SKF (Ultrashort Financials)	29.92	28.04	N/A	Chart
FRG (Fronteer Development Group)	4.51	4.29	N/A	Chart
POT (Potash)	90.86	88.43	N/A	Chart

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

Trade Ideas for 09/04/09

Some late-day strength in the market, but so far the bounce has been more sideways than up. Assuming last Friday's high was the peak of the bear market rally, so far the move down appears to have unfolded in 4 waves:

When this bounce ends, there are a few downside targets just below Tuesday's low: the August lows around 980, the 50-day moving average around 970, and the June highs at 956. Wave 5 could be shortened and barely make a lower low, or it could extend, but generally the 50-day moving average requires at least a couple of attempts before it gives.

Note that there are always alternate counts: the move down could be much more powerful than illustrated, with the labels being 1-2-1-2 (i.e., extended 3rd wave) instead of 1-2-3-4. However, since 4th waves tend to be flat, my guess is that the move down has been as labeled. With that in mind, I would consider selling partial short positions as the above-mentioned targets are met, leaving the majority of positions intact in case the move down picks up momentum.

Today we sold FXP for a profit.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SDS	44.12	45.22	+2.5%	42.99	N/A	Chart
TWM	32.36	33.39	+3.2%	31.32	N/A	Chart
ARIA	2.26	2.26	0	2.13	N/A	Chart
VXX	57.34	59.71	+4.1%	58.42	N/A	Chart
V	70.44	70.91	+0.7%	69.27	N/A	Chart

Today's bounce provides some entries into more short positions. Again, I would consider lightly selling partial positions as the S&P hits the aforementioned downside targets.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
DUG (Ultrashort Oil & Gas)	17.12	16.69	15.99	Chart
SKF (Ultrashort Financials)	29.92	28.36	26.43	Chart

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

Trade Ideas for 09/03/09

The market made a slightly lower low this morning, and spent the rest of the day rangebound. With four days down in a row, the market may have a rebound in it. Given the strength of the downtrend so far, it may not be much of a bounce. Meanwhile, gold soared today, indicating a great deal of fear. We tried to play gold yesterday and got burned, and today it took off; proving once again that it's not an easy trade to enter or exit profitably. The relationship between the dollar, gold, oil and the stock market appears to be in flux right now; this supports the idea that a major trend change has occurred.

We sold REG today for a loss.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SDS	44.12	45.96	+4.2%	42.99	N/A	Chart
TWM	32.36	34.16	+5.6%	31.32	N/A	Chart
FXP	10.04	11.17	+11.3%	10.71	N/A	Chart
ARIA	2.26	2.27	+0.4%	2.13	N/A	Chart
VXX	57.34	62.69	+9.3%	58.42	N/A	Chart
V	70.44	70.10	-0.5%	69.27	N/A	Chart

A re-up for tomorrow in FXP, and the other promising chart is correlated to FXP. It is OK to add to your existing FXP position.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
FXP (Ultrashort Xinhua 25)	11.46	10.94	10.71	Chart
EEV (Ultrashort Emerging Markets)	17.36	16.79	16.14	Chart

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

Update 09/02/09

The day began with a furious rally to close yesterday's gap down open. Once the gap was closed, the markets reversed in a hairpin turn and proceeded to crash for the rest of the session. The bear market rally appears to be done, and if that's the case, market dynamics will reverse. Instead of furious rallies with shallow pullbacks, be prepared for relentless selling with sideways bounces.

We lost several long positions: AUY (bought today), UYG and SRZ, but our short positions really blossomed. We also bought ARIA.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SDS	44.12	45.60	+3.4%	42.99	N/A	Chart
TWM	32.36	33.82	+4.5%	31.32	N/A	Chart
FXP	10.04	11.43	+13.8%	10.71	N/A	Chart
ARIA	2.26	2.35	+4.0%	2.13	N/A	Chart
VXX	57.34	62.36	+8.8%	58.42	N/A	Chart
REG	33.27	32.27	-3.0%	32.09	N/A	Chart
V	70.44	70.14	-0.4%	69.27	N/A	Chart

Waiting for setups to develop in the coming days after today's wide range move.