Trade Ideas for 12/10/09

After hitting monthlong trading range lows early on, the market bounced, came in, tested within a point of the low, and then bounced higher. After-hours prices have relaxed a bit. What the market does next promises to be big. After such a lengthy consolidation, it has the potential to be a sudden and powerful move. We were stopped out of JDAS and PMI today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
AONE	16.81	18.91	+12.5%	16.71	Consider booking partial profit near the 50-day moving around (around 19.40)	Chart
ARIA	2.36	2.56	+8.5%	2.44	N/A	Chart
SKF	25.31	25.23	-0.3%	24.19	N/A	Chart
QID	21.11	20.67	-2.1%	20.49	N/A	Chart
MZZ	24.47	24.16	-1.3%	23.49	N/A	Chart
DXD	30.29	30.12	-0.6%	29.49	N/A	Chart

We got a bounce today, so there are a couple of short ideas in tomorrow's mix. Real estate has a chart that could go either way, so there are long and short ideas there.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
CAEI (China Architectural Engineering)	1.11	1.02	N/A	Chart
CSR (China Security)	7.01	6.65	N/A	Chart
FST (Forest Oil)	19.61	18.64	N/A	Chart
URE (Ultra Real Estate)	6.51	6.25	N/A	Chart
SRS (Ultrashort Real Estate)	8.39	8.14	N/A	Chart
VXX (VIX Volatility Index ETF)	39.61	38.77	N/A	Chart

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

Trade Ideas for 12/09/09

The market fell to mid-range levels. Now let's see if there'll be a bounce at support. The bottom of the range is at S&P 1083, and just below that is the 50-day moving average. We loaded up on short positions today and probably won't be adding more until some kind of bounce/consolidation occurs.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
JDAS	24.51	23.94	-2.3%	23.42	N/A	Chart
AONE	16.81	18.14	+7.9%	16.71	N/A	Chart
ARIA	2.36	2.62	+11.0%	2.44	N/A	Chart
PMI	2.21	2.34	+5.9%	2.11	N/A	Chart
SKF	25.31	25.37	+0.2%	24.19	N/A	Chart
QID	21.11	21.11	0	20.49	N/A	Chart
MZZ	24.47	24.18	-1.2%	23.49	N/A	Chart
DXD	30.29	30.41	+0.4%	29.49	N/A	Chart

Some longs in case the bounce occurs tomorrow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
FIG (Fortress Investment Group)	4.16	3.91	N/A	Chart
IWC (Microcaps ETF)	38.06	37.42	N/A	Chart
CPST (Capstone Turbine)	1.37	1.27	N/A	Chart
HOT (Starwood Hotels)	34.01	32.49	N/A	Chart

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

Trade Ideas for 12/08/09

After a wild couple of sessions to end last week, the market started off the new week with a narrow-range doji. But it feels like the market is coiling, getting ready for the next big move. The question is, will it be up or down. With weakness today in financials, real estate, energy and AAPL, the chance of a downside breakout has improved. Surprisingly, given that Friday saw a new uptrend high in the S&P, energy (XLE) hit a one-month low today. But the medium-term trend has been up, complicating the picture. We bought PMI today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
JDAS	24.51	24.61	+0.4%	23.42	N/A	Chart
AONE	16.81	17.56	+4.5%	16.71	N/A	Chart
ARIA	2.36	2.47	+4.7%	2.21	N/A	Chart
PMI	2.21	2.34	+5.9%	1.99	N/A	Chart

Lots of signals for tomorrow. Given the recent market strength, the short ETF signals look relatively strong.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
GMO (General Moly)	2.32	2.20	N/A	Chart
CAF (China Fund)	35.18	34.72	N/A	Chart
CPST (Capstone Turbine)	1.37	1.28	N/A	Chart
CHS (Chico's FAS)	14.39	13.79	N/A	Chart
GE	16.51	15.99	N/A	Chart
SKF (Ultrashort Financials)	25.31	24.19	N/A	Chart
QID (Ultrashort QQQQ)	21.11	20.49	N/A	Chart
DXD (Ultrashort Dow 30)	30.29	29.49	N/A	Chart
MZZ (Ultrashort Midcaps)	24.47	23.49	N/A	Chart

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

Trade Ideas for 12/07/09

After putting in a wild outside day on Thursday, the market did it again Friday, going even higher and even lower intraday. While doing so, it happily ignored resistance and support as well as existing dollar correlations.

Overnight, the market remained near Thursday's lows. Then at 8:30 AM ET, a significant surprise in the jobs announcement led to a 15-point jump in S&P futures in under 10 minutes. At the same time, the dollar started soaring and gold dumping:

About an hour and a half later, the S&P hit the peak of the day at 1119 and perhaps only then remembered that the dollar has recently been the linchpin of all markets. As the dollar continued climbing, the market fell all the way back down below where it was when the jobs report was announced, seemingly crashing. But as the dollar consolidated its gains in a sideways move, the S&P bounced hugely. Throughout the session, as the dollar rose, alternately climbing and consolidating, the S&P managed to rise disproportionately higher during the dollar's consolidation phases. Whereas, gold and the dollar remained in a tight inverse correlation, with every fall in sync with the other's rise in terms of timing AND magnitude. It's too early to say that the market has broken the dollar-S&P inverse correlation, particularly since the inverse correlation did hold in terms of timing. But Friday's action does put the correlation in doubt.

Our short holdings didn't stand a chance against the early surge and were swept away. This included our 1+ month-long holding TWM. We bought JDAS.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
JDAS	24.51	24.57	+0.2%	23.42	N/A	Chart
AONE	16.81	17.18	+2.2%	16.71	N/A	Chart
ARIA	2.36	2.44	+3.4%	2.21	N/A	Chart

A lot of variables up in the air make the market especially unclear at the moment. With every stab upward, prices are met with strong selling, yet support levels are holding in the upper half of the now 4-week trading range. The market hasn't been ready to truly break out of the range, but with the recent upward bias the ball is in the bulls' court.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
EXM (Excel Maritime)	7.54	6.92	N/A	Chart
ITRI (Itron)	63.11	61.69	N/A	Chart
PMI	2.21	1.99	N/A	Chart
GMO (General Moly)	2.36	2.20	N/A	Chart
SEF (Short Financials)	45.33	44.29	N/A	Chart

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

Trade Ideas for 12/04/09

Today the S&P broke out to new recovery highs early on, and then fell back (just like yesterday). This time, however, the market was unable to hold on. Led by financials and real estate, the S&P ended up dropping 18 points from the high, closing near the lows of the day. The dollar, meanwhile, has been making a series of higher highs and higher lows.

Last week the markets plunged as a result of the Dubai crisis and then went on to new highs, crushing the bears. If the bounce reflected a successful ascent of that particular wall of worry, we'd need to see sustained follow-through to the upside. If instead the bounce served mainly to throw the bears off the scent, we'd see a reaction high and then the real drop. This pattern of behavior might be more recognizable at bottoms. A stock plunges, seems to hit bottom and bounces. People buy in, only to see the stock fall to new lows. This dispirits the participants, many give up, and only then does the stock truly begin its rise.

The Dubai crisis may or may not prove to be a significant event, but it certainly catalyzed the deterioration in market internals to act on price. The subsequent bounce this week shook the weak hands (like us) out, but meanwhile the technical picture worsens. In other words, there's a good chance the drop that began today is for real. Bears are w[e]ary after last week's failed campaign, and yet the evidence of deterioration has only gotten starker, particularly in the secondary indices. The Russell 2000 may have just put in its third lower high, and today price was rejected by the declining 50-day moving average:

This index is downtrending. Also, the low put in by the dollar last week was not breached when the market reached new highs today and yesterday. There are good arguments for a drop tomorrow, but it all comes down to price. Let's see if there's downside continuation tomorrow. We bought SH today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM (trending)	27.58	28.69	+4.0%	27.27	N/A	Chart
AONE	16.81	17.85	+6.2%	16.71	N/A	Chart
ARIA	2.36	2.51	+10.6%	2.21	N/A	Chart
SH	53.19	53.43	+0.5%	52.57	N/A	Chart

Be very wary of opening gaps tomorrow. More likely than not, they will be faded. In fact, look to close partial long holdings into a gap up, and partial shorts into a gap down.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
JDAS (JDA Software)	24.51	23.64	N/A	Chart
H (Hyatt)	30.01	29.09	N/A	Chart
GG (Goldcorp)	46.26	44.61	N/A	Chart
EGLE (Eagle Bulk Shipping)	6.04	5.75	N/A	Chart
SRS (Ultrashort Real Estate)	8.56	7.92	N/A	Chart
MZZ (Ultrashort Midcaps)	24.66	23.49	N/A	Chart
EEV (Ultrashort Emerging Markets)	11.31	10.73	N/A	Chart

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

Trade Ideas for 12/03/09

The S&P joined the Dow in breaking through to new uptrend highs today and then began selling off. However, unlike previous sell-offs after new topping range highs, the selling subsided by the end of the day. Could the market be gearing for a breakout to the upside, or will it fall back into the range? Tomorrow the market should let us know, by either continuing upward or falling back. I don't think it has decided yet.

We bought ARIA today.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM (trending)	27.58	28.04	+1.7%	27.27	N/A	Chart
AONE	16.81	17.76	+5.6%	15.79	N/A	Chart
ARIA	2.36	2.44	+3.4%	2.21	N/A	Chart

Ideas in both directions tomorrow.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
FIG (Fortress Investment Group)	4.09	3.87	N/A	Chart
DIG (Ultra Oil & Gas)	36.23	34.99	N/A	Chart
MDR (Mcdermott)	21.31	20.49	N/A	Chart
MRK (Merck)	37.24	36.44	N/A	Chart
PSQ (Short QQQQ)	45.76	45.10	N/A	Chart
SH (Short S&P 500)	53.19	52.65	N/A	Chart

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

Trade Ideas for 12/02/09

The market opened with a gap up and stayed above the gap all day. Because of the staggered way the S&P and Dow open, it's hard to see the gaps on the index charts, but SPY/DIA show these gaps well. The past couple of weeks the chart looks like it's been blown to smithereens: so much action taking place outside regular trading hours that during regular market hours we're just getting the tail ends of moves:

So it's been a tough environment to trade, both long and short. Last week's flight to safety was short-lived, as this week the dollar continues to drop, bringing everything else up. Today's gap up and hold invalidates the bearish interpretation of recent price action, but the market continues to churn, showing resilience rather than strength. We've been rangebound, and if this continues, the market should turn down from here. However, a breakout from this range may be in the cards. The trading range is over 3 weeks old now, which is far longer than these topping ranges have lasted in the recent past. It could be basing for a final hurrah. The Dow saw new recovery highs intraday today, beating highs from last week. On the other hand, the Nasdaq/S&P haven't yet broken their highs from mid-November. And as before, the secondary indices such as the Russell 2000 and the banking sector are a month or more removed from their highs and have since begun trading below their 50-day moving averages. A very mixed picture that suggests that strength in the large caps is enough to hold up the market, and weakness in the smaller issues and certain sectors is not enough to bring the market down.

We were stopped out of the majority of our positions. If you chose to sell only on a close below the sell-stop, use today's low as the new sell-stop. We bought AONE. HMY gapped up above the buy price and never came back down.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
TWM (trending)	27.58	28.71	+4.1%	27.27	N/A	Chart
AONE	16.81	16.72	-0.5%	15.79	N/A	Chart

The question for the next few days is whether the market is basing for a move up, or if the topping range pattern holds true to form. The setups on the short side are not ideal, so be cautious in your risk.

New Trade Ideas

Ticker	Entry	Exit A	Exit C	Chart
ABK (Ambac)	0.86	0.76	N/A	Chart
RTN (Raytheon)	52.06	51.48	50.85	Chart
ARIA (ARIAD)	2.36	2.21	2.13	Chart
SH (Short S&P 500)	53.28	52.82	N/A	Chart
MZZ (Ultrashort Midcaps)	24.66	24.08	N/A	Chart

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