Trading Update:

1/23/2008

1:30 PM Stopped out of QID for a 1% profit

3:30 PM Purchased SSO at $67.85 with a $65 stop

Market Evaluation: Wednesday January 23rd, 2008

January's performance certainly answered the question of our forum with clarity. It has been a Crash Course to start the year. Declines of great than 15% in less than 15 trading days is a rough way to start a year. Today we saw a volatile day with a much lower opening (particularily due to AAPL), a rise in prices, a dramatic fall to new lows on the day followed by a powerful reversal! The General Market Trend is still down. The 7 Day EMA is still well below the 21 day EMA and the MACD's are far from a positive cross (although starting to move in that direction) for the Dow, Nasdaq and SP. However, the stochastics have turned positive on all three indexes and a bounce is likely. This does not guarantee a tradeable trend to the upside as the intermediate trend is still lower. However, it is likely that we will see a continuation of today's bounce.

This has been a very difficult market to trade. The drastic pre-market changes have made it very difficult to perform short term (1-3 day) trades. However, the purpose of this forum is to identify an intermediate term trade that is comfortablly tradable with stop loss levels that only require up to a maximum of 8% risk. Remember, although we probably see a solid short squeezing bounce, there are no guarantees and our official trend change will be documented when all three indicators turn positive.

Safe Trading!

Current position: SSO @ $67.85 (FULL POSITION) Stop at $65 (which will be moved up to ensure profits)

Trading Update: Prior To Market Open - Jan. 24th, 2008

SSO - Purchased 1/23 @ $67.85
raising stop loss to $68.35 to guarantee profit.

Market Commentary: Thursday January 24th, 2008

We saw a continuation of the rebound that we expected after Wednesday's reversal. The intermediate trend is still down and it will take a week or two of neutral to positive action to see the 7 day EMA cross above the 21 day EMA. However, some sort of a bounce is in progress and it could continue with strong movement to the upside. Stochastics are positive and the MACD is working back to positive, but has a long way to travel.

Stocks to watch:
VMW - after hitting a low of $71 in November, VMW has stayed above this level through the entire January decline. In fact, it has only fallen about 9% in January, which is much better than most equities. Look to purchase VMW after the 7 day EMA breaks above the 21 day EMA. This could come as early as today or Monday if the stock is moving to the upside.

ISRG - take a look at the chart. A company with great earnings took a hit early in January, but basically has stayed about even over the past 2 weeks of stock market craziness. I would like to see a 7 21 day EMA cross before I recommend the stock, but I am keeping a close eye on it.

Trading Update:
Hopefully you are still in SSO trade recommendation on Wednesday or got in during the pullback after the open yesterday. Today should bring a nice additional gain to your profits. Make sure that you have a stop at a level that guarantees that you will have a profit on the position even if the markets turns down again.

Market Commentary: Friday January 25th, 2008:

It seems as if the August lows are acting as strong resistance for our current rally. We still have a downward moving average cross and the MACD is strongly negative. Stochastics did turn higher on all 3 indices, but they could be pointing down with another drop in the markets today. After a strong 46 hour bounce (mid-day Wed. through Friday morning) where we saw over an 8% run it is very possible to see the markets decline again. Changing a trend does not happen in a few trading days. It is not safe to go LONG. The test of our recent lows should prove to be interesting. It will determine if we have another leg lower or if we can start a new trend to the upside.

Today's Trade Suggestions:
1. Short TOL after bouncing off resistance at $24
2. Short TMA after bouncing off top of channel (also a weak Mortgage Co.)
3. Short TSO after hitting August low resistance at $44.
4. Short PMI after hitting resistance of previous lows near $10.

Watch List:
Continuing to watch and wait for VMW and ISRG to trend to the upside.

Safe Trading

Market Commentary for Monday January 28th, 2008:

It is a tricky spot to be in right now. However, I have to keep telling myself to "Wait until the market confirms an uptrend before you begin commiting capital." Yes, I am trying to make some money on individual positions here and there, but that has only been so successful. Not like early in January where the trend was down and it was just a matter of taking the wave for a ride for a few weeks.

The trend is still lower, although today brings us closer to the August lows again that will act as an important resistance. A break through August lows is a major step in a trend change. Stochastics remain higher as they are the first to turn, but the moving averages have not crossed to the upside and the MACD is still very negative. Again, the trend is still lower, so be patient and wait. At this point it is very difficult to get in this market with conviction on either side.

Short:
1. TOL is still an option with a stop at $24. Cover price targeted between $16 and $19.
2. TMA was not available to short with Zecco this morning, but will try again tomorrow with a stop at $12. Target price between $7 and $9.
3. TSO with a stop at $43 and a cover price between $32 and $35.
4. PMI with a stop at $10.25 and a cover price between $6 and $8.

Long:
Continuing to watch ISRG as it's chart improves on a daily basis.

Safe Trading!

Market Commentary for Tuesday January 29th:

The larger market trend is down and we are in the midst of a strong bounce. This is not the time to go short as the trend could be changing, but before we go long on the general markets we should wait for wait for a trend change confirmation through a moving average cross.

I imagine that today's action after the FED presents their rate cut decisions and the remainder of the week should give us some key intermediate term direction. If the stochastics make a downward cross I plan to purchase some QID, SDS, or DXD. However, if we break above the resistance level we are sitting at and see the 7 day EMA cross above the 21 day EMA I would go long with QLD, SSO, or DDM. For now it is sit and wait, but by Friday we should have some direction.

Take ISRG off the Long watch list. I need to spend some time looking at Individual long positions. Right now I would only trade the index funds.

I am currently shorting TOL at $20.80 with a $24 stop and PMI at $9.40 with a $10.25 stop. Considering closing my PMI position if profitable this morning before the FED announcement.

Market Commentary for Wednesday January 30th:

Get to the Point - The trend still down. Waiting for short term direction confirmation.

The Story - The FED cut rates by 50 bp and the market flew up a couple hundred points, and then it reversed and closed negative for the day. None of this was stressful because we are waiting for further confirmation during a short term bounce and an intermediate term downtrend. The markets must rise further to develop a moving average cross. However, my guess is that the stochastics will turn lower and the market will fall close to previous lows or beyond in another shorting or QID, SDS, or DXD opportunity. Let's wait until we have confirmation.

Current position: Short TOL @ $20.80 with a $24 stop.

Today's trade: Got out of PMI before the FED decision with a small gain. PMI could still be a nice short position if it stays below $10.

Market Commentary for Thursday January 31st:

Get to the Point - The trend is still down. Waiting for short term direction confirmation.

The Story - Could anyone have predicted the markets actions over the past two days. The FED cuts rates, up 200 points and then down 300 pts for no reason and then today we open down a few hundred points and have nearly a 500 pt intraday run to close up a coulple hundred points higher. JUST WAIT FOR THE TREND. The markets must rise further to develop a moving average cross. However, my guess is that the stochastics will turn lower before we have a moving average cross and the market will fall close to previous lows or beyond in another shorting or QID, SDS, or DXD opportunity. Let's wait until we have confirmation. In the meantime, I wouldn't be surprised to see things jump around a bit more.

Current position: Short TOL @ $20.80 with a $24.50 stop. Shorted some more TOL at $23.57 with the same stop in place. Also bought 3 Feb. TOL 22.5 puts. Maybe a little heavy, but the $24 resistance seems strong.

Market Commentary for Friday February 1st:

Get to the Point - The trend is still down. Waiting for short term direction confirmation. A lower stochastic turn or a moving average cross should give us some buying direction.

The Story - We are getting very close to some specific market direction. The Dow and SP have run up strongly and are possibly 1-3 days away from a moving average cross. However, the current trend is still down and will be until the 7 day EMA crosses above the 21 day EMA. The stochastics are on the rise, but we would initiate a sell if they were to turn lower. The trickiest situation would be if we had a positive moving average crosss followed by a stochastic turn downward. At this point we would have to wait until they are in agreement. It should be an interesting week.

My guess is that the stochastics will turn lower before we have a moving average cross or posiible right after and the market will fall to test previous lows or beyond in another shorting or QID, SDS, or DXD opportunity. One confirmation of this idea is that we have seen very few individual stocks take leadership or hold up well in the recent declines. It might take some time for the market to develop legs for another sustained run. Regardless, let's wait until we have confirmation.

Current position: Shorted TOL @ $20.80 with a $24.75 stop. Shorted some more TOL at $23.57 with the same stop in place. Also bought 3 TOL Feb. 22.5 puts. Maybe a little heavy, but the $24 resistance seems strong. Just hoping that we don't have a short term break to the stop point followed by a big drop.

Market Commentary for Monday, February 4th:

The Point - The trend is still down. Waiting for short term direction confirmation. A lower stochastic turn or a moving average cross to the upside is needed to clarify short to intermediate term direction.

The Story - We are getting very close to some specific market direction. Much of the following post is very similar to Friday's comments. The markets sold off some today and might have started the next leg lower. It will take some time to develop, but this week should give us clearer direction. The Dow and SP have run up strongly and are still 1-3 days away from a moving average cross. However, the current trend is still down after a terrible month of January and will be until the 7 day EMA crosses above the 21 day EMA. The stochastics are on the rise, but they would signal a sell if they were to turn lower. Currently, the Dow has been the strongest and is closest to developing a positive moving average cross. The SP and Nasdaq have lagged and I would focus on them for downside participation.

My guess is that the stochastics will turn lower before we have a moving average cross or posiibly right after and the market will fall to test previous lows or beyond in another shorting or QID, SDS, or DXD opportunity. One confirmation of this idea is that we have seen very few individual stocks take leadership or hold up well in the recent declines. It might take some time for the market to develop legs for another sustained run. Regardless, let's wait until we have confirmation.

Current position: Shorted TOL @ $20.80 with a $24.75 stop. Shorted some more TOL at $23.57 with the same stop in place. Also bought 3 TOL Feb. 22.5 puts. Maybe a little heavy, but the $24 resistance seems strong. Just hoping that we don't have a short term break to the stop point followed by a big drop. TOL turned lower today and hopefully will be sold in the short term.

The trend may be down, but it gives the perfect reason for diversification. Although most of my stocks were down today, my oil stocks actually kept me in the green.

Trading Update:

It is almost time to get in some positions to play a potential slide to new lows (QID, SDS, DXD). I nibbled today and bought some SDS at $63.58 as stochastics have nearly turned to the downside! Unfortunately, TOL did not particpate well today so we got out and broke even. Until later...

Market Commentary for Tuesday, February 5th:

The Point - The
trend is still down. Nasdaq confirmed the downward trend with the Dow and SP just behind!

The Story - Another enormous drop today. It is so important to wait for a positive trend before jumping back in this market. The moving averages came close to making a positive cross, but did not get there. Stochastics turned lower for the Nasdaq (time to buy QID) and the SP and Dow are very close to making a downward cross. An initial purchase of QID, SDS, or DXD can be made as the market slides lower. As the positions are confirmed we will add to them. This current leg lower will probably take us to new lows or at least test them. I would not go Long in this market.

Current
position: Bought an initial position of SDS at $63.57 and have a stop at $59.20. Will look to add over the next few days.

My play for tomorrow is to pick up 30 shares of Agrium, only if it is in the $60s. This is one I plan to go long on and I look forward to their 4th quarter report next week.