TALK ABOUT TEMPERING THE ENTHUSIASM

I hate days like this in the stock market. High trading volume and a down day. From my point of view as a technical trader, this day sucks. I have noticed on the indices charts (SPY, DJIA, QQQQ), the markets have made some interesting moves in the past a couple of weeks. Before I make a statement on what I think, let's look back on Nov. 2006. I had a post that looked like the market was going to top out. One of the big reasons I said that was that the MACD had a negative divergence. The markets avoided the negative divergence and continued to move upward. Currently, I still see the markets making a downturn if the SPY breaks below the 50 day moving average on heavy volume. Today could be a precursor.

LQDT did well for me today. It was up as high as 10% versus yesterday's close, but eeked out a 5% gain overall. (I'll still take it)

Good thing I'm not in on DIVX. On an earnings report, it decided to tank. I am pitching this one of my possible buy list.

TAM dropped 3.29% on lower than average trading volume. I am still in on this one.

I have to chuckle on PACR. Let me tell you of a scenario that panned out for me and this may be for more advanced traders since I am going to spit out trader terminology. I have been holding a calendar spread on PACR for the past 3 months with a July expiration. My intent was to close the near-month call when it broke out above $30.58. I did such that when it broke out so that left my June 25 call open. As you can see for the past few days it really rose. I took a look at a 1 year chart and saw that $33.25 was going to be a resistance point. So, when the stock got near $33.25, I sold a March $25 call for $8.50. The next day the stock took off and my March 25 call was as high as $9.00. Little did I know that PACR was going to come out with an EPS report the next day. (NOTE TO SELF: CHECK WHEN EPS REPORTS ARE COMING OUT) I checked my options early the next morning with the expectation that my PACR March 25 was going to be near $10. Ha, ha, ha. I beat the market. Guidance was lower than expected and the stock dropped 15% after hours. My contract was now worth $3.70. I'll take and overnight 55% profit any day. I am still holding that March $25 call with the expectation that PACR will head south.

Watch BSM.

BUY: WW. Plain and simple. It is above a previous level of resistance on high trading volume.

SELL: ISE, PRFT. (Other options include buying puts.)

Good luck trading.
JD