FUNNY THING....

Every single stock that popped up on my sell list yesterday went up in price today. Some with good trading volume, but none of them worth saying "close the position." Question is - is there bargain hunting going on in the market or are we truly in a "correction." I am trading based upon indicators only so my trades still say sell. If you want the market to go down, but still BUY a stock try these two: SDS and QID. What these ETFs do is go UP if the market goes DOWN. Sounds really weird doesn't it.

Here is what my stock search brought up today:
BUY: PRFT
SELL: RVSN, TALX

It would be really hard to sell TALX seeing how there was a huge trading volume to the upside 3 weeks ago. Seeing how RVSN also broke out of a cup-and-handle, it too would be hard to put this one in a sell category. (See how trying to logically explain why I wouldn't sell a stock can leave a trader with a "deer-in-the-headlights syndrome" if I refused to follow my signals. We will just have to see how these are going to turn out.

I was looking at LIFC and was seeing that this one would be a good CONDOR play. I may enter into this one to expire in April.

I'm still in the attitude of a down market based upon my indicators, but I have been proven wrong before.

BTW, I played a bear call spread on CHAP today. So far I'm down on that trade.

Good luck trading.
JD

LET THE MELTDOWN CONTINUE

I said earlier that I did not like the looks of the market and today it let us know that it is not a good time to be in the market. My stock searches are pulling up sells all across the board. So, here are your choices:
1. Get solely into cash
2. Sell covered calls realizing that you will take some loses in the stock only to make up for it in selling the covered call and getting a premium off that.
3. Buy puts or place put spreads if you are into options.

My search showed sell on these stocks:
CRS, BOT, CHAP, CME, EQIX, VTIV and PCU.

Plain and simple. I am going to utilize bear call spreads for credit and then buy put spreads for a debit. (in simple stock trader terms - I am expecting the market to "correct" itself.

XXIA IS REPORTING EARNINGS ON MON

XXIA is reporting after the bell and the stock looks good to buy.

Check out WW. It's heading back up to a buy point.

WOOF also bouncing off support.

NOT LIKING THE LOOKS OF THE MARKET

Got to admit, now that the panic has left the market, I am not comfortable with how it is heading. By that I mean that the market has come back up for the past three days, but trading volume has declined. What a trader wants to see is a rise in price with a rise in trading volume (or a decline in price while trading volume is declining). Another problem I have is that the MACD histogram was getting smaller and smaller for the past 3 months (see attached chart of SPY) denoting a consolidation phase. Since the markets broke to the downside, I personally believe that we are in for a correction. The indices I am looking at is SPY, DJIA and the QQQQ. Type those into www.stockcharts.com and you will see what I mean.

The best thing to do at the current moment is to get into cash. That means - sell your stock. If you are into options trading, the best thing to do is start playing bearish trades such as a calendar put spread since volatility is so high right now in the near month expiration.

Personally, I am bearish now and am going sell my stock in my retirement accounts and play the short side with my personal money. Of course, with any market there are caveats. CME has bounced back above its 50 day moving average on higher than average trading volume. I personally don't have the $$ to invest right now. AGR might sneak back down to its 50 day moving average and move higher. LHCG has also held up well and has sat around some support. Again, if RVSN breaks $23.30, go in.

MCO appears to be spitting out a bear flag. I'm gonna short it if it breaks down below $64.00.

This next bit of text is for me personally or for any advanced trader that can follow the jargon:

I am trying a new technique with options that center around earnings announcements that was described in aMarch,2007 options magazine that I get. Basically, I take a short-term calendar spread around the day of earnings announcement. Since it is hard to determine direction, I am going to play a double calendar spread around the day of earnings. Trade set up is like this:

1st leg: STO near month OTM call, BTO one month out same-strike call.

2nd leg: STO near month OTM put, BTO one month out same strike put.

Other rules:

1. EPS release within 3 days since volatility is the highest in the near month option.

2. Volatility skew must be greater than 20% (near month versus far month).

3. Don't pay more that $1.50 for both legs together.

4. Use only a one month spread.

5. Even more desirable if far month delta is higher than near month.

Let's see how this works. Today, I bought CMTL calendar call spreads only since my directional bias after EPS releases was up. Bought 50 calendar call spreads at strike of $40 for a debit of $0.25. After placing the trade, I realized I should have also put on the second leg. Oh, well. Let's just see what happens. But first, why I bought:

1. overall CMTL has done well and risen after each EPS release

2. volatility skew as 67%

3. Delta for Mar 40 call was 0.07 and for Apr 40 it was 0.14.

Good luck trading.

JD