Tech Ideas (pre-labor day week)

MSTR: Following recent recovery to $90- stock is overbought near-term

A short candidate at $90 exit at 92 closer to the 200 day mva. With reward levels 85, best case 80.

Despite price recovery from summer lows, intermediate-term downtrend in tact along with overbought daily momentum.

WFR: Quarterly recovery in recent trading action: (watch near-term behavior as a pullback name for Q$).

Looking for pullbacks at $33- chasing long trade here not timely, but FUNDI- support case. Q4 attractive set up.

NVDA: Like the intermediate-term but near-term short.

Trade: Short for pullbacks from 26-22.

Investment: Following pullbacks add for Q4 recovery corresponding with positive recent fundamentals.

BGC: a rare working momentum stock that has outperformed the market/sector.

Up over 160% since Q4 2006. (a cable play).

Looking for short here after recent highs of 39.50. (exit point)-

Reward: 50 day at 33.- any disappointment in this name is a valuable short play.

Defined exit of 39.50 helps manage the trade.

RBAK- use weakness to add – an idea for Q4.

Shopping for Q4.

Shopping for Q4.

Well, Homebuilders mentioned earlier. A decline in Sep can offer even a bigger recovery.

In the consumer discretionary space, homebuilders are the highest beta space.

Retail: Beaten up summarizes the story in Q2/Q3- but value traps are being set up in areas from stores to restaurants

Deep value search has to be justified with the Macro call. And currently not a timely trading short but a time too look for attempted bottoms or further downside extortion.

Regardless- an area of interest for Q4 rally especially higher beta names.

Follow up on credit shorts---

Credit Related: (Housing related stocks)

Barron’s: An article examining the “overdone” sell-off in housing. I like the discussion but rather wait into Q4. As a bear this sep/early October can be rewarding to short select groups. Although, I agree with waiting for strength in homebuilders give the extreme oversold conditions. Fundamentalists are certainly interested here and given the beta of some names like TOL-a strong recovery can help managers Alpha.

Negative Housing perhaps becoming too fashionable of a story on Wall St.

Homebuilders have corrected since August 2005 and have given up close to 40%+ of their value.

REITS: Mortgage Lenders are vulnerable but a tricky play in finding the right name in the group.

Some brokers have expanded to the mortgage business and remain a question mark.

LEH and BSC- remain shorts to consider on a timely fashion.

I am interested in LEH short in the near-term .

Trading Evaluation

• Did the trade's chart pattern conform to the criteria in our plan?

• Did the market as a whole support the direction of the trade we chose? (Every equity trader should have some clear rules about this in his or her trading plan, with a specific set of market criteria to cross-reference.)

• Were the precise entry requirements fully met, thereby legitimately triggering our participation in the trade? (I can't tell you how many students of mine confess to being overly anticipatory in their trading, entering a whole host of positions that never really triggered.)

• Did we hesitate once the entry requirements were met and then find ourselves chasing the trade?

• Did we use the proper position size for the trade, according to our rules?

• Did we locate our stop loss for the trade in the correct place?

• Did we obey the stop loss? (This is probably the most important issue of all. If we make too many errors in this department, we are bound for an early exit from our trading career.)

• Did we allow our position to fall (rise) all the way to the stop loss, or did we pre-empt it? (While this is not as serious as the issue above, there are traders who constantly eject themselves from perfectly good trades on the slightest hiccup, dramatically changing their overall trading odds.)

• Once the trade started to move in the desired direction, did we implement a trailing stop loss, and if so did we place it correctly?

• Were our targets for the trade chosen with a healthy reward-to-risk ratio in mind?

• Were those targets placed correctly based on support/resistance considerations?

• Did we hold the position all the way until we reached our targets, or did we take profits early?

• Did we add more position size once the trade was underway, either by averaging up or down? If so, was this allowed under our rules?

Dow Jones: Similarity 2002: (Mid-term Election Year)

Dow Jones: Similarity 2002: (Mid-term Election Year)

Amazing discovery in the chart patterns of the last Mid Term Elections.

After peaking in May 2002 and a failed recover in the summer, DJ Index topped on August 17, 2002. A major decline in Q3 02 setting the lows October in a Mid-Term presidential cycle.

Repeat? Easy to conclude from a recent historical observation but never hurts to recognize past performance.

Clearly just stating the similarity in seasonal patterns.

Don't let S&P 500 fool you

SPX:

Over 50 % of stocks in the S&P 500 Index are highly influenced by the top 50 Mega Cap.

A key detail to recognize when analyzing US markets. Looking at the RSP (S&P equally weighted index) one can observer the down trend

Defensive leadership and shift towards higher liquidity serve as reasonable for explain the S&P strength following a broad market correction on May 2006.

General Thoughts for today: 8-23-2006

General Thoughts for today:

Last week winners this weak shorts.- driven by oversold rally and a positive translation of CPI/PPI.

Two-three day rally from last week now offers attractive trading shorts as stocks hit key resistance levels.

More apparent in tech and retail.

Technology: QLGC, LRCX, WDC.- In Retail you have tgt, bby, etc.


In financials: Certainly the XBD

Aug 4 highs for the xbd as well. 219 level a very key res levelCan short all the way to 50 day ma of 208. A sideway mkt can make the short rather neutral but momentum still decling from overbought level.

Overall, would love to pile the shorts aggressively across the board but not that clearly defined yet. SPX: 1292- some gauge of support in the near-term.