After Market Close March 4, 2008

Reversal?

Maybe, just maybe we got a reversal yesterday. The sentiment was there and currently we're seeing options data that suggests dumb money shorting and smart money buying. Cumulative Bearishness is way up there, too, even as there is money to flow into the market. The thing is, breadth does not confirm and there are some price hurdles to overcome first. Also, we must remember that technically this is a Bear market. It's acting like it and it's wearing folks out. Our opinion polls have seen participation drop by 50%, even as traffic has remained robust.

DJIA: The Dow bounced nicely.


SPX:  The S&P also bounced at a key level.


NDX: The Nasdaq performed better than it has in a while. I'm a buyer.


RUT: The Russell rallied smartly off support too. This index will lead again if we're getting legs, I think.


HUI: The miners were weak but that's not unreasonable. If the economy strengthens, bonds will fall and the $Buck will rally.


DJUSCA: The Casino's look ready to die here. Gambling is driven by leisure money. In tight times, the overbuilt casinos will get hurt.


BKX: The Banks are just plain sick, but if they mount a rally on volume here, well things would look much better.


TTH: The Telecoms are about as sick as they were in 2003. They were also a heck of a buy. They're better companies now, too


EPAY: Bottomline Tech fell apart for us. Nice short there. Analyst downgrade.


SRVY: Greenfield Online broke and tagged us in, but it's not falling apart yet.


SBUX: Starbucks got us in and I'm not pleased with the close.


CHTT: Chattem was down, but not a lot. Buy it.


BMY: Bristol Myers broke down, but it's a value. I may be adding this to managed accounts and then adding to it on a turn.


CSCO: Cisco looks like a classic buy. If it can get some market support, I think it's a buy above Tuesday's high.


GNTX: Gentex was down, but it has potential still.


BIG: Big Lots is a classic play.


CEPH: Cephalon looks promising on strength.


DWA: Dreamworks still has promise but the relative strength was iffy. Give it another go, however.


PBH: Prestige looks Bullish here.


NPO: Enpro Industries bucked the trend and looks Bullish.


TYC: Tyco looks bullish here.


Summary:

As before, I'm a Bull, but I have to respect this market and it's a bit Bearish. So, we'll look long and play for what looks like a reversal, but we'll also have and look to add shorts as appropriate. Investors can accumulate high quality positions in dividend paying household names. Traders can play both ends against the middle and keep some powder dry.

Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team


Current Positions:

Short 25% EPAY at 12.67, stop at 12.35

Short 25% SRVY at 13.04, stop at 14.11

Short 25% SBUX at 17.67, stop at 19.07

Watch List:

CHTT: Buy 50% on a print of 80.67, stop at 75.57

CSCO: Buy 25% on a print of 25.04, stop at 22.91

GNTX: Buy 25% on a print of 16.83, stop at 15.48

BIG: Buy 25% on a print of 17.77, stop at 16.34

CEPH: Buy 50% on a print of 63.51, stop at 60.19

DWA: Buy 25% on a print of 26.21, stop at 24.11

PBH: Buy 25% on a print og 8.19, stop at 7.51

NPO: Buy 50% on a print of 31.04, stop at 29.59

TYCO: Buy 50% ojn a print of 41.64, stop at 39.91

Changes in Current Positions:

Move the stop down on EPAY to 12.35

We are now 25% short SRVY at 13.04

We are now 25% short SBUX at 17.67


*30 Minute Trading Rule:

In order to prevent whipsaws, we use a 30 minute trading rule. This means that, as a general rule, we are going to "sit on our hands" during the first 30 minutes of trading,   this includes the lifting of stops during this 30 minute period as well. Additionally, if after the first 30 minutes of trading the range of the stock pick is within the stop and buy/short boundaries presented, the trade recommendation is valid. If the stock's range is outside of the buy/short and stop boundary, the trade recommendation is VOID. E.g. if the recommendation is "Buy a print of 10.25, with a stop of 9.95," and the stop trades up to 10.50 during the first 30 minutes, we would pass on the trade. Similarly, if that stock were to trade down to 9.90 before 10:00, the trade would also be void.

There is no 30mn rule on limit orders, but if price gaps out of the buy/stop range the trade is void.

Rule on stops:
As a general rule for the model portfolio, we will lift all stops on existing positions for the first 30 minutes of trading. As a practical matter, subscribers may wish to leave their stops in place if they expect to be incommunicado or unavailable during that time to monitor positions.
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