The current volatility sure makes the market a fun place to be. I suppose that will depend on how much pain you are enduring at the present time. The recent trading has setup a number of opportunities on both sides of the ledger. Today we will initiate our first short position and establish one more long. They are as follows:
(Short) CFC - Countrywide Financial is telling us that business is not just marginally bad, they are not even sure how bad it is. Couple this backdrop with the Financials Bullish Percent Chart's recent turn into Bear Confirmed status means it is the optimum time to put on some financial shorts. We will look to short 250 shares of CFC at the $30 level (frankly if it opens higher today we will want to execute the trade close to the market open). The downside on the short position is a very conservative $34 (although we cannot see how the stock rises to even the $32 level). The price target is $15 for a UD ratio of 3.75.
(Long) DELL - Perhaps Michael Dell is David Blaine in disguise. Ever since he re-appeared at the helm of DELL the company and the stock have moved forward. Granted, it is not at the lightning fast pace over the late 90's, but up and up nonetheless. While we would love to wait for a lower buy point, this position will be intitiated at a target of $28.75. We will allocate 200 shares. The downside is at $25.50 and the upside target is $44, a solid UD of 4.7.
More shorts to come over the next few trading days. While it is the optimum time to short JPM and a number of other financials, the P&F charts are not yet set up properly. Always stick to your trading rules as discipline is of paramount importance.
Stay calm.
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