Trading on the market at this time, causes a great deal more pain than usual.  The VIX is still above 50, and it doesn't look like it will be coming down any time soon.  Scandals are popping up left and right, but on the positive side, we finally have some bullish finds in our equity screener that aren't just double leveraged short funds.  Here's what we found on both sides of the fight:

Bullish

  • Ford - This one is dangerous.  The motor companies are all begging the government for money, and that external element is what brought this one onto the screener.  This trade just drips risk.  If the bailout happens, you can be sure that there will be a substantial jump for all three of the american based auto makers.  We're going to be picking up $3 Jan calls whenever we can get them sub $0.40.  The amount wagered is going to be small, and we'll accept their value heading right to zero.
  • Delta Airlines -  Air carriers have been seeing their margins swell with the price of fuel dropping.  There appears to be a lot of overhead resistance between $11 and $12, but there appears to be a few buyers around $7.  Right now it appears to be in the middle of an upward channel, and we're going to try and catch an upward swing. We're going to keep an eye on it and buy in equal dollar values at $8, $7.50 and $7 with our stop at $6.  Target is $11.
  • Bristol-Myers - Some dealings where the drug manufacturer picked up some new recipes, have pushed the companies price into an area congested with support and resistance.  Our stops were calculated at $20 but can't see this company moving above $24 in this market.  Since we can't get the risk-to-reward we want, we are going to sit this one out.
  • Barrick Gold Corp - This company is obviously tied to the price of the commodity.  We feel that that with the US government printing money faster than it ever has, fundamentally the price of gold has a lot of upside.  With this Canadian company, we are placing stops at $26 and holding onto a target of $37.  We'll be entering this one on strength, and won't be buying in on a down day.

Bearish

  • Activision Blizzard -  This equity has been trending downward since August, carving out lower highs and lower lows.  It has come up against solid support at $9, and if it breaks below, we're going short a parcel or two.  We'll have protective stops at $10 and start moving out of the position at $8 with a final downside target of $6.50
  • Schlumberger Limited- The equivolume chart shows the downward trend the service company has had as the price of oil has dropped.  We are going to attempt to catch some swings, picking up short positions at $45, $47.50 and $50 with a stop a smidgen above $55.  Downward we'll fill half the short position upon returning to $40 where we will re-evaluate the position.
  • Johnson & Johnson - the volatility on J&J is around 4.5% and the trend is clearly lower.  If price holds below $55 the company's next support levels are $52ish and then nothing until around $44.  Of course there will be retracements on the way down, and we understand that this market's volatility will most likely stop us out.  We'll look to enter if the price holds below $55, exiting half at $52.  Protective stop will be at $58, and we will be aiming for a $45 downward target.  We will also put on a time stop of 30 days, as J&J is a good long term company, and holding onto a short position against it is not safe.

We're looking to get into about 70/30 to 60/40 bearish to bullish as most likely this market is going to whipsaw around as holiday reports and government meddling play with prices.  Remember that these are just our plans for the upcoming week, as always do your due diligence on any trades you are planning to make.

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