Pimp My Trade

Look Out! (And a super aggressive trade idea)

Posted on February 18, 2009 by Adam

I returned to my computer this morning to see how my trades had fared in my absence. Wow! Dow down 300 points! S&P below 800!

That’s kind of a big deal. We’ve broken down pretty hard, putting the NYSE Bullish Percent on bear confirmed, the most bearish scenario out there. I have no doubt we will exceed the November lows at some point - whether it be this week or a month from now, it will eventually happen.

In the short term, watch out for a rally. In the past, as we have approached the lows, we have seen ferocious short covering rallies that really took the cover off the ball.

If we get down to the November lows of 740 in the S&P and stop going lower for at least one hour, I like the idea of calls on the Nasdaq ((QQQQ: 46.25 0.00%)). Sell them once we get a big move. Keep in mind that this is about as aggressive as trade ideas come.

Happy trading