Decision Point®: Top Advisor's Corner: Equity Guardian Group

After Market Close Apr. 16, 2009

Op-Ex Boogie-Woogy-Oogy

We got tired of the "Tango" and "Fox Trot" and "Cha-Cha-Cha", so this is what we're left with on Options Expiration. We can expect "da Boyz" to play out whatever games their programs require. In fairness, too, not all of it is manipulation; some of these guys just need to roll over positions into the next expiration month and are trying to do it with a minimum of slippage. Regardless, it makes for odd trading and it's best for us to keep our heads down.

DJIA: The Dow had a nice day. Who knows where it stops.

SPX: The S&P continues to be very resilient. Every volume support seems to hold and create another higher plateau. We're due a pullback, but...

NDX: There were an absolute TON of put buyers in the QID yesterday. That's a leveraged bet on a leveraged short on the Naz. If ever there was a good fade, it's those folks. The Naz responded appropriately.

RUT: Has the Russell broken out? Boy, it seems too early for the squeeze, so I'm not predicting it, but just in case, do NOT short this index.

HUI: The Miners broke down. Note that they can turn at any time.

DXY: Personally, I think that the Buck needs to take out 83 before it can rally much, but I've been wrong before. It's hard to nail down the dominant trend here.

HGX: The housing index broke out too. We know that the lows will be tested, and probably broken, but who doesn't? Best to let Bears lose money here for a while.

AOC: Aon was up and I'll take it.

G: Genpact had a nice day. Tight, rising, channel, just like Gary Smith like 'em.

PEP: Pepsi put in a disappointing performance.

GB: GreatBatch had a nice day. Busted out!

PLL: Pall also romped. I like it. Above channel strength!

OCN: Ocwen was supposed to be a hedge, so if everything else is up and it is too, it's a cost of doing business. Still, we might get lucky if the market pulls back today and Monday.

PFE: Pfizer held above the trend line.

AZO: No chance at Auto Zone.

MMC: Marsh & McLennan still looks higher.

MRX: Medicis looks poised to pop.

DPL: Dayton Power & Light looks like it has built enough energy to move.

HRL: Hormel also looks ready to move.

Summary:

We've been Bulls for a long time and we still are, but now is the time to make sure everything is in order. Let a few stocks go. Hedge a little bit. Maybe write a few calls. A pullback makes some sense. Don't raise too much cash, however, because the next leg up could come sooner than expected.

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

Current Positions:

AOC: Long 25% at 39.47, stop at 37.83

G: Long 25% at 8.21, stop at 8.77

PEP: Long 25% at 51.83, stop at 48.86

GB: Long 25% at 19.63, stop at 18.33

PLL: Long 25% at 23.13, stop at 21.93

OCN: Short 25% at 11.11, stop at 12.01

Watch List:

PFE: Buy 25% on a print of 14.16, stop at 13.11

MMC: Buy 25% on a print of 21.17, stop at 19.53

MRX: Buy 25% on a print of 12.92, stop at 11.78

DPL: Buy 50% on a print of 23.12, stop at 22.19

HRL: Buy 25% on a print of 32.36, stop at 31.06

Changes in Current Positions:

Move the stop up on G to 8.77

Move the stop up on PLL to 21.93

*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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