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Holding: AMR

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Symbol	Sector	Return	Exposure	Trades	Last Trade	Status
AMR	Airlines	0.00%	n/a	0	21-Jan-09	Prior Holding

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28-Sep-08

Post-Bailout Shorting Opportunities

The stock market is likely to get a temporary lift from the bailout. However, with earnings season on the way, expect some dismal forward guidance. Remember that stock prices reflect perceptions about future earnings. The S&P is only 20% off its highs, and many consumer related sectors are well above their lows for this year. Also, short selling restrictions only work for so long, and eventually the market reflects actual value.

I have been telling friends and family to make sure assets are protected and hedged against inflation. I am gradually accumulating gold (via GLD and DGP) and Swiss francs (via FXF). As we enter what promises to be an eventful week, I will be lightly invested and watching the post-bailout action, with an eye toward shorting strength in damaged sectors.

Airlines look like they are ready to give up much of their big move since July. There is no question businesses and individuals will be tightening their belts. Of course, a breakdown in oil prices could delay the drop.

- UAUA topped out around 14.00 and is resting on the last line of support, with empty space below. I will be looking to enter a short position below Friday's low.

- AMR has a double top in place. I have a small short position, and will be looking to add on a break of the 200 day moving average.

- SKYW broke a rising trendline with volume and is sitting at its 50 day moving average.

The consumer will struggle with lower employment, a falling dollar, and rising inflation.

- FINL hit a low of 1.48 in January, and is now up to 9.51. The chart is starting to show distribution, and has a large potential fall ahead. I am holding puts, and will look to increase that position this week.

- DHI: I am not sure what is holding up homebuilder stocks, perhaps high short interest and the expectation of government intervention. Out of this group, DHI looks like the best short candidate. I would place a stop in the 14.40 area.

- AN looks like it is struggling to get through the 13.40 area. The price is well above January lows, and is under a descending 200 day moving average. The future does not look bright for automobile retailers.

- MR: Mindray has a broad topping pattern in place, and broke down with volume after earnings early this month. The chart shows a low volume retracement to resistance.

- FSLR: Solar stocks look weak. FSLR has significant resistance in the 242.00 area. I would prefer to see a bounce before shorting.

- CSIQ: I would look for a move up toward the 27.00 area to initiate a short position.

- COCO: I mentioned this one a while back, and the stock has been resilient since then. I still think a top is in place here. Note the big drop after earnings in late August.

- ENB has significant resistance around 40.00.

Those looking for trades on the long side might consider the stronger financials. Here are some charts that might provide some good trades in the short term. I probably will not venture in this direction, except perhaps a day trade here and there.

- RJF has a clear rising trend in place, and accumulation during the past two weeks.

- FNFG broke above major resistance around 14.70 with heavy volume. Buyers came in again on Friday to defend that same level, which is now support.

- UMPQ:

In these troubled times, be sure to protect your assets!