Trade Ideas for February 5, 2010

Wow! Judging by the futures overnight, the market continues to be relentless in its campaign to skin and gut every bull in sight. The employment number comes out today at 8:30am ET, and I can’t help but think that if the number even barely meets or exceeds expectations, the market is going to rally hard and fast. There is just too much fear of this report already cooked into the numbers. It isn’t unheard of for traders and investors alike to get whipped up into such a tizzy that they start front running a report thinking they  know exactly what its going to say, only for the report to surprise everyone and reverse price action in a hard and decisive way.

Now remember, I am as bearish as it gets on this market, but I also know that I would be foolish to be initiating new short positions ahead of the employment number with the kind of sell-off that we got yesterday.

Currently futures are trading down 35 points on the Dow (a much better improvement since I started writing this), Up 0.5 on the Nasdaq and down 4 points on the S&P.  

Here are Today’s Trading Ideas…

Potential Swing Trade (Long): Pharmerica Corp (PMC) – Back in November and December this stocks formed a double bottom, and broke out very nicely before pulling back of late. It has retraced, on low volume 50% of its gains and has been forming a base at these levels over the past week. Despite yesterday’s market sell-off this stock held firm. Now there is a caveat to this play – they reported earnings after the close yesterday, and they were mixed at best. So there could be a huge gap up or down, if that happens, this is a “no-play” and you can scratch it from your list. But if the reaction is relatively muted, and you feel like you should go long in a market that is obviously going south, then this is a good play. Put the stop-loss at 15.99

Click Here to See the Rest of My Trading Ideas.

Potential Swing Trade (Short):  Advance Auto Parts (AAP) – This stock did everything it could yesterday to try and break its December highs, and instead sold off right at the cusp of doing so and put in a nasty doji-candle for all of us to marvel at. Should it break the 39.00 level, this stock could easily go down to 36.00. Place your stop-loss at 41.81.