Focusing on the sure plays...
Tuesday, August 21, 2007 at 11:04PM
Jon in DRYS, ISRG, TBSI, VMW

Index is doing a good job confusing traders today and it looks as though it'll take a while for some conviction to kick in.    Most of us aren't counting on a major rally at the moment and we are only playing things off a tradable bounce.    As long as we are aware that this is the situation we are in, we then have to look at plays that offer us this kind of tradable opportunities.     There is really just a few obvious plays worth watching for today and we will go through them here...

VMW, we pointed out last night that the break out area is around $59 and boy did it explode after it broke through that mark.    Again, it's about emotion and momentum at this moment and there's really no need to even look at its fundamental aspect of this play.    The ones who paid $66/share only care if he/she can get out at $69 or higher.    Pay attention to the technical sign and intraday movement as they are the only necessary things you need to trade this play at the moment.    With its strong close today, we carried some position home and we'd be at it again aggressively tomorrow.     This one has the kind of liquidity and price movement we haven't seen in a long while.   Take our word for it, this kind of play doesn't come often and do take advantage of it.

ISRG, this one poked back above 9 ema today and closed near the high.   We are keeping our  eyes close on it for a potential follow through.   Unfortunately, many plays on our watchlist are very sensitive to the index movement and it's impossible to forecast the index on an hourly basis.   In another word, playing these kind of plays can be risky so we'd do small lots to cut the exposure down to minimum.

DRYS/TBSI, after DRYS eps report tonight, we'd keep our eyes closely on this pair tomorrow morning for a potential trade.    This group was taken down like others last few days and it'd be interesting to see if they can recover some off this DRYS report.

Bottom line, the index point movement  lately may not show the true potential of this market's volatility.    We shouldn't let this seemingly calm action lower our guard down.    The market can turn badly literally off one piece of bad news and we have to be prepared for it.    We are far from out of the woods  and it's definitely appropriate to trade lightly.    Keep the plays simple and short and we'd able to finish this month on a high note.

Article originally appeared on Your Personal Trader (http://www.yourpersonaltrader.com/).
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