Things To Look At If The Market Explodes…

… Not that I’m saying it will.  I am expecting some type of recovery pop this week, and if we don’t get it, I’ll be even more worried than I am already about the state of our economy.  The one thing I am sick and tired of hearing is Obama professing that he will sprinkle some type of miracle dust on the market after his first term in office and the market will magically spring board like a weed without weed killer.

With the current trend in stock markets all around the world, however, the weed has been replaced with a tree root, going lower and lower as the tree gets watered.  The water, for those of you who don’t get understand this analogy, is the $1.5 trillion dollar deficit we have been racking up since this mess began back in September.  The question that has been on my mind ever since I watched the PBS Frontline Special is, “What would have happened if we let these major institutions go bankrupt?”  Food for thought…

In other news, AIG (AIG) and Citigroup (C) are utterly disgraceful and will be put on the nationalization chopping block in a matter of months, especially if the government intends to keeping pouring money into their oversized pockets.  Understand this: the reason why I am upset about this ridiculous government-funded financial bailout is not just because of the enormous taxes my children will be paying, but because the government should understand that it’s not the institution as a whole that’s at fault, but the people at the top calling the shots.  You want to make a difference in the financial sector, United States Congressional Leaders?  You should be spending your money on hiring strong, able-bodied men and women that get graced with the job of heaving CEO’s like Ken Lewis, James Dimon, Vikrim Pandit etc. out of their penthouse apartments or top floor offices laced with $35,000 toilets.

Moving onto the technical perspective for the day, UltraShort Real Estate ProShares ETF (SRS) opened lower than the expected $72.83 support level, bottoming out on the intra-day at $70.10, and then tore the rest of the day up in rampage-like fashion.  The candles on SRS towards the close look promising as well, as they’re mainly bullish with appropriate volume to support it.  RSI closed out at 57.61, which is somewhat indecisive as to where the iETF will go from here.  As for now, SRS has the potential to go hit its next resistance level of $84.72.  Beware of this puppy for tomorrow:

SRS  10 Day, 15 Minute

As for now, I am 45% long and 55% cash.  I had a down day Monday, but I feel confident in my three overnighters going into Tuesday:

• XLU @ $26.13 (15% Exposure) - Stop @ $24
• SLB @ $36.95 (15% Exposure) - Stop @ $33.50
• DRYS @ $4.08 (15% Exposure) - Stop @ $3.62

I chose these three tickers because of their technical status, as two of the three (SLB and DRYS) have hit significant support levels, while the other (XLU) is ridiculously oversold and is bound for a dead-cat bounce.  During times where markets pitfall, my belief is that you can pick any sector you please and still get away with gaining a decent percentage return.  The only thing that is different now than from last November when there was, “No bottom in sight,” is that the government is officially out of bullets and is without the American public’s support (for the most part).
Other tickers I’m looking at are as follows:

• ENER @ $23.24 to $22.65
• GS @ $79.94 to $78.27
• AAPL to hold Tuesday off of its close from Monday ($86.95)
• FCX to hold Tuesday off of its close from Monday ($26.34)
• NUE to hold Tuesday off of its close from Monday ($35.55)
• BTU to hold Tuesday off of its close from Monday ($22.00)
• ROM to hold Tuesday off of its close from Monday ($17.63)
• FSLR @ $111.10 to $107.91 (if no hold off of Monday’s $124.84 close)

Again, these picks are only if the market were to explode for a corrective measure pop.  If not, the standard DIG/DUG, FAS/FAZ, URE/SRS, UYM/SMN day trades will always bring in a good 5% if traded properly.

As I look through my charts tonight, the one major thing I see in a lot of stocks that are in heavy sell-off mode is their price-to-volume convergence, as it is a trend being seen in almost all of the stocks in my watchlist above.  To me, this indicates a short-term squeeze, so in other words, heads up for a spike Tuesday off the open.  On the contrary, don’t let the Opening Bell Panic Buy/Sell Syndrome fool you!

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