us stock market, trend trading stock

- Economic worries weigh market down once more, but indices hold their trends in lighter volume.
- Market prospers with a lower PPI, Fed on hold, but regional manufacturing slowdown combined with housing stokes recession fears.
- Bond yields continue their decline as treasuries also benefit from the money flowing out of commodities, emerging markets.
- And suddenly it is the last week of September with the market sporting gains.
- Window dressing versus the need for a further pullback.

Here's a trade from "The Daily" and insights into our trading strategy:

Chart by StockCharts.com

Company Profile
We really like playing market leaders. They have solid fundamentals, they set up great bases and patterns to break out of, and good news tends to follow them. With GYMB we knew it had good fundamentals growth rates, and when we saw it putting the finishing touches to its 12 week cup with handle base last week we put it on the report on Tuesday 9/19/06. It got some volume the next session and we moved in with some stock positions at $37.53 and some February $35 call options at $6.30. The stock finished the session well, holding the breakout move and closing at $37.97. The next morning GYMB raised its Q3 guidance and the stock gapped higher to $41.65. We were tempted to take gains on the open given the strong news but after an early dip it started back up. It hit $42.90 on the high and we took some gain near that level at $42.81, a nice 14% on our stock in short order. We also locked in some gain in our options, taking in a nice 42% on part of our position. We like the strength of the move so we are letting some positions run. After all, good things happen to leaders.

Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week

Playing stock splits can be very profitable, but it takes know-how. Our stock split service focuses on three main types of plays:

1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).

For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term "would I buy this stock at this juncture?" position. Now there are times when a hot stock splits and investors pile in to get in while the stock is 'cheaper.' We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.

Remember, everything we do has to pass muster with the market that day ... don't fight the market on these plays.

Here's a post-split play and our current analysis.

Chart by StockCharts.com

Company Profile
STATUS: Cup. Fell back Friday a bit further, breaking below the 200 day SMA (22.07), but rebounding to close right at that point. Very low volume so looks to be a shakeout before resuming the move. This actually gives us a better look at an entry. Want to see that stronger volume as it makes the break. To recap: SCSS is still in the process of forming its overall base, currently a 20 week job, testing the 200 day SMA after blasting off the bottom of the pattern in early September and moving through that level in a quick, strong move. It has tested the past two weeks, dropping to the 200 day to end last week, but on very low volume. Positive accumulation is setting the next move higher. Looking for volume to return as it comes off the 200 day. SCSS posted an excellent run in December through April and needed this base to reset. It is ready to make the next break higher in this pattern. Looking for an initial run to the prior high at 28 and after that we will see if it will move beyond that for us to another all-time high.
Volume: 375.128K Avg Volume: 882.483K
BUY POINT: Aggressive: $22.55. Clearing the recent highs: $23.12 Volume=1.3M Target=$27.75 Stop=$21.95
POSITION: QSL CX - Mar. $22.50c (51 delta) &/or Stock

Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays!
Details Here.