us stock market, trend trading stock

- Market slides lower on no volume as no shorts rush to cover.
- Income up, spending lower: so what's new when the consumer is worried?
- Core annual PCE falls to 2%
- Michigan sentiment lowest since 1992. Some very interesting comparisons to that recession.
- The stage is set. Time to step up and rally.

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

Chart by StockCharts.com

Company Profile
Apple was a big winner for us during 2007; no surprise there as it was a market leader. Then it fell into a steep correction after its earnings and MacWorld when it disappointed with no really cool new products and no split. Well, you always keep watching leaders that fall into bases because when they set back up they can make you some money over the short term and longer term.

We saw AAPL form a nice, firm rounded bottom, taking real notice in March as it started off the lows. What really caught our attention was when it gapped higher on March 18. We put it on the report when it faded modestly the next session, ready to move in as it started back up. It tested the next session and then did bounce. We moved in with some stock positions at $132.43 and some July $130 strike call options at $15.75. It rallied and closed at session highs that session at $133.27.

Next session AAPL gapped higher again and surged through the 50 day EMA, posting a $6.26 gain. It added another $1.45 the next session, and after a solid move off the bottom and the market overall running out of a bit of steam, we sold part of our positions, selling some stock for $142.65, a 7.7% gain, and some options for $22, a 39.6% gain ($6.25 per option). Not bad for just over two sessions in this market.

Apple showed its strength the next session despite a weaker market, adding $4. It then rested Thursday. So we put another play on to pick up some more positions after the rest. Friday AAPL gapped higher again and we picked up some more positions to play the run up to the 200 day SMA along with our prior positions. The market looks weak, but there are a lot of stocks such as Apple that are not acting weak. Have to like that for the prospects of the rally.

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
EARNINGS: Third week of April
STATUS: Test breakout. A second tight hammer doji at the 10 day EMA (27.36) on low volume as ZOLL tests the breakout, riding out the market pullback in a very constructive way. Ready to make the move. To recap: It has been a long 15 month base after a very impressive run in 2006. After that slog in the twilight zone, ZOLL has perked things up, breaking sharply higher off a twin test of the 200 day SMA down at 24.50 in March. That second test jumped it higher on strong volume. That made a definitive higher high in the long base. It is coming back to test, tapping the 10 day EMA on the Wednesday low and rebounding. Lower selling volume. Looking to pick up some Z's as ZOLL rolls off this low volume test.
Volume: 138.253K Avg Volume: 247.623K
BUY POINT: $28.08 Volume=375K Target=$33.95 Stop=$27.11
POSITION: ZQQ FE - June $25c (72 delta, 36 OI) &/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.