Editor's Note:

The stock market acts like it's forming a top. I am expecting a short-term correction. We are adding some bearish plays but don't go overboard with your position size. The market's current trend is still up and we're just trying to catch a temporary move lower.


NEW BULLISH Plays

UltraShort Russell - TWM - close: 28.41 change: +1.08 stop: 26.30

Why We Like It:
The market looks vulnerable here and the small caps could lead us lower. Let's take advantage of any correction with a small position in the TWM. This is the ultra-short (double short) ETF on the Russell 2000 index that seeks to deliver twice the inverse of the daily performance of the Russell 2000.

I am suggesting bullish positions now with a stop under last week's low. Our first target is $31.90. Our second target is $34.50.

Annotated chart:

Entry on   October 24 at $28.41 
Change since picked:     + 0.00   			
Earnings Date          00/00/00 
Average Daily Volume:       4.2 million 
Listed on   October 24, 2009    


NEW BEARISH Plays

Navistar Intl. - NAV - close: 35.41 change: -1.83 stop: 40.25

Why We Like It:
NAV is sinking on big volume. Shares look poised to break support near $35.00 soon. I am suggesting bearish positions now. However, we only want to open half of our position now. We'll plan on opening the second half of our position on a bounce to $37.50. Our first target is $30.50. Our second target is $27.75.

Annotated chart:

Entry on   October 24 at $35.41 (buy half a position)
Change since picked:     + 0.00   			
Earnings Date          12/30/09 (unconfirmed)    
Average Daily Volume:       1.5 million 
Listed on   October 24, 2009    


NASDAQ OMX Group - NDAQ - close: 19.85 chg: -0.14 stop: 20.65

Why We Like It:
Shares of the NASDAQ stock market have been consolidating sideways after breaking support in late September, early October. I suspect this stock will break support again at $19.50 soon. I am suggesting a trigger for bearish positions at $19.45. If triggered our target to take profits is at $17.85. We'll plan to exit ahead of the November 5th earnings report.

Annotated chart:

Entry on   October xx at $xx.xx <-- TRIGGER @ 19.45
Change since picked:     + 0.00   			
Earnings Date          11/05/09 (confirmed)    
Average Daily Volume:       2.8 million 
Listed on   October 24, 2009    


Steel Dynamics - STLD - close: 15.03 change: -0.40 stop: 16.21

Why We Like It:
The oversold bounce in STLD has stalled at resistance near $16.00. Earnings are out and the news failed to spark any new buying pressure. I suspect the stock continues to correct. I'm suggesting bearish positions now. Our target to take profits is at $12.60. Keep an eye on the simple 200-dma near $13.50, which will probably act as short-term support so expect a bounce there.

Annotated chart:

Entry on   October 24 at $15.03 
Change since picked:     + 0.00   			
Earnings Date          10/19/09 (confirmed)    
Average Daily Volume:       8.0 million 
Listed on   October 24, 2009