NEW BULLISH Plays

UltraShort Basic Materials - SMN - close: 7.21 change: -0.11 stop: 7.15

Company Description:
The SMN is the UltraShort exchange traded fund (ETF) on the Dow Jones U.S. Basic Materials index. This ETF tries to deliver twice the inverse daily performance of the index (if the index goes down this ETF rallies higher).

Why We Like It:
The rally in the basic material sector is struggling. China and India are trying to slow down their economies and a rising dollar only adds to the pressure. It may only be temporary but this group looks ready to retreat. I'm suggesting we trade the SMN ultrashort, which will rally as the sector declines. Use a trigger to buy the SMN at $7.70. If triggered our first target is $8.80. Our second, more aggressive target is $9.75. It could take the SMN several weeks to get this high. By its very nature this can be a volatile issue. Keep your position size small.

Trigger to buy the SMN at $7.70

Suggested Position: BUY SMN stock @ 7.70 (unopened)

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date --/--/--
Average Daily Volume: 3.3 million
Listed on March 27th, 2010


UltraShort Russell2000 ETF - TWM - close: 20.61 change: +0.00 stop: 19.99

Company Description:
The TWM is the ultrashort exchange traded fund (ETF) on the small cap Russell 2000 index. This ETF tries to deliver twice the inverse daily performance of the Russell 2000 index.

Why We Like It:
The small caps have had a very impressive run with the Russell 2000 up nearly 20% off its February lows. In response the TWM is off 28% from its February highs. The market's recent trading activity is suggesting the rally is running out of steam. Window dressing by fund managers could be all but over with only three days left in the first quarter. When the market correction begins the small caps will probably lead the way lower.

Aggressive traders could open positions now. I am suggesting a trigger to open small bullish positions at $21.55. If triggered we'll use a stop at $19.99. Our first target is $23.95 since the $24.00 level was support in the past it could be resistance now.

FYI: If you prefer shorts to going long inverse ETFs then consider bearish positions on the UWM - the Ultra(long) Russell 2000 ETF.

Trigger to buy the TWM at $21.55

Suggested Position: BUY TWM stock @ $21.55 (unopened)

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume: 4.5 million
Listed on March 27th, 2010