WE GOT A BOUNCE!

We did get a bounce today. It looks like the trading range is still alive and well. Expect more choppiness in the markets through the end of the month...unless we break out of this range. Spreads are working best in this environment. I know that many of you haven't taken Course 2 yet and don't know how to use the spreads. That's okay, just be patient right here and try to limit your directional trades. Part of good trading is learning when so sit tight and wait for the probabilities to move into your favor. You could try using some shorter term trades if you have the ability to watch them throughout the day. Make sure you calculate your reward to risk and make sure that the reward to risk ratio is in line with your winning percentage. Until this range is broken, try to enter your bullish trades near the support of this range (about 1086) and your bearish trades near the resistance (about 1115). Below is my response to an e-mail from a student. I thought my commentary might be of some worth...maybe just a little. Many of these stocks would be great picks because the reward to risk is great. That doesn't mean they will necessarily go up, just that they have the potential to give twice as much if they do...compared to what you could lose if they don't. These were all bullish trade patterns. Thanks JJ.

SWM - I wouldn't chase it here. It's gotten too far away from the 50 day MA. It could move up a bit more due to the volume of today's move, but I don't like the reward to risk from right here. 11/27 to 12/1 would have been the ideal days to enter. Even 12/4 was good.

SHOO - This would be a good one.

AAPL - I'd use a Bull Put Spread or Bull Call Spread on AAPL. I think it could chop a bit sideways over the next few weeks.

TS - This one is nice. I might use the 10 day MA as extra confirmation. I do like the reward to risk.

MEE - I'd definitely want confirmation on any energy related stock right now. If the dollar continues to rally, there will be more pressure for these stocks to go down. The rest of the coal sector has struggled. This one could lead a new rally in coal. The reward to risk isn't too bad if you place the stop below the 10/20/09 high. I do like the ABC pattern and the Fib retracement levels.

MMM - I like this one for a Bull Put Spread, placed below the 50 day MA if possible.

MT - I don't like this one. Too close to overhead resistance. If it does break out above the 10/15/09 high, you could use a Bull Put Spread.

TCK - I like this one.

OMG - I like this one. Very nice reward to risk.

DSX - This one is okay if it can get above yesterday's high (12/8/09) for confirmation.