WaveStrength Radar for December 13, 2006

Macro Outlook

Two pointless stories ripped from today’s headlines:

The first: Someone else is suing Borat.

This time it is over an incident in the pricey Ristorante Divino, where comedian Sacha Baron Cohen, posing as a bathroom attendant, filmed himself staring at a patron using the facilities.

The footage didn’t make it into the movie, but is circulating on the web. Needless to say, the gentleman (who was not paid for his “efforts”) wants either the footage pulled (impossible) or a piece of the action.

The second story: the Dow hit a new intraday high at 12,368, seven whole points higher than the previous intraday high, and then immediately retreated. Quite honestly, I think the Borat story is more significant.

Material Profits

Buying a stock at new highs can be a bit scary, especially if a pullback is imminent.

But if you still have a bullish stance on the stock, hold on… don’t bail at the first sign of weakness. It could be worth it to wait out the pullback. Many times, a pullback is a consolidation before the stock moves higher.

I’ll give you all a real live example in Market Report this evening.

Trading Tactics

WS Traders: If you were not able to take profits on your TTH February '07 30 Calls (TTW BF) yesterday for $5.00 per contract, you're getting an even better exit opportunity today! As I write, these calls have traded as high as $5.20 – so take your profits!

At the same time, continue to hold your iShares Russell 2000 Index Fund (IWM:AMEX) calls. There's also good news for WOW readers, as our latest play is already showing a profit from its opening day trigger price. Profits all around!

Please note that all quoted currencies are in United States dollars, unless specifically stated otherwise.

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