Momentum Trader Report: 05/01/08

The market put in a very impressive rally with lower oil prices and a rising dollar fueling the move. The Nasdaq was up over nearly 3% as traders out money into familiar tech stocks that had been taking a beating earlier this year.

There were two triggers from the watchlist. The first was GGB, which moved with all things Brazilian.

The other was BZP, which I had listed as a long or short, depending on the breakout. It broke out to the downside, and traded well below the short entry price of 19, but bounced back at the end of the day. Now it’s actually looking kind of strong here, and perhaps could breakout to the upside soon.

But it wasn’t good news for gas and oil stocks; they took a big hit today. As I mentioned in Mondays post, an oil pullback was expected, and a good way to play this could be with DUG, an ETF which trades at twice the inverse of the daily performance of the Dow Jones U.S. Oil & Gas index. It broke out of its downward channel. It moved very well today, closing up over 5%, and trading much higher earlier in the day.

If you missed this and feel oil will continue to pullback, meaning DUG will trade higher, you could consider a limit order just under today’s gap.

Trade Ideas for 05/02/08:

Good luck and good trading!