Friday premarket looked like a massive sell off was upon us. The market gapped down and then clawed its way higher, and with bad news. The market action continues to look strong, but many traders aren’t quote ready to jump in yet. The indexes are consolidating just below their 50-Day SMA’s.

This chart of the Dow shows the consolidation will. Once it breaks the 50-Day SMA and upper trendline, more buyers should come in. The Dow and well as the S&P 500 could also be forming the right shoulder of a bullish Head and Shoulders pattern.

On Friday, EWZ, the Brazilian ETF, closed above the 50-Day SMA. EWZ had a great week, due to the bounce in oil and gold last week. I am not ready to buy this, but I am going to keep an eye on this one, as well as FXI. If we are at the beginning of a multi-month rally, then these could do very well.

I will have a shortened trading week, as I will be taking a vacation toward the end of the week. I am looking for stocks that could offer a big one-day gain, like CHUX did last week.

Trade Ideas for 12/15/08:




Good luck and good trading!