To OTC Journal Members: 
 

Do You Twitter?

This is fantastic news for those of you with an interest in trading actively. Do you Twitter? We're set up on Twitter now, and it's a great tool for quickly and easily distributing information.

Currently, there are two ways you can find out what's going on. Either read the email newsletters like this one, or go to the web site and see if I've had a chance to post commentary through the BLOG. 

Now there's Twitter. We can't always be in front of the computer screen, but most of us carry around our cell phones wherever we go. 

By enrolling on Twitter, and "Following The OTCJournal, I'll be able to send you a quick text message- anytime and anyplace. Your cell phone number remains totally confidential. Here's how it works.

First, you have to set up your own Twitter account. Don't worry- it's free. Just go to www.twitter.com, and enroll. From there, adding to your Twitter network is a little tricky, and there's a learning curve. Then, go to the home page at www.otcjournal.com, and click on the "Follow" button on the Twitter box. Or, go directly to http://twitter.com/otcjournal.

Once you've enrolled and chosen to "FOLLOW" the OTCJournal, I'll be able to send you text messages for important events. If a stock breaks out and looks like a sell, or breaks below my SSL, I'll be able to notify you in seconds via text message, and it's all free.

Sign up today, join as a follower, and I'll start using it to everyone's benefit. Tell your friends to sign up as well. If you need some help, email me at editor@otcjournal.com.
 

Market Appears A Little Heavy - FAZ Looks Tasty For A Trade

Since coming off the bottom at the 680 level on March 6th, the S&P 500 has appreciated a full 33% in about six weeks. It's been one of the most impressive 6 week rallies in history. The S&P 500 has been up 26 of the last 39 trading days, with only one really big down day.

In my view, there's plenty of upside left. The majority of the fuel for this move has come from short covering, and the big money has not really poured back into equities yet.

Nevertheless, there are times when one has to assume the market is going to get a bit tired, and take a breather. The most volatile sector has been the financials, which I believe also still have a ways to go to the upside as the banking sector continues to improve. 

Here's a chart of the XLF- the ETF that mirrors the financial sector. The XLF has almost doubled in the last six weeks. Remember, this is not some biotech idea that just got a favorable ruling from the FDA- this is a grouping of huge financial institutions that simply don't double in six weeks. It just doesn't happen. $6 to a high of $11.40. When stocks double I like to sell- not buy.

I believe the XLFs are due to roll over and correct for a bit. Friday's news on the "Stress Tests" was delayed for a week, and a best case scenario from the Stress Tests is probably already priced into the market.

The XLF is vulnerable to a 38.2% retracement, which would be about a 10% drop. If that gave way, look for about $8 to the 61.8% retracement, which would be a 25% drop.

A 10% or 25% drop in XLF translates to a 30% or 75% rise in FAZ- the triple leveraged short ETF on the financials. That is the security I am recommending for a trade right now.

The few that were "Twittering" with the OTC Journal got the call yesterday at $8. Today, FAZ has moved up to about $8.60, but there could be a few more points in this trade. A 38.2% retracement in the XLF would equate to about $10.40 on FAZ, which would be a very nice trade. 

If you own it on margin, you would put up at $4,400 to make $2,000. Not bad.

Of course, I could be wrong and the financials could continue defying gravity and grinding North. Due to the volatility, you need a tight stop. I'm suggesting $7.50 as my SSL. 

And, speaking of volatility- FAZ was $120 just back in March. Amazing. 

Worth mentioning- the last time I suggesting buying FAZ was 3/26 at $19. We closed it out at $23 on 3/30. FAZ as a trade right now with a tight stop.

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