Can we make it 5?

8am Can the market continue it's march higher? For those 401(k)ers out there, I certainly hope so. If you are not actively trading this market, you have probably lost a ton of money. If you are, and you use the proper tools to take advantage of the volatility, you could be way ahead in your portfolio right now. For every one's sake, I want us all to be making money. That's is when we are all happy. More people are making money. More people have jobs. Prosperity flourishes.

Now, how are we going to make money? In my research over the weekend, I found an interesting stock I am going to keep my eye on. The company I found is Panera Bread (PNRA). This is a bet on a shorter term recovery in the economy. If you think we don't see any signs of economic life until 2011 or later, you might be wasting your time reading further. They are in that "sweet spot" of a recovering economy. They appeal to the consumer who was eating at the swanky restaurant 6 months ago and now has to trade down. They also appeal to the person who is newly employed again and wants to eat out, but still doesn't want to spend huge amounts for quality food. They have strong long term growth prospects and minimal amounts of debt to service or roll over. This can be a great trade for 2009, just not yet.

The stock has done nothing but go straight up since Mar4. On March 10th (PNRA) broke out of a strong downtrend that started on Dec 18th. It closed Fri well above the $51 mark. It needs to pull back before purchasing anything here. My target is going to be some LEAPS going out to 2010.

A quick note on LEAPS. Most times, you want to buy them in the most round increments you can. LEAPS options tend to be less liquid than options that trade in closer months. You want to be in a more liquid option contract when it comes time to take profits or cut losses. Anyone who has traded options long enough can tell you that profits can be fleeting. You need to be able to take them when they are there. In this case, the (PNRA) LEAPS I am looking at are the Jan 2010 $60 calls. They are trading in the $6.00 range right now, and I'd like to see that come in a little before I buy some.

The market looks like it will continue higher today so the (PNRA) trade will probably be later in the week or month. I will be watching my (DIA) trade closely because, as I have stated before, I will be looking to take some off at a 5% gain. That translates to pulling the trigger in the $74 range. It might happen today if we get a strong open. This market is too volatile to just sit back and hope for the best. I will be taking some off and watching from there.

The recent economic news is not "as bad" as it was before. Economically, it used to feel like we were falling into a never-ending abyss. Now we are starting to feel like a bottom is coming soon. It doesn't mean that the market can't go down (it will, I promise). It does mean that we have started to adjust to the new economic paradigms we will be using from now on.

When we fully adjust, I think we will be going higher for the long term. Until then, you need to stay nimble. Until next time, stay low risk..