A Good Start..

8:15am EST We had a good start to the week yesterday. The consumer confidence number was dramatically better than expected. As I mentioned yesterday, there is still a chance at up side surprises in the economic numbers. We got one. However, we need to be cautious about the reaction. A 200 point rally in the Dow does not mean that things are great. The volume was light on a typical vacation day for many Wall St. traders. Around holidays like Memorial Day, and especially holidays in the summer, the market tends to levitate higher. We had that yesterday. Pardon the pun, but I wouldn't put much stock in that.

I think a good pullback is in order for today. It might present a good buying opportunity for some of the longer term stocks I have mentioned in previous posts. While anything can happen, and it is never smart to fight the tape, I would be looking to add to longer term positions.

A trade for today is pretty simple. I will be buying puts on Palm (PALM). The company releases the Pre on June 6th. The stock has already had a dramatic run and the stock is bound for a pullback. I am looking at the $7.50 November Puts. You can currently buy them for a little more than $1 right now. I would be looking for a quick double. I anticipate that, when the Pre is officially released, the stock will sell off. The only risk I see is that there is a large short position out there. There is a significant risk of a short squeeze that brings the stock dramatically higher. However, if you are putting on a small position with low-priced puts, you have a limited risk. This is not a bet-the-portfolio trade. This is one that you put on to potentially juice your returns for the year. Little, speculative trades like this are fun and can add some nice juice to your portfolio. Until next time, stay low risk..