4 stocks I like today

Optimism is not at extreme
levels. There is a wall of worry to climb. What is all the worry about? How
about gas prices above $3? Gas at $3, the war in Iraq, a presidency in trouble,
possible war expanding to include Iran, an unfriendly but not hostile Fed,
interest rates rising for 15, soon to be 16 straight times without a pause, $40
trillion of credit card debt, record trade deficits weakening the dollar, and
on and on and on. Bull market gets the benefit of the doubt and has a wall of
worry to climb and is doing just that. That is what is happening. Right now I
am more short than long. The blend currently tilts slightly in favor of the
short side of the equation. I am fully invested both long and short in this
current market and am confident in the positions currently in place. I use
stop losses to minimize damage and avoid a disaster. If a stock violates a key
inflection point or gets extended it will be trimmed, reduced, sold, or
covered.

Today I am making some serious
bets long and short based on what the price movement of the stock tells me
according to a chart that reflects movement over the course of a day and
stretching it out over 5 years. The whole picture is important to me and when
a stock like BAC, for example, trades in an advance on all cylinders then I am
inspired to get involved and profit from that move. The benefit I get as a
holder of an instrument that is in the midst of an advance is a gain. The gain
is realized after the trade is complete. Until the trade is complete the gain
is theoretical. BAC although trading up on all cylinders may easily fall to
support in the 45-46 zone if this market gives way. That would be a great
price point to pick up shares. That is just an example that separates the
investor from the trader. The trader would look at BAC and see an extended
stock and would start trimming it out. The long term investor that believes
that a stock like BAC will be in a thriving business over the next decade
could care less and is inclined to add to the position on pullbacks. There in
lies a difference in approach.

I am into individual stocks
and although the overall market presents real risks right now, each stock must
be approached based on the information currently available and relevant to the
specific instrument. You can profit in any market. It is about being able to
make the right choices long and short and those choices are based on current
information that is readily available to any one that wants to have it. It is
public knowledge. So I am about to provide a bit of current information about
individual stocks that express movement conducive to making gains. All the
stocks that I am currently long are in an advance while all the shorts are in
decline. I will get into a few of them right now.

SI Corporation
(
SONE |
Quote |
Chart |
News |
PowerRating)
5.70

This stock is acting well. No
question about that. It broke out the other day in decent trade and the stock
currently trades above the top of the base it formed following a brutal
decline. So check out the chart and notice that it currently trades above all
key inflection points and is in great shape technically. Place the stop under
4.69 for a swing. The 10 day line is 5.32 and a stop under that point for
short term traders is appropriate.

QUALCOMM
(
QCOM |
Quote |
Chart |
News |
PowerRating)
52.66

In the midst of a stunning yet
steady climb. That is just what is happening with QCOM and I am happy to own
it. It is climbing in a mature advance and just made its 52 week high the
other day. The 200 day line trades at 45.57 indicating a healthy but not
overly extended advance. I am into this stock and prefer waiting to pick up
more shares on a pullback. It is prudent to trim into strength.

Legg Mason
(
LM |
Quote |
Chart |
News |
PowerRating)
116.15

My guess is that the stock
settles in at 108 and falls to 100 at the bottom sometime in October. Just a
gut feel. That is not why I am short this stock. It has nothing to do with how
I feel. How I feel means nothing. How the market feels about this instrument
will determine the direction it takes. If the demand for the shares slow
causing selling pressure then the stock will decline until sufficient buyers
come in to balance out and neutralize the selling pressure. That happens down
in the 111 zone. If 111 fails to hold then it is likely to land at 108-110 and
tread water in that territory for a while till a body blow sends it reeling
into a corner forcing it down on a knee and that is likely the bottom found in
the vicinity of 100 around October. I am short LM and consider the position a
low risk try. I prefer selling in the 118-119 zone and covering down around
111.

KB Home
(
KBH |
Quote |
Chart |
News |
PowerRating)
60.48

To every thing there is a
season. Home builders had there day in the sun and the sun shined on the group
for the last 6 years and it is over. Home builders are one of several groups
that are in bear hugs. Most are oversold so it pays to wait for a rally if
ever there comes one as a chance to sell short. I am in a profitable short
position in KBH and am just keeping it and intend to add to it in a rally up
to the 50 day moving average at 64 and change. Place the stop above the 200
day line at 70.10.

Now it is time for a spot of
tea and a modest chunk of lemon to enhance its flavor and balance. Futures are
flat. Markets in Europe are positive while Asian markets are down. Fed is
meeting today and tomorrow and the street will be focused on that.

Jack Rothstein is the
President of Rothstein Investment Advisory Services, Inc. and is a 20-year
veteran stock trader and a money manager.

Mr. Rothstein also writes Wealthcast, a monthly newsletter about the technical
behavior of the markets. He has been quoted on Bloomberg, CNNFn, the Dick Davis
Digest and the Dow Jones Newswire. Since 1993, Mr. Rothstein also hosted
WealthCast, a radio show in the Washington DC area covering the stock market.

Jack S. Rothstein

Rothstein Asset Management,
L.P.

3600 Chain Bridge Road,
Suite 200

Web: RAMhedge.com