Want to trade the Japanese bull market? Here’s how

• September 29, 2005
• Jack Rothstein

It is obvious that the NIKKEI 225 is in great shape.
Look at the action. Check out the action in
(
EWJ |
Quote |
Chart |
News |
PowerRating). I called it to your attention and have been since early August. I have been
involved in EWJ since early August after it crossed 10. It trades above 12 now
and the market in Japan had another rousing session last night. The volume in
this current advance is way above average. Energy, positive energy, comes out
of the East as the Japanese market through 3 quarters easily leads the major
markets across the globe. Today I will get into a few stocks that are hot
right now. Stocks that are favorable. Favorable means making money. That is
the purpose of owning and shorting a stock. Let’s get into a few that provide
favorable odds to gain:

Red Hat Inc.
(
RHAT |
Quote |
Chart |
News |
PowerRating) 16.51

I ended with RHAT yesterday. I
begin this morning with this stock. On the way in at around 5:30 this morning
on Bloomberg radio RHAT was featured for a moment as reaction to the news of
record-breaking earnings propelled the stock in Europe. The stock is up close
to 10% overseas. How do you play it now? Yesterday was an ideal time to grab
it. Yesterday is gone. I have it. I am involved. I am flexible. Means I will
come back to a stock that was recently sold if the chart improves. That means
it is moving in the direction necessary to make money. Money will be made in
RHAT as it climbs to higher peaks. RHAT has a 30 range written all over it. It
won’t get there overnight. Its good for a swing and it is a stock that can be
traded. Trade around the position. A minute-by-minute chart is necessary to
improve the odds for success if you chose to play that way. Playing for a
swing is a better bet. The advance gets into gear after it breaks new ground
today. It can be had coming in after it fills the gap. It appears well on its
way to challenge the peak of the previous advance so a chance to nearly double
your stake is what is faced if long. That is appealing. The sooner it fills
the gap the better. Place the stop at 14.99 on a swing.

Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating) 10.50

The stock broke out yesterday.
The action is not surprising. This stock is now in the heart of an advance and
will likely move to test the old high made on 1/16/2004 a year and 9 months
ago. WOW. The action is superb. The breakout came in heavy trade. The new
52-week high was established yesterday. Plenty of room overhead. Watch it run.
It is better to be involved as you watch. Get involved in TLAB. Get involved
in stages. The stock broke above its baseline and it could come in to test
that 10 zone and legitimize the break. The passing of the test confirms the
break out and sends it on an advance. TLAB is actually ready to get into a
higher gear.

Lucent Technologies
(
LU |
Quote |
Chart |
News |
PowerRating) 3.27

Just look at the chart. Forget
about everything else. Forget about the past. It is brand new. Nothing old
about it. LU is in a brand new advance. The chart tells that tale. Tells it
loud and clear. It is liquid. Nice! Nice and liquid. LU is in the beginning of
a new advance after building a base off the near term bottom. It bottomed in
April at 2.35. It recovered and built a base through the spring and into the
summer. Today it is at the outset of a new advance. LU is down 13% this year.
It is up 7% in the last 5 days. Are you beginning to see the picture? Get the
drift of the current in this fresh advance? It expresses favorable odds to
gain. Place the stop 2.87.

Nortel Networks
(
NT |
Quote |
Chart |
News |
PowerRating) 3.25

You can make money in dung.
Nothing wrong with it. Lots of headroom here in this instrument. NT is on the
verge of expressing itself in the same vain as JDSU. Lots of potential here.
It is not a long-term investment. It is an instrument that will serve you well
as it attempts to get its young advance into gear. The stock is down 6% this
year. It is up over 2% in the last 5 days. Out of weakness, and into strength,
as September closes and the season turns. NT is angling into an advance. That
is what is happening to the shares as the chart indicates a hint at higher
price points coming. Check out the chart and see the outset of a new advance.
The stock like LU and JDSU is liquid. That enables easy in and out.

Darden Restaurants
(
DRI |
Quote |
Chart |
News |
PowerRating) 29.55

Here is a good short. Stocks
like DRI are out of favor. If it is out of favor then it must be in decline.
Out of favor stocks are typically in decline. Selling declining stocks short
is a way to make money. Identify the stage of trade and act prudently and
appropriately. This stock, DRI is in decline. I am short the stock. I
anticipate making a decent gain on the short side. DRI is coming off a
stunning advance. The advance was stunning. It is over. No more advance right
now. The top is not well formed. Lets see how the decline shapes. Will it be
pronounced? How long will it last? Where will it hit bottom. Let the tape
dictate the action made. Right now the tape tells of a decline that just
began. DRI is in the beginning of decline.

Asia ended its session way up
but Europe is faltering. Our futures have turned negative. Lousy end to a
lousy month in the market for longs and shorts. Market ought to stage a last
gasp rally after the autumn holiday season. Look for good action post Columbus
Day. Build in leading stocks right now and benefit greatly after a swing. And
I end as the baseball season gets set to conclude and the boys separate from
the men. The real men of baseball wear pinstripes. They are the men of
baseball in Yankee pinstripes playing against a bunch a bums. That is the
truth and the truth will be clear as a bell at the end of this weekend.