Monday's market action saw volume decrease on the NYSE and all of the major indexes opened lower but were able to achieve new closing highs for 2009, even if some of the gains were modest. The Semiconductor Index (SOX) mimicked the major indexes in moving higher while the Semiconductor Holders (SMH) were flat (lost one cent).

The TLT (Lehman 20-year Bond fund) looks to be heading lower.

Trade Recommendations:
Sell Sept $42 Calls (DAVIT) at a limit of $0.45 against our long positions.
Sell Sept $42 Calls (QQQIP) at a limit of $0.40 against our long positions.
Sell Sept $42 Calls (SWGIC) at a limit of $0.75 against our long positions.
These options expire Friday but our long positions will be called away on a surge higher this week, which is not as likely now, even though our BIAS is still bullish.

Daily Trend Indications:

- Positions indicated as Green are Long positions and those indicated as Red are short positions.
- The State of the Market is used to determine how you should trade. A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will.
- The BIAS is used to determine how aggressive or defensive you should be with a position. If the BIAS is Bullish but the market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance. The BIAS tells you to exit that trade on "weaker" signals than you might otherwise trade on as the market is predisposed to move in the direction of BIAS.
- The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.

Commentary:
The Dow, S&P-500, and SMH all moved into trading states but all the indexes we have been monitoring still have a bullish BIAS. We need to sleep with one eye open as the semiconductor leadership is now in question. Since it is a leading industry, we use it as a canary in the coal mine for an early warning sign of a change in bullish sentiment.

We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to mark@stockbarometer.com.

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By Mark McMillan

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Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
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© 2009 Copyright Mark McMillan - All Rights Reserved
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