Due to the likely sideways to down nature of the market as well as the nearness of the upside parameters of the trading range I believe that short positions in general will have a better chance of profit.

MT (Friday Close at 66.20)

MT is a stock that was trading at $3 a share back in 2003 and now finds itself trading at $66. The volatility and trading ranges of this stock have increased strongly in recent weeks. The volatility and wide ranges points to a mid-term high having been made when it reached 67.89 on July 12.

MT is a stock that generally trades in a haphazard manner with lots of gaps left open. Such action makes this stock slightly riskier to trade than others but the risk/reward ratio on MT at this time is extremely good and therefore worth the risk.

After MT reached its high at 67.89 it then proceeded, in conjunction with the drop in the indexes, to go all the way down to 51.18 and sustain a 25% drop in price. As with the indexes MT spiked up from that low and on Friday reached a corrective high of 66.79. Since the stock did not have a previous weekly re-test of the highs the move up this past week, if it fails, can be considered a re-test.

As with the indexes it is likely that MT is getting into a sideways phase and such a rally as this stock had on Friday makes it a perfect opportunity to institute a short position.

Resistance on MT will be found at 66.96 as that was a major high just prior to the all-time high made at 67.89. There are also 2 minor intra-day highs at 67.20 that will also act as decent resistance. The nearest support is down at 62.83-63.02 where the 50-day is currently at as well as 11 previous daily highs or lows are located. Major support is down at 60.00 where there are two major previous weekly lows as well as the 100-day MA. Support under that price will be found at 54.60-55.00.

Sales of MT should be attempted on any rally between 66.70-67.00 level and a stop placed above the all-time high at 67.89 (stop placed at 68.00). Getting that price may be tricky as the rally up to 66.77 on Friday could have fulfilled the re-test-of-the-high scenario and MT may now be heading lower. Evidently a lot will depend on whether the indexes rally on Tuesday or not so keep that in mind. Short positions at a lower entry point will still have a high probability of success but a lower risk/reward ratio.

There are three objectives on this short position. The first objective is 63.00. A drop to that price offers a 4-1 risk/reward ratio. The most probable objective is 60.00 and that offers a 7-1 risk/reward ratio. The last objective would be 55.00 and that offers a very attractive risk/reward ratio of 12-1.

It is highly likely that MT is in a sideways trading range between 67.00 and 60.00 with a decent chance of the range being 67.00-55.00. The 63.00 level needs to be considered the pivot point and if it holds strongly on the next dip then the possibilities increase that MT will resume its up-trend.

My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).

ABC (Friday close at 47.85)

ABC hit its all-time high in April of this year at 56.56 and since then has been in a very evident downtrend which may have found its bottom 3 weeks ago when the stock dropped to a low of 42.67. The subsequent rally back up to 49.00 hit a major resistance established in April of last year at the same price, that high stood firm for almost 10 months.

ABC acted strongly upon hitting the 49.00 level on Monday with a drop of almost $2.5 dollars. Friday ABC rallied back up to the 48.00 level which was also a strong resistance level last year. At that same price the 50-day MA is currently trading at. Support is will be found at 46.50 (recent low and 20-day MA) and then strong at 44.20 which was also a strong support level last year when ABC was trading below the 49.00 level.

Sales of ABC at Friday's closing price of 47.85 and placing a stop loss order at 49.10 and an objective of 44.20 will offer a risk/reward ratio of 3-1. Though the risk/reward ratio on this trade is below my 4-1 norm I do believe this trade has a high degree of probability of success. If a sensitive stop is desired you could put it as close as 48.20 and if the resistance at 48.00 is as strong as I think it might be then you will not get stopped out.

My rating on the trade is a 8 with a stop at 49.10 and a 6.5 with a stop at 48.20 (on a scale of 1-10 with the strongest probability rating being 10).

GPS (Friday closing price 18.75)

Since October 2005 the GPS has been in a very evident trading range for 60% of the time between 15.82 and 18.81. The period of exception (Sep 06-Feb 07) saw the GPS trade as high as 21.39. Since Feb 07 the GAP has been on a downtrend which culminated two weeks ago with a drop below support at 15.82 and a low of 15.20. The subsequent rally to Friday's closing high of 18.96 has come because of the index rally as well as a higher than expected earnings report two weeks ago.

From a fundamental basis this was the opinion of a Goldman Sachs analyst after the recent rally "Talk of a GAP turnaround reverberated across Wall Street on Thursday after the mega-retailer said second quarter profits soared 19%. Still, not everyone was ready to rally around the embattled chain. On Friday, Goldman Sachs analyst Margaret Mager warned investors that there was "no recovery in sight."

From a chart basis GPS is close to several major resistances levels and looks like a good shorting opportunity. Since February of this year there are 16 highs and 7 lows between 18.70 and 19.10 making that area a major pivot point as well as strong resistance area. In addition the 50-week MA is presently at 18.81. GPS has run up, over the last 3 weeks, from the 15.20 low up to the high on Friday at 18.52 and is now in an overbought condition. Having closed on Friday on its highs it is highly probable and expected that the stock will get up to the resistance level sometime this week.

On Friday GPS got up to 18.96 which fulfills this rally's objective to the upside as well as a re-test of the 50-week MA. Failure to go any higher this coming week will likely take GPS down to the 18.00 level. Sales of GPS between 18.70 and 19.00 should be instituted using a stop loss at 19.21. Objective of the trade is initially the 17.22 level (20-day MA) with a decent possibility of going lower down to 15.87. Risk/reward ratio using the 17.01 objective is almost 5-1.

My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).

GIGM (Friday closing price 13.16)

GIGM is a stock I previously shorted back in July at 13.71 and covered the short at 11.21 and sat on the sidelines while the stock dropped all the way down to 9.02. Almost the same reasons for the short exist now that the stock is back above $13 again.

GIGM went from $3 to $16.42 in just 14 months but upon reaching that price level it likely became overpriced and proceeded to correct over 50% in price in just 3 months. Over the last 3 weeks GIGM has rallied from 9.02 to last Monday's high at 13.38 without even a minimal re-test of the correction lows and now finds itself nearing strong resistance levels that are unlikely to break easily.

GIGM has strong resistance at 13.63 from a slew of previous lows and previous highs as well as the 100-day MA and 20-week MA presently at 13.54. It seems highly improbable that at this time and with a short term overbought condition that GIGM will have enough strength to break through all these resistances.

On the downside GIGM left a gap open between 11.31 and 11.94 that is likely to act as a magnet as this stock is not considered to be in a bull trend. Such a gap has a high probability of being closed. There is decent support at 12.50 and again at 12.00 from the 50-week MA but the strong level of support is down at 10.84. A drop to that level would not only be a positive test of support but would also allow for the gap at 11.31 to be closed.

Sales of GIGM between 13.38 and 13.54 with a stop loss at 14.12 and an objective of 10.84 would offer a 4-1 risk/reward ratio.

My rating on the trade is 7.5 (on a scale of 1-10 with the strongest probability rating being 10).