OK folks, the bulk of today's newsletter is going to be on our hypothetical portfolio's holdings, and specifically, the two additions we're going to add to it. Well, there's only one addition we're making for sure. The other one is a trade we're going to try to get into, but we'll need to shop around a little for the right price before getting in. First things first. Let's go ahead and step into water pipe maker Northwest Pipe (NWPX). If the name seems familiar, it may be because we actually traded Northwest Pipe last year, and did pretty well with it too. We ended up banking a 20% gain in about three months on it, but it looks like the right opportunity has popped up again. As for why I like it, it's a combination of technicals and fundamentals. I'm not going to rehash the fundamentals, as they've not actually changed much since the look we took when we first bought it back in June. You can revisit that newsletter here. If you just want the Q&D version, it's simple - America's water infrastructure is failing, and Northwest Pipe can help fix it. Period. The reason I think NWPX is worth getting into here is its "right time, right place" technical setup. Basically, the January pullback hit the reset button on the rally. The stock only had to get within reach of the 200-day moving average line (green) to start a sharp reversal effort, and sure enough, it's off to the races. Northwest Pipe shares cleared the last of its moving average lines today, and the volume behind the two-week rally was pretty good, even if not great. While I'm willing to stick with Northwest Pipe for the long haul as long as it's making steady progress, I don't mind telling you I'm expecting to lock in a decent short-term gain here if it develops and is there for the taking. May as well take a shot. The other pick I want to try to start adding is PICO Holdings (PICO). Coincidentally, PICO Holdings is also something of a water play. The company owns water resource and water storage operations, as well as agribusiness and real estate operations. The company isn't profitable on a trailing basis, but is expected to swing to a profit this year. I don't doubt it'll get to profitability this year either. Although the company itself doesn't do anything all that remarkable, revenue has been growing like crazy because management has been making some smart acquisitions. The big reason I like PICO right now, however, isn't the stock's value. The reason is simply how the chart's finally started to reflect the budding corporate opportunity. In fact, it finally started to reflect the company's progress in one fell swoop this week, breaking above a major long-term ceiling at $24.91. This is the fifth time the stock's taken a crack at breaking above the $24.91 level, and now that the bulls have finally done it, they aren't likely to give up now. If anything, this week's breakout is likely to attract a bunch of new buyers. There's just one problem ... I don't want to pay $25.65 per share for PICO, and I don't want you to either! I'm willing to bet the stock gets reeled in a little bit before continuing higher. So, my entry limit is a price no greater than $24.70. This may well mean we end up not getting in at all, but I'm ok with that. We've got a lot of other ideas we can utilize if we can't get PICO at a decent price. If we should get into PICO Holdings, it's only being seen as a short-term trade. As for our other trades - BlackBerry (BBRY), CubeSmart (CUBE), and Silicon Image (SIMG) - not a lot going on there today. Anyway, one last thought on all the stocks we're in or almost in... I know the market was bullish today, and that rising tide is lifting most stocks (including many of our positions). I still contend there's a very good chance of a marketwide meltdown here, however, so I'm going to advocate putting some stop losses in place. Why would I want to pile into new trades if the market's at a top? Because I don't know that it will top out here, and I'd rather be in a trade and ready to make a quick exit than be out of positions just to watch the market rally without me. For BlackBerry, I'd place the stop at $8.93. For Silicon Image and CubeSmart, I'd draw lines in the sand at $5.59 and $16.50 respectively. For PICO Holdings (if we get into it), let's say our stop-loss level is $24.00, and for Northwest Pipe I think the floor is at $34.95. Those are just suggestions though. You know your situation better than I do, so you're more than welcome to adjust those mental stops as needed. Now, speaking of the market.... OK, the Bulls Aren't Rolling Over You have to give credit where it's due. The bulls could have rolled over after yesterday's doji and handed the keys back to the bears, but they didn't. Instead, the buyers sunk their teeth in again, and this time around they added the ingredient that had been missing up until this point.... volume. Although volume wasn't enormous, the bullish volume is growing. The scale just tipped in favor of the bulls again. As for where the rally will run out of gas, I think the most any of us can hope for right now as a revisit of the 1850 level, where the S&P 500 peaked in late December and mid-January. The upper Bollinger band is going to be around that level by the time the market could get that high, and you can bet a lot of traders will have their finger on the "sell" button there. Today's surge, however, looks like it at least bought the market enough time and room to get there. With all of that being said, I still can't stress enough that in this environment, you can't afford to assume anything or blindly take anything at face value. The apparent trend is bullish, but the apparent trend back in late November was bullish too, and the rug got pulled out from underneath stocks just a few days later. I'm just saying, nothing would surprise me right now, which is why I made a point of putting stops in place on the handful of open trades we have on our plate.