In This Edition... New Trades - Advance Auto Parts (AAP), Valassis Communications (VCI)  Market Update - Downside Targets Established  Open Position Update - Exit United Therapeutics (UTHR) From the Community New Trades  Since we didn't have any new trades last week, we definitely want to add a couple this week to refill some of the ones we carved out a couple of weeks ago. As usual, we've got one bullish pick, and one bearish pick.  Advance Auto Parts Inc. (AAP) - Bullish  Surprised? Don't be. Advance Auto Parts Inc. has remained profitable through the worst of the recession, and comes at a surprisingly cheap P/E of 14.6. Even more attractive is the forward-looking P/E of 12.2.  As for the chart, the upward momentum is fairly clear; Advance Auto Parts shares made a fortunate pullback between July and October, but have renewed their prior uptrend. I'll also acknowledge that AAP has struggled with resistance at $45 and $47 since 2005... a legitimate concern going forward. However, the buying volume for this stock has been stronger over the last two months than it's been in years. Perhaps this time AAP can get over the hump.  Regardless, the move from $40 to even the lower ceiling at $45 is a decent move, and would build a profit cushion for a stock that's got a shot at breaking out beyond that level.  By the way, Advance Auto Parts has topped estimates - handily - in its last for quarters.  Valassis Communications Inc. (VCI) - Bearish  If the name rings a bell, it's because I first posed Valassis as a bearish/shorting opportunity on November 11th. While it was only a conditionally-bearish setup at the time, what I needed to see has since materialized.  The key to the meltdown was support at $16.63 breaking down. Well, that's what happened the very next day to Valassis Communications shares... much sooner and harsher than I expected. VCI popped back above it the next day, putting the idea in question. The stock's back under $16.63 today again though; I don't think it will be able to recover this time.  You can also see how Valassis Communications has been guided lower by a falling resistance line since mid-October. That line was the reason last week's bounce went nowhere.  I'm setting a rough mental target for VCI in the mid-$11 area.    Market Update Barring any miraculous changes within the next few hours, the major indices are poised to close out the week slightly in the red. Though it will be the first losing week in the last three, and only the seventh in the last nineteen (since the July bottom), it's becoming quite clear that the pace of the bull market's gains are slowing... perhaps to the point where things are not bullish at all. The slowdown isn't readily apparent on a daily chart, where things look volatile, but still appear to be in a 'two steps forward, one step back' mode.  When you remove all that noise by looking at a weekly chart though, it becomes clear the recent highs aren't as powerful as the prior ones, while the recent lows are cutting deeper than the previous ones. If you like more specific rationales, the MACD lines just made bearish crossunders for all the major indices. As for how low we could go, that largely depends on your timeframe.  For you short-term swing traders, the Bollinger bands (20 day, 2 SDs) have been working remarkably well as reversal points; it took but a mere touch of the upper one with the SPX's peak of 1113.69 on the 16th to send the index lower again. But, that precision has been in place for the last four reversals, not to mention the Bollinger bands have played a role in containing the ebbs and flows since March. The nearby chart tells the tale. Almost needless to say, with the lower Bollinger band currently at 1028 and falling, and knowing how important these levels have been as support and resistance lately, I'm looking for a retreat to that level for the S&P 500. The lower band could be at 1020 or so by the time it's intercepted. If you're thinking a little more 'bigger picture' - meaning weeks instead of days - the first major Fibonacci retracement level is at 947 (not shown).  Simultaneously, there are minor Fibonacci lines (based on the span between the July low and the November peak) at 1020 and 964. Those are interesting lines in that the first may well be lined up with the lower Bollinger band by the time either line is reached. And, the second is relatively close to the major Fibonacci support line at 947 (which is based on the span between the March low and this month's high). First things first though; let's not worry about the 950-ish area unless and until 1020 is snapped.    Open Position Update - Exit UTHR Though the market's been quite volatile the last two weeks or so, the net movement has been nil.... for stocks in general as well as for most of our trades. So, there's no particularly meaningful comment to add about the bulk of our open positions. We do have one exit we want to make, however.  In short, cover the United Therapeutics Corp. (UTHR) short trade. Not only did the support line at $41.00 hold up, the resistance line at $43.66 did not contain the stock. UTHR moved above that zone on Tuesday, and is lingering above it still.  All in all, this still isn't a bad trade for us. We shorted it at $48.24 on September 23rd, and are covering the trade somewhere around $44.50. That's about a 7% win over a two month period. That's nothing to write home about, but it's better than a loss. The only other stock worth mentioning is RealNetworks Inc. (RNWK).  Though it opened sharply lower today, I think that's just what the doctor ordered as relief for a nagging overbought situation. The steep plunge should also shake out the weaker hands, and apparently is letting interested buyers into the stock - RNWK has already moved from a low of $3.26 back to yesterday's close of $3.58, quickly quelling the selling effort. This remains one of my favorite picks.    From the Community Chart Outlooks for OPSY, FTWR, and MLXO  52-Week Highs: ENZN, SCVL, BONT  Trade Analysis: Power3 Medical (PWRM), Viking Systems (VKNG)  Technical Outlooks: BRYN, PTN, BBI