One obstacle has been hurdled now that President Bush has signed the bailout legislation, but there are still problems ahead. A deteriorating economy, seized-up credit markets, and poor corporate earnings must still be dealt with. What do the professional traders of TraderInsight.com think?

Here’s the list of 9 stocks our professional traders will be watching this week:

Beazer (BZH), Lennar (LEN), Centex (CTX), Horton (DHI), Pulte (PHM), Safeway (SWY), Yum Brands (YUM), Ruby Tuesday (RT), Costco (COST)

Adrian Manz, Stock Day Trader

The week ahead promises to be very interesting. The legal battle for Wachovia (WB) should keep the financial stocks front and center, as Citigroup (C) was left at the altar on Friday when Wells Fargo (WFC) decided it would make a better partner for the defunct bank. That led to a temporary court order stopping the deal dead in its tracks, and a guarantee that the news-driven volatility of the past few days will continue in the sessions to come. Traders need to stay particularly nimble this week, as it appears that there is little perception of anything as being “good news,” and the market seems ready to accept anything as a reason to sell off further.

I will remain tightly focused this week on financial and retail stocks, with long side trades in the banks on pullbacks and takeover chatter, and short trade in the homebuilders Beazer (BZH), Lennar (LEN), Centex (CTX), Horton (DHI) and Pulte (PHM). In the retailers, Safeway (SWY), Yum Brands (YUM), Ruby Tuesday (RT) and Costco (COST) report this week, and each will be on our radar for daily and intraday trading opportunities.

Tom Incorvia, Stock Swing Trader

Last week’s action can be described simply as ugly. All the broader averages closed at multi-year lows. Even the NASDAQ, which had been the strongest of the broader averages, closed down 10%. The concerning aspect with the NASDAQ is that it is not heavily weighted in financial stocks. Since the tech heavy NASDAQ posted the weakest performance of the three broader averages, it is a sign that the financial debacle is bleeding over to Main Street. This is a clear sign that institutional investors are in heavy damage control.

For the week ahead, the markets are oversold, but so what. Remember the markets can stay illogical longer than you can stay solvent. When the markets are operating on Defcon 1, market movements are fast and inordinate. Under normal circumstances, I would be calling for an oversold bounce, but it is not out of the question to see more weakness hit the markets this week. It is worrisome that the long awaited $700 billion bailout package did nothing to give the market any buoyancy. After Friday’s vote, the markets were enjoying a strong day, but right after the final vote was cast the markets saw selling pressure mount. The adage “buy the rumor sell the fact” comes to mind when reviewing Friday’s action. If this is the case and more selling is in store, the S&P 500 has some support between the 1099 level and 1059 area. If that is violated, the next meaningful support will be the 2003 lows (805). I’m not predicting that scenario yet. I’m trying to maintain a positive outlook and awaiting an oversold bounce. If we do get an oversold bounce, I will be watching for clues of its sustainability.

Third quarter earnings will start reporting this week. Expectations are not good, as consensus has expected earnings down 1.7% year over year. There are a few economic releases due, but I’ll go out on a limb and predict a Fed rate cut this week.

Art Collins, Index Futures Trader

It’s difficult to find a roadmap that suggests how to trade the current hyper markets. As a mechanical system trader, I have three choices:

1. Continue to trade off historic biases, either the same way as always or with modifications that consider the current volatility.
2. Stop trading as mandated by revised volatility filters.
3. Arbitrarily stop trading altogether.

In these scary times, no idea is perfect. I’ve had plenty of experience with total shut-down following destabilizing hits, and the inevitable result has been for me to watch spectacular account recoveries occur -- on paper only. The filter idea is good in theory, but much harder to put in practice than one might think. Here’s an example of something I use that doesn’t work well now. If yesterday’s true range was X times bigger than the previous three-day average regular daily range, then stop trading for three days. I haven’t stopped trading off that filter in weeks because the average previous three-day range, the normal average range of late, is also off the page. Other adjustments face similar issues.

That leaves me with systems -- past and present-friendly adjusted. Modifying systems under fire can be like a dog chasing its tail; a good way to latch onto something that won’t demonstrate crucial robustness into the future. So that leaves me with staying the course. It has the best chance of working not merely in spite of how counter-intuitive it is, but because of it. History shows over and over again how prudent it is to do “the hard thing” against the masses. This is why I’m also not intervening in the managed money account I’m letting someone else trade. It may go to zero, but if it does, we’ll probably all be flaming out together and adjusting to a vastly different American life anyhow.

So what are the market tendencies I continue to reference, ramped-up hyper-volatility notwithstanding? It still continues to be a good play to fade dramatically gapped openings, particularly selling off higher ones. Intra-day momentum can still serve as a positive numbers game. I don’t know how you can play it without extremely wide entry and exit points plus a willingness to sit through inevitable givebacks as the market dramatically reverses direction inter-day. Remember that today’s adverse reversal can become a renewed positive move tomorrow. For me, it’s not a big mind-leap because my signals are keyed off range sizes. I’m trading off the same formulas, just further out than normal.

The present rampant fear will be the ultimate catalyst for a possible unprecedented rally. Timing it is obviously fraught with peril. There still may be one or more scary washouts. But I’ll go out on a limb by suggesting that as of now, the short side is the more precarious position to take. Many forces out there are conspiring to fix the market. You may be rewarded playing for continued melt, and I’m not saying that we don’t have further decline ahead of us long-term. I’m simply betting on a higher market close by the end of the week.

Dave Mecklenburg is the Editor-in-Chief of TigerSharkTrading.com.