9:00am (EST)

The market stumbled on Tuesday as a stronger dollar and disappointing economic news were too much for the bulls to overcome.  The market was trying to gather some momentum put spent all day in the red.  

The Dow finished the session with a loss of 49 points and settled at 10,452.  The index traded down to 10,426 so at least the selling was somewhat contained.  The Nasdaq held 2,200 and was off by 11 points while the S&P 500 slipped 6 to finish at 1,107.

There were a few bright spots in the market and one of them was Weyerhaeuser (WY, $43.11, up $0.60) which hit a high a 52-week high of $46.80 yesterday.  Although the stock slipped for the remainder of the session, shares got a pop after the company said it plans to become a real estate investment trust (REIT) to boost profitability.

As a REIT, the company would still trade on the NYSE and would be required to pay 90% of its profit to shareholders.

Elsewhere, Solar sector continues to shine a bright star at the moment.

First Solar (FSLR, $138.99, up $0.34) broke $140 yesterday and there could be more gains to come.  The company is expected to announce its 2010 guidance today after the market closes so traders will positioning themselves ahead of this big event.

Wall Street currently expects $6.50-ish a share but it appears option traders are gearing up for a relatively upbeat report.  We have seen some strength in the sector over the last few weeks as several companies have come out and said orders are up.

First Solar has a 52-week high of $207 and a low of $100 and is up nearly $20 since the beginning of November.  There is resistance at $143.75 but a break above this level could lead the way to $150 quickly.

Other Solar stocks that did well include: JA Solar (JASO, $5.76, up $0.46) which surged 9% and SunPower (SPWRA, $24.12, up $0.93) which added 4%.  Energy Conversion Devices (ENER, $11.19, up $0.07), GT Solar (SOLR, $5.64, up $0.13) and Suntech Power (STP, $17.90, up $0.43) also showed slight gains.

We also want to talk about the current market environment.  Most experts are calling for a correction or a market top here at these levels but we aren’t so sure.  The best we can do is to try and figure out where the market is headed and take another look at things once we get there.  On October 18th in our Weekly Wrap we had this to say:

“The Dow is at 10,015 (up 145 points yesterday), the Nasdaq is at 2,172 (+32) and the S&P 500 (+19) is at 1,092.  So where do we go from here?  If you will notice from my 8/23 notes, we could hit 2,275 on the Nasdaq and 1,175 for the S&P 500.  For the Dow, we could see 10,300-10,400 if the rally continues.  Now, we may not see these levels during earnings season but there’s a good shot we end 2009 at those aforementioned levels.”

We have had these targets since August and in July when the Dow was at 9,000 we were calling for Dow 10,000.  We recently bumped our Dow target to 10,800 but the bottom line is that a sideways market is extremely tough to trade which is where we have been since November.  The point is the market has been flat as some traders lock in profits but you still have to trade the trend.  We are mostly long on our current trades but have added a short position and we are looking at others in case we do stall at these levels.

This will be the last full week of trading before 2010 gets here so we would like to see the bulls make one more run higher in what has been a historic 2009.  Of course, all eyes will be on the Fed today and the FOMC policy statement today.

As we head to press, Dow futures are up 40 points to 10,438 while the S&P 500 futures are showing a 5 point pop to 1,108.  Current subscribers, please check the Members Area this morning for all of the trade updates.

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