My Ebay short is, alas, no more. I shorted this pup at its 50-day moving average last week. It went my way initially but I was conscious that its 200-day average was nearby and likely to act as support.

Accordingly, I was looking to take some pro"ts there and my order was just cents away from getting "lled before the price reversed upwards and stopped me out the next day.

It's always a bit sickening when that happens but I shouldn't crib too much. The fact that I had brought my stop near my break-even point made this one a minuscule loss.

The more I trade, the more I see the wisdom in the old trading adage that says you should never let a winner turn into a loser. If I had left my initial stop untouched, I'd have been stopped out for a loss of a grand. Getting stopped out near break-even isn't any bit as painful, believe me.

Returning to Ebay, the stock's recent strength has me on the lookout for a long position (like all traders, I'm promiscuous) and I have an order to buy a dip to the 200-day average near $32. If I do get long, however, it won't be for long . . . the stock reports earnings next week and, as always, I don't take positions into earnings.

I'm still long Elan. The stock has been range-bound over the last few weeks. Nothing to get excited over, but no reason to sell either.

I trimmed my long bet on the Nasdaq 100. This trade has brought a big smile to Monkey's face since its inception a fortnight ago, rising day after day. With the index being extremely overbought and the psychologically-important 2000 level ahead, it seemed prudent to take a few quid off the table. The Nas, like the Dow and the S&P, took a bit of a beating on Tuesday but that's not unexpected after such a strong run.

The chart continues to look bullish to me so I would look to add on weakness. The 50-day average is at 1925 . . . that looks like a nice spot to get long.

IBM can be a bit of a snooze stock . . . you don't buy Big Blue if you're looking for adventure and excitement . . . but it's on a steady uptrend and hit a 52-week high this week. In fact, boring stocks can be surprisingly good trading vehicles.

They allow you to employ tight stop loss orders and make correspondingly large bets.

I bought IBM near $104, betting 5 for every one-cent rise in the stock. I took some profits last week, and with the stock currently touching $109, continued to count the coppers this week. Not bad for a 'boring' stock. Earnings are out next week, so I'll be exiting in advance of that.

As for the markets, I remain a bull but a slightly more cautious one.

Looking at the Dow and the S&P, the recent rally was very much lowvolume. Tuesday's sell-off, however, was a high-volume affair.

Psychologist, trader and blogger Brett Steenbarger pointed out some warning signs prior to the Tuesday sell-off. "Unlike past rises during this bull market, we're not seeing strong institutional participation on the upside. That has me questioning whether the current bounce will lead to a fresh new bull market leg."

Steenbarger also points out that only 14 of the Nasdaq 100 stocks made annual highs in the index last Friday, despite the index hitting new highs for the year. This means that a handful of stocks . . . the likes of Apple and Research in Motion, both of which have been on "re for some time now . . . have been doing most of the legwork. The level of stocks hitting new 20-day highs is below the level recorded in mid-June. "We want to see new highs continue to expand . . . and break the mid-June peak . . . to sustain the bull move."

Steenbarger's methods are different to my own and I'm not slavishly devoted to his opinion. His analysis has helped Monkey make quite a few quid over the past few months, however. Like many analysts, he has noted that the recent market rises have come at a time of deteriorating fundamentals.

That has not stopped him from being strongly bullish during that time.

Like all good traders, he looks at what the market is doing rather than what he thinks it should be doing.

Steenbarger is not a bear at the moment but the recent action has tempered his bullishness.

Traders could do worse than peruse his weekly summary at www. brettsteenbarger. com/weblog.

It's not for newbies but informed traders will recognise that it contains some of the best technical commentary on the web.

To sum up, I'm inclined to be a bit more picky about long entries for the Dow and the S&P. Both bounced from their 50-day average on Wednesday but I'm no longer inclined to buy at that juncture . . . it can't continue to act as such unfailing support. I'd prefer to get long near the June lows (around 13,300 for the Dow and 1490 for the S&P).

I'd be inclined to try out a countertrend short if the Dow or S&P return . . .on low volume . . . to their 2007 high.

The Nasdaq, as I remarked earlier, has been stronger so the 50-day average should continue to act as support there.

Most of the stocks on my watchlist are longs rather than shorts. I'm continuing to watch Oracle closely . . .the stock dipped this week, albeit not low enough to trigger my order.

Amazon looks like a buy at $68.

Earnings season is upon us, so expect volatility in stocks reporting.

Weekly gain/loss: + 300
Overall balance: 53,800