Welcome back to the Trader's corner! I know it's been a while since our last idea. However, I'm looking forward to getting these ideas out to you guys on a more regular basis in 2007.

In any case, the hiatus may have been the best thing for us considering some of the rewards we've reaped since then. As of our last update, we still have at least one open trade - Level 3 Communications (NASDAQ: LVLT). There's also a possibility Incredimail (NASDAQ: MAIL) is still open, depending on how you handled things when it got up to our suggested target area.

The MAIL trade idea was featured on October 17th when the stock was priced at $6.64. We didn't set a firm target, instead just suggesting somewhere under the $9.00 area as the likely peak. MAIL actually got up to $8.75 in early December, then retreated slightly, and was flat for most of that month. The stock slipped under its 20 day average on January 3rd to a low of $8.00, which may have been a likely bail-out point for anybody still in the position at the time. So, your gain on that particular trade could have been anywhere from 20.5% to 31.8% if you got out around that time. And if you're still in it, you're up by 5.4%, and still generally pointed higher.

Our LVLT position is up by 18.3% since we mentioned it on November 13th. After suggesting it when it was trading at 5.46, we came close to making an exit at our stop price of $4.90 just a few days later. But, fortune smiled - LVLT took off and has moved all the way to the current price of $6.46. Better yet, it looks to me like it's still pointed higher, reaching for our targeted level of $7.40. Of course, discipline should always be applied...let's raise the stop to $5.52.

Prior to that, we locked down a gain of 15% or more on Atherogenics (NASDAQ: AGIX), and gave up 4.5% on a Sanderson Farms (NASDAQ: SAFM) trade. So overall, we're pretty pleased with the early results of this relatively new column.

What about the next trade? Glad you asked.

Tuesday's huge pullback was a drag on nearly everything. However, you know us....the lower the entry, the better (brilliant idea, huh?) So, we're actually excited about the opportunities left behind in the wake of the weakness - we see some great undervalued ideas.

One of them is Basin Water Inc. (NASDAQ: BWTR). The chart was the primary attraction to the trade, but a little perspective may be in order. This fairly obscure group - the water stocks - have been strong on their own, with the water utilities stocks doing particularly well of late. Their strength seems to have created a ripple effect for all the ancillary businesses like Basin Water, which designs and builds water treatment systems. The point is, we've seen a lot of companies with the word 'water' in their name performing very well over the last few weeks, so Basin appears to be in good company.

So, when we saw the BWTR chart on Tuesday, we were licking our chops.

After peaking at $8.10 less than a week ago, shares slid all the way back to a low of $6.86 amidst all the panic. But look what happened in the latter half of the day - a recovery pushed shares all the way back to $7.37. It also appears as if the 50 day line played the support role in the reversal effort. And, the selling volume behind the half-hearted dip was tepid at best....not reflective of the majority opinion. All in all, we'd say those are some pretty nice technicals.

Based on Tuesday's close $7.37, we're thinking a move all the way back up to $8.90 may be in the cards. That's where we topped a couple of times late last year, but it seems like BWTR is getting back in that flow again. For safety's sake, we'd use $6.86 as a stop level.

The only other stock we really thought the timing was great on is Sprint Nextel Corp. (NYSE: S). While most stocks are still digging themselves out of Tuesday's hole, these shares simply shrugged off those losses and are basically right back where they left off on Monday.

Aside from just the sheer conviction of this stock's fans, we're equally impressed by the recent cross back above the 200 day moving average line. It took plenty of work to get there, but over five of the last six sessions we've seen little to no hesitation in keeping this upward move alive now that this long-term signal line has been hurdled. You can also see on our weekly chart how the stock seems to be breaking out of a long-term wedge pattern....one more thing to like.

We're thinking this likely breakout could be strong enough to carry shares all the way back up to $24.00, or maybe even higher. We saw long-term tops there in 2005 as well as 2006, and we don't want to tempt fate this time around. As for a stop level, I'd suggest $18.45...which was Tuesday's close.

In the meantime, I still recommend keeping it all in perspective. Wednesday's strong bounce in the shadow of Tuesday's plummet is probably creating a tailwind effect for these two names as much as it is for any stock. The real test will come when Basin Water and Sprint Nextel have to overcome another wave of selling. For what it's worth though, I think these two trading ideas are about as solid as anyone could expect right now.

Happy Trading...

Trader's Corner Editor