As the major market indices rallied for another week, optimism truly sprung eternal as traders and portfolio managements sought to bring in the New Year with a bang. Historically, though, holiday seasons are always positioned upward due to several important factors, including the lack of market participants due to holiday vacations. The light volume, generally speaking, makes asset prices easier to manipulate both upward and downward, and a generally more optimistic view helped push the market close to a monthly high.

Our principal pick last week was Monsanto (MON), which finished up a respectable 8% on the week as international markets rebounded and the re-inflation trade took force. Still near its 52-week low, Monsanto is probably a bit overheated despite being attractive in the long run.

This week's Rocket Stocks portfolio focuses on both earnings and momentum plays. It includes some names to avoid this week as well.

Family Dollar Stores (FDO): I think it's safe to say that we are in the middle of a nasty recession, and companies such as Family Dollar Stores and Wal-Mart (WMT) are the names that are likely to benefit the most. Stuck in the middle of its 52-week range, shares of Family Dollar will likely pop based on solid fundamentals, increased demand and lower input costs to their base products.

A move into the low $30s is not totally out of question because there is currently a large short position, which could fuel a short-covering rally.

Acuity Brands (AYI): I would actually be short or even just stay away from Acuity Brands, which produces and distributes lighting fixtures. Given the massive slowdown in housing and the total halt to consumer spending, Acuity should be sitting near its 52-week low on the assumption that sales will be pathetic and profit margins substantially weaker than they were last quarter.

A move into the mid-$20s is not totally out of question given the weakening macro-picture for housing and spending. Furthermore, management is likely to issue a horrible earnings outlook for 2009.

For more short-term trading ideas, check out this week's Rocket Stocks portfolio.

To find the snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use in my own research each week:

Always check the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard.

When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. The funds will be buying at the lower prices and likely supporting the stock.

Ditto for the 52-week-low list. You must check the above two lists every day if you hope to find volatile stocks that can snap back

Stocks Rising on Unusual Volume: These are potential breakout plays.

Stockpickr's System Trades of the Day: These are trades triggering that day in various back-tested trading systems we've developed.

Stocks With Unusual Options Activity: Perhaps someone knows something?

Latest Activist Situations: These are stocks that hedge funds are accumulating shares of and demanding change in. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.

One final place to frequent is the Answers section on Stockpickr, where ideas such as those presented in this article are thrown around daily. And you can further discuss your ideas and share opinions in Stockpickr's Member Forums section.

By James Altucher. At the time of publication, Altucher had no positions in stocks mentioned.

Posted on Jan. 4, 2009