Predicting the future is virtually impossible; however, if one takes an hourly, daily and even weekly no-nonsense approach to the stock market, profits may soon follow.

What do I mean by a "no-nonsense" approach?

1. Every trade you place should represent no more than 1% of your total capital or assets under management. Keep your losers/losses under control and the winners/profits will take care of the rest.

2. Every trade must have a specific catalyst that you attempt to "game." After the catalyst has occurred, you dump the position. No matter what.

3. Do not buy something just because you think it is cheap. There are tons of cheap stocks currently in the market, but they all have the potential to fall another 50% or more. A cheap stock can get cheaper, and cheaper, and cheaper as it painfully eats away at your capital. The ideal long trade is a cheap stock, but one with a catalyst that may propel it higher.

4. Keep very tight stop orders on all positions. There are dozens of academic papers regarding what is the ideal stop order might be; personally I use 5%-7%.

5. Keep a close eye on the CBOE Volatility Index, commonly known as the VIX. There is no better gauge of raw fear in the market than this index.

With this in mind, here's my weekly Rocket Stocks portfolio of stocks ideas that could surge higher -- or, in some cases, lower -- on specific positive or negative catalysts.

Short Scotts Miracle-Gro (SMG): The negative catalyst here is that earnings, which the company will report on Feb. 3, will likely pop this balloon.

Everyone knows Scotts Miracle-Gro, which manufactures and markets lawn and garden care products in the U.S. and Europe. Its principal line of sales come from its granular lawn fertilizer and combination products, including fertilizer and crabgrass control, weed control and pest control products and plant foods.

For 2008, Scotts' net sales were $2.98 billion, up from $2.87 billion in 2007, a 3.8% increase. Gross profit declined, from $1 billion in 2007 to $939.6 million in 2008, a year-over-year decline of 10.6%. Adjusted EBITDA fell from $382.6 million in 2007 to $318.4 million in 2008, a year-over-year decline of 21.4%.

Thesis: Up roughly 50% or so in the past six months, shares of SMG represent an attractive short ahead of earnings based on several trends. First, it is severely overvalued, with a forward P/E of 14.4 and EV/EBITDA of 9.9. There is a also misperception by the market regarding Scotts' growth potential; it is not likely to grow by more than 1% to 2% maximum. There has been mammoth insider selling ever since the stock started to rip higher in August, and no insider buying. Finally, Scotts typically reports a first-quarter loss to the tune of 80 cents to $1.

Ultimately, a short position in SMG is an indirect short on the consumer. Despite Scotts' dominant market share, there are various generic versions available that cost half the price of a Scotts product. You seriously has to question the profitability of such a company, given high unemployment, a massive amount of residential defaults and extreme water shortages on the West Coast.

Additionally, SMG has a decent amount of debt to roll over this year and into next. Any slight hick-up in revenue, could lead to a nasty roll over.

Long Century Aluminum (CENX): Shares of Century Aluminum, which closed on Friday at $3.55,down a whopping 55% on the week, are setting up perfect for a snapback trade.

Century is in the process of issuing an additional $100 million of common stock, or about 50% of its total market capitalization, will announce the secondary at $4.50 per share.

In situations like this, the stock normally drifts higher after the secondary is issued. I am betting that this is what happens. Sure, things are rough all over the place, particularly if you’re a commodity producer, but with a stated book value of $29+, Century certainly has the power to trade in the $5 range within a week’s time.

Some other ideas in this week’s Rocket Stocks portfolio include Yum! Brands (YUM), FMC (FMC) and Newfield Exploration (NFX).

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.

Posted on Feb. 2, 2009

Don't miss Stockpickr Answers today: Jud Pyle, CFA, chief investment strategist for the Options News Network will be on Stockpickr Answers today (Monday, Feb. 2) to respond to questions posed by members of the Stockpickr community. Not a member? Join the Stockpickr community today -- for free.