The Daily Dose of Trading Comments

That's it for today. Another quite day with a lot of underneath action but pretty flat indices to end with. The NASDAQ is getting a lot of press about being negative for six weeks running now; almost as if it has to go up from here. The indications are that a bounce is possible at any point but I don't know that it can go that far yet. There needs to be a trigger that says you have to put your money to work now or you are going to miss the move. Maybe those eco numbers next week might provide that. If they come in with robust growth, is that any different than what we are thinking already? What about the INTC mid-quarter update. Could that provide the catalyst?

Recognize that things are not bad here and the economy is chugging along still. There are a lot of clouds overhead, but that's almost always the case. We can get rain at any time. To get the market moving we need time in my estimation. Time to absorb the supply coming on line, time to let the charts work themselves out, time to have the long term overbought nature of the market ease some. What happens in between now and then is what we have to be concerned about. Do we get the pullback of size that scares the pants off the longs? That would set up a nice buying opportunity for, if nothing else, a trade. On the flip side, if we blow right through NASDAQ resistance that could set the short's pants on fire. What I am saying is that in the short term, we need an extreme that allows us to make a bigger trade. Until we get that, it's in between and banging out smaller trades for smaller bucks. It's bucks though and it's bucks that we need to keep on trading.

As an aside, you kind of forget how much work you put into trading preparation. After 3 days of off and on work required to work my way back through the stocks that I monitor and re-setup the alarms, I'm about a 1/3 of the way there. It's necessary though as it's what allows us to be on top of a situation when it's happening and to make the go/no go decision. Incrementally it's not such a big job. To do it all at once for all stocks seems monumental. Have a great weekend and do something fun. Next week we start all over as it's March and a new month begins.

This market has more twists and turns than those backroads I used to take in the Texas hill country. I am using this volatility to make small forays in and out of stocks as we simply work around the edges in the direction we like on individual stocks. If you can catch a few good moves in a day you can make your paycheck. Nothing has changed here from what I can see. Just a little volatility on reasonably low volume.

The final two hours of potential fireworks are rapidly approaching and you have to consider how you want to be positioned into next week. So far the market is holding up reasonably well here in the range that it is carving out. Unfortunately, the intraday charts are starting to look like a bear flag so we could see some more downside pressure into the close. If that unfolds, it might be wise to take a few profits on the short side should you be so inclined. There's a lot of data next week on the economic ledgers and how they will be received is become more confusing. A few weeks back I decided that strong data would now be negative but the Fed has turned that equation around again. Will the data be strong? There's a good chance of it. Will the markets run with it? That's more doubtful ... at least not too far probably.

I'm looking to stay reasonably balanced and with sufficient cash to take advantage of any extremes that may come along. In this type of market, when the markets get euphoric is when we can make a little change ... against the euphoric charge.

Well, that choppy behavior we thought could raise it's ugly head has in fact done so as we had a quick drop from the highs of the days to the lows. It's hard to see how we will fall out of the recent range trading today given that it's end of month, but the reluctance of the chips to move higher and thus the NASDAQ failing at resistance suggests more work is to be done if, in fact, this market can eventually move higher. My bias continues to be negative short term, especially in technology and that's the way we continue to lean.

I can't always point out everything we are doing, but clearly our timeframes are shorter as we simply are taking what the market is willing to give. That change in behavior is a function of market behavior. When it's choppy, your trading becomes choppy if you want to make money ... otherwise you sit there and watch losses and gains come back to even over and over again as you get nowhere. Now going nowhere is better than going somewhere if that somewhere is losing money, but if you care to play in this morass, then consider the need to shorten your timeframes and your expectations. When the market presses the edges once again, both challenging and breaking the current range, then our thought process may change.

One of the things that always has amazed me is the reluctance of many to take what the market gives you. There are many common misconceptions with the market that I see voiced over and over. One is that the market is somehow the enemy or there is somebody or some group of people (many times the MMs are cited) who conspires against you. To me, this belief is founded in the comfort that it provides namely that you don't have to be responsible for you actions because there is someone else out there who is manipulating things against you. That's bunk. You are responsible and you have to take responsibility for your portfolio if you care to have it grow. One of the things this site has always impressed upon it's readers is the need for active portfolio management. That doesn't mean you have to trade things as frequently or infrequently as your neighbor, but it does mean that, given your time frames, you have to actively consider each position in your portfolio, how it fits with all positions, the risk it carries, whether you would buy it again today, etc. Adding to and weeding out positions in your portfolio is no different that your garden. If you let the weeds grow, pretty soon the garden will be useless.

I pressed the PMCS short a bit ago and see it starting to falter a bit here. The chips really can't get it in gear and I'm trying to make a few bucks on that difficulty. Overall the market is holding up reasonably well but as the day wears on the gains are starting to thin; especially on the NASDAQ.

Although we are seeing a bit of a pop here and we have to respect what can happen, we have to be realistic as well and that is that we aren't seeing strength in the chips. Without the chips the NASDAQ is not healthy and that's where my eyes are trained. I've not added to the short positions in those chips but I've not even considered pulling them. Let them ride for now as they are churning while our longs perform. I did take profits on ABS as it lost that big gap opening now that the strike is gone. We should be able to re-enter it a bit lower again later. Just playing this hand close and not letting anything stray too far. Keep your risk in check here as we are in the middle of a pickle as it were and this market is likely going to remain in a choppy range for a while frustrating most players. Pick your profits and don't be disappointed if you can't get a 10% move ... two 5's or three 3's get you to the same spot.

The PMI was received well and has provided the excuse for the market to push higher. I've trimmed a little on stops in MTCT, BMY as well keeping the loss exposure reasonable. We are making hay on our longs mostly and the tech shorts aren't getting much movement north so that divergence between the listed versus the tech stocks continues.

Volume was running about normal but internals are good again today. Looks like a positive tone to allow a push higher here. The SPX and DJIA look as if they want to flirt with their highs once again.

The two eco numbers reported so far have been bullish for the market yet it is up only marginally. The PMI coming up is the real number as it's new, not a revision. The early look shows a decent internals with the underlying indexes positive. The BBH is still red hot and usually that's a good sign for the NASDAQ but right now the NASDAQ is all about chips and until the SOX/SMH turn hot, I don't see the NASDAQ running despite the BBH.

Was stopped out of that home builder short. Man those are still hard shorts to make money on. In time.

Futures this morning or pointing north. I see that the metals rallied yesterday despite the bullion's price being stuck well under $400 and I see that metal price down further this morning. That's a treacherous playground that we continue to avoid.

Yesterday we got a slight rise in volume along with good breadth although volume is tepid at best. Today is the last day of the month and typically the market has a bid at the end of the month as the funds like to make things look as good as possible.

What we have seen of late is a weak NASDAQ and Russell 2K with a relatively strong DJIA and SPX. Those cross currents are likely to continue as the NASDAQ now faces resistance where there once was support. Approrpriately we have began shorts primarily in technology and are holding longs away from technology. Those plans could go ary if technology were to catch a serious bid so we must stay on our toes in case. For the time being, we monitor and wait. This rising wedge in the NASDAQ looks destined to fail but we must not judge a book simply by it's cover. They say that if you give it time the truth will come out. That rule applies to the market as well. Time, price, and volume are what move markets. Those are the three critical pieces of data that every exchange provides. They have been and always will be the basis of technical analysis.

I don't know what, if anything, today has told us. There are some economic numbers tomorrow that could satisfy the desires of either side in this continuing battle. I've been fairly inactive today getting stopped out in one stock and adding a few longs I like the charts of for some multi-day trades. What I have been careful to do though is to keep the books reasonably balanced believing that if we have picked some decent charts on both sides of the ledger we should be able to weather a push in either direction ... assuming that push is jagged allow us to trade both sides. I believe that's where we are right now in this market and that being all on one side or the other is a toss up. See you in the morning as we wrap up the week and the month; a month that has been particularly favorable to our portfolio. Starting next Monday, we must put all that aside and start again. Never get to rest on your laurels for long in this business. Have a great evening.

As we head towards the close, everything is pretty much the same. The markets have the work cut out for them to advance and the path of least resistance still looks to be down near term. Given enough time, that will change and we have to be mindful of that but for now we stay with the short term bias of a mixed portfolio keeping both sides of the table in play.

Although this market looks better today, let me remind you that the resistance on the NASDAQ should be rather formidable now in the 2050-2060 area and the up moves have all been on lackluster volume. I've done no covering of shorts as yet. They are all individual issues, not indexes and I will stop them out, if needed on individual merits. Same is true of adding to the shorts. We would do that if we feel the resistance levels will hold and the individual merits of the charts dictate such action.

Got an email asking about STZ, that issues that got clubbed yesterday and gapped down badly. It's dead money. I didn't take it out yesterday as we got no real bounce. Today it is climbing on decent volume so I'm trailing it with a stop. I'll let it run as far as it can but in the end, we lose on the deal. It's just a question of how much.

On days like these, I do my best to look elsewhere instead of at the market. A check in every 30 minutes or so is plenty to keep me from overtrading. It's not clear what's next, up or down very short term although my bias is down, so we steer clear of big bets either way and simply wait. Not the most exciting thing to do and thus, why I keep myself distracted on other items that need tending to.

The marekts made the push up and are now hanging around those levels. It's sit and wait for now to see if the NASDAQ can push higher. Lot's of resistance right ahead and no volume.

The chips stocks have turned green and that's an important first step to turn the market green, but as we all know, the chips are reasonably volatile, especially on spurts like this and the short covering can play out and turn right back down. I'm still keeping all options open and trying not to watch the daily ticks but to prepare. Picked up a little ANSR on it's foray south and have a couple bids out for other longs including ARIA and ARG if they want to come in some.

If the intention of the market is to lull everyone to sleep before it clamps down on one side or the other, it's doing a great job. We are back to low volume thrashing with red pretty much everywhere but the depth of red not that great. I'm going to take some time to flip through charts and set up more alarms as we wait for the next move.

I've been battling a head cold as well as the market this week and each time I believe I get the upper hand, one or the other deals me another blow. The market, unlike my head, is unclear here. The fact that it has been unable to build on the tentative support it has found suggests that last dagger down is near ... the one that makes a large portion of the folks to give up and set up a real bounce of a more lasting nature. My head on the other hand is quite clear in that it is stopped up and not getting better.

Yesterday we put on some short positions to cushion ourselves for whatever direction the market wishes to take. Again, we are playing both sides here partly because we are uncertain as to which direction the market will take. The notion is that the market will not continue to travel in one direction for a considerable period just yet and thus we can profit on the one side of the table then move some chips back to the other side. In choppy markets such a strategy performs when others fail. It's a rather simple idea that works reasonably well and allows you to continue working the market when it seems to make no sense. At some point we will need to take a side, but for now we play reasonably small portion of several stocks on both sides of the equation.

Today we got off to a bad start with missing alarms and a stock called down +7%. After a day long battle with positions that either couldn't or wouldn't turn green, we caught a little lift in stocks, booked a few gains and put on some short positions as we begin to reload for another push south.

The thought coming into today was that we would catch a bounce but more than that we thought that we would see a bounce with some emphasis, some volume. Instead we got a weak bounce with no real volume which seems to suggest that very few are willing to stick their toes in the water now. As a result, we took the bounce for what it was worth and pushed out most of those recent long adds, played around with a few trades intraday plays on the long side trying to catch a few bucks, and ended the day putting more short exposure on the books, a lot of it in technology.

What I have seen over the years is that when you get a move down like we have seen, a feeble bounce is many times met with more pressure as the shorts are emboldened to press their positions. My sense is that is what we are seeing here. Keep in mind our time frames are short right now and we are simply playing what the market is giving us. Although I cannot predict with reasonably accuracy what this market will look like come next week, my guess is that we have another push down in front of us before we can move appreciably higher. The fact that the NASDAQ has set lower lows and that 2037 or so on the NASDAQ on this bounce is likely tops near term, I'm willing to play it a bit looser on the short side and start positions today with the ideal that we build them if we continue higher.

I've a lot of work to do just to get back to where I was yesterday in terms of my many triggers. I'm signing off here early with that work requiring my attention. See you tomorrow.

This market feels like a well dressed woman with no place to go. Looks great but ...

I've continued a few more shorts into the close here. Nothing big but putting some more out.

Starting to add a few short positions on late strength in TER, MTCT, and ATML. Starting some positions we can average into if needed. This low volume rally may or may not have much more oomph so we start some positions on the other side of the ledger.

This idea of a short term bounce continues to try and work the markets higher here. I've worked in and out of some small trades on the long side like yesterday attempting to catch a bit of this bounce. Not a lot happening here and I've my eye to sell some shorts into strength if it continues. I will be averaging in though thinking that we sell strength ... what else?

If a rally is to develop here near term, it's likely to take the form of a quick short covering burst that will fade the next day or a few days later. If you believe this, then the objective is to sell short into that strength and to take any long profits on positions that you don't care to potentially ride back down. I know we are getting to the point where we are spliting hairs here, or so it seems, but I can't find a reason to stay long in most positions in this market and instead am looking to grind out performance in smaller chunks.

With the NASDAQ breaking to lower lows, we clearly have divergence in the major averages. We have an intermediate term trend that is lower in the NASDAQ. This is true of the Russell 2K as well. We still have intermediate term uptrends in both the SPX and the DJIA. Now the fact that we have had uptrends in all markets until recently, this suggests to me that the character of the market has changed and that the market is suggesting that at least over the next few weeks, that the bias is in fact down, not up ... for all domestic indexes. Now that doesn't mean we can't rally; in fact we most likely will at some point. That's why I've been probing for a bounce play. What it does mean though is that any rally is likely to be faded and that we have to use strength to scale out of longs and into shorts. That's my longer term focus, and here longer term means the next few weeks. Although I trade stocks on differing time scales, some very short, some a month or two or even longer. That's my thought process at this time and the thought process I'll be acting on as the market twists and turns.

This drift lower finds me stopping out of several of the adds from yesterday. I don't have much confidence in the bounce as bounces by their very nature require that we have very short term frames. The worst thing we can do is to change our trades and make them investments if they do what we want. It's important to know before hand what you are attempting to do in each of your trades and if they work as expected then you simply need to exit and wait for the next opportunity.

Again, there still seems to be a bounce in here somewhere and we will continue to probe for it as the market indicates. At the same time, we are not married to any position or time frame.

Here's my short list. Some are within reach today, others may take another day or two of higher prices and may or may not be met. I plan to put shorts back out into rising prices, but not overdue. I can't see putting too much on one side of the table or the other right now. For the near term, selling strength, buying weakness continues to be the trading mandate.

atml, ocpi, term, mrvc, oclr, intc, dcx, mat, bwa, utx, su, fjc, wrld, mtct, csco and of course the various indexes.

Some days are just a pain in the you know what. First the STZ debacle this morning. Still looking for an exit there. Now I find out that my alarms on my trader workstation have mostly disappeared. You see, I keep hundreds of alarms on stocks on both bid and ask so that I can notice when a paritcular stock starts to get interesting. That way I can jump on a situation early if it warrants action. This morning I wasn't getting many alarms and as I probed, I noticed that most are missing. I've used this tradestation for almost a year now and it's my best guest that I've probably exceeded some maximum that causes the system problems. This is the IB workstation in case you are interesting. After almost a year of use, they get my first gripe. Great system but every system has it's limitations I guess. So today looks like the pain of reconstructing my alarms.

The market is churning along here an still holding the gains although the volume is apathetic and I don't know how long the bounce will last. I've been building a list of short positions to enter. I'll share that with you on the next post.

The first peek at internals isn't that encouraging. Volume not building and about even on others. Doesn't mean we can't rally but it does tend to endorse the thought that this is a bounce and nothing more. Before we get set on that conclusion though, we give it a bit more time and see how the day plays out.

Right now, if you catch a quick 5% gain as we just did in AUDC, you take it and bank it. Will look to re-enter this name a bit later this morning on volatility if we can for another run.

The early look is positive. I'm sticking with these longs and we'll see if we can ride them up a bit now. Starting to pan around looking for the next set of short plays.

The last week or so has had us jumping to stay ahead of this market. Yesterday we pulled most short positions and transitioned long as the indexes reached the target short term support areas. This morning we are seeing a higher opening but will it hold? Will there be sufficient buying power to keep the numbers green?

The volume yesterday was interesting on the markets as the NASDAQ got volume expansion on a down day. The tell though, in my eyes, was that the NASDAQ looked to be putting a short term bottom in place as we closed higher than the opening even though we took out a lot of early stops. I like that kind of action for a short term bounce. I'll be keying on the SMH today to see if it can get some legs off the IM earnings last night.

One note on STZ. Disappointed earnings forecast last night. Stock set to open down 7 or 8 percent. I'll eat this loss and move on. Likely that the stock eventually trades higher but it's dead money for a good long while now and I don't need the negative vibes it creates. That's the cost of having positions.

Tough day as the markets see-sawed around. We kept our sights narrow and our time frames short in order to bang out some more gains. In these markets it gets more difficult, but the market always offers up opportunities and pitfalls and it's our job to find the opportunities and avoid the pitfalls.

We may be getting nothing more than a pause before a further decline or, if I'm correct, a little playable bounce that allows us to reload for the short side. Worst case, from my trading perspective currently, we could have already bottomed and are about to turn higher. In all these cases, if we continue to keep our time frames relatively short and buy stocks that offer opportunities on weakness (TS is a good example today) and sell stocks that are weak into strength, we should be able to deal with whatever the market throws our way. It's harder, but still profitable. See you tomorrow.

I like the general tone today. Think it sets up a continuation bounce tomorrow. Will be likely taking most of the added longs into tomorrow.

Since those targets look to have held, I've wandered back into JNPR and AUDC, took the small trading profits on the PMCS short and we are right back to where were earlier after booking a few small gains in between. Add that to the fact that we moved out of the way in case we were wrong and you have a reasonably successful trading move.

I know that not everyone, actually most readers of this site are not day traders. The point is to show that if you can read the charts, you can use the nuances of the market to protect yourself. This is true if you are swing trading or day trading.

DJIA and the SPX are reaching those target lows areas now that we outlined this morning. I'm watching carefully looking for the opportunity to try and play the bounce again.

Sometimes I, like you, get discouraged because the trade that we thought we had turns out not to be so rosy. This morning I pulled the rug on BCON. This stock has rewarded us steadily for some time but that $1.30 level was pretty key short term. So, you curse a bit and pull it. No need to second guess. Keep the losses small and put the money somewhere else where it will work.

The same is true for winning trades that haven't reached the goals you had in mind. I just took off JNPR and AUDC that we bought this morning for smaller gains than we had desired. With the DJIA fading pretty fast, why take the risk and hang around? I know the NASDAQ should bounce here and it did, but it's fading as a result of the DJIA now and although I still the playable bounce is in here somewhere, no need to let profits get away and let them turn into big or even small losses. Put the green away. You can always re-enter later if you change your mind.

Now all of the above depends on your time frame. For example, I've held the QQQs so far but just reshorted PMCS when the DJIA started to give way a bit. I'm thinking we average into more QQQs somewhere in here and by shorting PMCS we can easily offset the QQQs weakness if that develops further.

Whatever your plan, remember that with fees as small as they are you can move in and out for a very small cost. I've taken some heat/question on the message boards regarding this kind of activity, but if you have a plan and aren't simply churning, it makes a lot of sense even if it's counter-intuitive.

I've been hands off as we allow this market to try and gather it's footing. I've decided not to press anything to the upside but to allow the select purchases to work for us and to be more careful than usual. We have had a great run to start the year and the dumbest thing would be to make an outsized play and get burned.

As for this bounce, I like what I see. We got the early short covering, a retest that held and now the creep back higher. We could put together a good day or two here and reap a few more returns while we sell a few select issues short on strength again. Back and forth here is great for trading.

As the market stammers around after that short covering rally, we are faced with the decision of whether we are right or wrong to change our short term bias (read as a day or two). The thinking remains the same and I'm staying with the short term bias of a long trade for now. We are getting good performance out of the drug, financial and retail sectors and on the OTC, the SMH remains green. As long as these sectors can hold, we caught enough volume here early to suggest that a snapback rally can catch fire and hold. Note that I'm not dogmatic and will move to take quick and small profits/losses if need be, but we have to give it a chance to develop and, if the timing looks right, add to the index long at the intraday support levels using the lows as our out.

Well, we did catch the turn there. Now we have to be careful to guard these long positions we put on and to consider whether we can add to the QQQs for a trade as the day wears on. We can't always get such a nice setup and although we didn't quite get enough selling to let us take off all our shorts, we are down to three with exposure at about 6% of the portfolio. Good work.

Pulling the trigger on the first set of purchases on indexes here on the QQQs now on the break higher intraday.

We have the pickup in volume this morning, especially on the NASDAQ. I'm making a few buys. Added TS as well on the retrace to the trend line break.

I've started closing a few more short positions and made one purchase in JNPR. Looking at AVX, AUDC and RNDC. Slowly transitioning to more long here.

Rigth now I feel like the first line of defense standing our ground while the warriors race towards us with guns blazing .... wait ... wait ... wait ... NOW!

I'm still waiting as we need to time this well. Right went we get closer to the 1980 area on the NASDAQ.

In reflecting on the early morning writings below, don't get the impression that my negative bias to the market is waning. Still there. I'm just looking at the situation that's potentially presenting itself short term for a trade. The fact that the listed issues have not broken down significantly and that they themselves have support nearby (1130 or so on the SPX, 10525 on the DJIA) the odds of a decent bounce look pretty good. I'll look to book some more short profits and play a long bounce if the setup looks good.

After catching a good ride down the past few days, we have to consider the immediate action of a reaction, i.e., a bounce. Volume has been low and in order for a market to continue it's path, it needs volume. Sometimes that takes time develop and other times it simply doesn't. Without an expansion in volume, the assumption needs to be that the buyers are fewer and the normal number of sellers is consequently greater than the buyers and thus the price discount. This is different than when the volume expands on the way down which typically indicates that the sellers are more urgent to get rid of things. So far that has not been the case. That expansions leads to a cleansing and the cleansing a bounce as selling exhausts itself.

Since we are not in the exhaustion situation, we consider what may happen without urgency. In that case the market is likely fading as the interest in buying/selling is subdued. Something or some event can shake it up create a turn or even create urgency. It could be an exogenous event, or it could be a technical event. Technically, this market (the listed issues) have held well and the OTC issues, where we've seen the real damage, are nearing some serious support areas. Without further news to rock the market, a bounce is quite possible from the support levels. We took profits into yesterday's malaise as we neared those support levels. Today we will concentrate on doing the same and trying to play a bounce in the indexes from those levels. A quick trade if you will.

Futures are lagging a bit which is what we thought could happen. Some early pressure could set up the bounce scenario.

Even though the listed issues still stand proud and tall, the NASDAQ is humped over and being beaten daily. In fact, it's come full circle, back to where it began the year. Everyone was looking for a bounce of 2K today. I'm thinking we may see some fast selling on improved volume if we can trade down to the 1980 or so level. I'll be looking for this in the morning and will look to take the other side for a short term trade if we get that kind of action.

Now that we have a lower low on the NASDAQ, the question is will the listed issues fall in line at some point. I do believe so, but so far that's not happening. We played the resistance levels reasonably well on the NASDAQ as written about a couple weekends ago. Now we have to consider what's next and develop another thesis to follow and trade. That will be task over the remainder of this week. The short term thesis is stated above. That's ok for a quick play, but we need something a bit longer to position for.

I'll be working on that for my own trading and for those whoose money I manage in the coming days. As always, I'll share those thoughts here with you as they develop. Have a great evening.

In trying to position for tomorrow, we have a good shot at some early follow through weakness given today and this ugly close. I'm going to see if that develops in the morning and try a bounce play on some QQQs then. Will re-evaluate any other short positions to potentially take further gains and look to reshort higher. We now have a lower low on the NASDAQ. This is significant in my book as it is the first time in a very long time that the intermediate term trend is negative. Need to respect that. The fly in the ointment is that the listed issues continue to hold so well. It would be easier if they all stunk rather than just the NAS. Keeping us on our toes.

I have also started a few buys here, in particular on ACXM and BN. Nice charts with pullbacks to support areas.

Although we didn't get the fast selling on increasing volume I was looking for in order to trim and add the QQQs for a trade, I am trimming regardless and booking profits into these levels.

If we get a break of 2K and fast selling into the 1980 area, I'll probably cover a bit more and do some longs on the QQQs for a trade.

There are always things for you to work on as you grow in the art of trading. One thing I've not talked about much but which deserves some air time is that of changing to trade what the market is rewarding as the market changes the way it rewards. A good example right now is that breakouts simply aren't working anymore where they were the trade de jour a few weeks back. Look at the the two buys made today; PNX and STZ. PNX is a breakout play and we bought that break out for a starter position. In the hole now. STZ was a retrace to support. Buying that retrace is in the green. It's early on these stocks and both will probably work, but the market is rewarding retraces to good support on good charts. It's not rewarding a momentum run on a breakout stock. Breakouts are being sold, not bought. These subtle changes can make a lot of difference in whether you make or lose money in the markets.

Talking about the market, it's still going nowhere fast. Volume still anemic and breadth rather pathetic. We haven't been able to bump higher and we may indeed be setting up for some ugly action into the close courtesy of the NASDAQ. I've made my moves for now and am waiting. I can live with it either way from here as we slowly build our bank account.

The NASDAQ is flirting with an even more serious breakdown as it hangs around the lows of the day. Having already set a new low for this move, to get the convincing move in the markets, a closing low in this area is needed. I've been taking off some of these short positions and banking the profits as I'm expecting that an attempt to rally from here will come about today or tomorrow. I'm not certain of that bounce though and am leaving plenty short in case it disappoints. If we had a bit more volume today, I wouldn't even be covering anything at this point.

At the same time, I'm thinking that any rally just gives us the ability to reload. I'm quite pessimistic near term and am trying to make some hay while the market is struggling. Note that the pressure so far still remains the NASDAQ mainly and the bleed over to the listed issues still remains small. That can change, but so far it's a one market anchor.

I've taken some partial profits into this 2010 area. We are down a good clip today and 2K is right below. Actually, 1980 looks more like the real support area on that index.

Nevertheless, just trimming on gains from today and looking to put them out higher again. I also am keeping my eye out for buying opportunities such as STZ which is in a good sector for now and shows a good chart but has been coming in hard.

Starting to look as if we could test the 2K area on the NASDAQ soon. Carefully monitoring and staying quite short still as the traction south begins to build. Just missed a short on TER which was breaking a trend line. Looking for a bounce there but probably won't get enough to bother with it. Did catch a short on ATML on the same idea a bit ago.

Last Friday we, along with the market, got too comfortable with the downtrend and as we neared support, we saw a nice pop develop. This morning we have set slightly lower lows than last Friday and we see the same sort of situation developing ... or do we? It's hard to read the market for what it is, not what you want it to be. I've been working hard this morning to do just that. I see the SMH begging for relief and the BBH not supporting this morning. That was different on Friday. What we do have supporting today is the financials ... at least slightly so far.

I've been working down my list of positions and making notes as to where I cover the shorts if we start another one of those breaks higher. I'm quite skeptical that we will, but am doing my best to be prepared in case.

Looking at the markets at this moment, we are seeing further deteriation in the internals but there is no volume. The lack of volume is usually lack of conviction. What it means here is that the longs are content to hold them while the shorts are wary to press them. That will change if we see a breakdown or a breakup. I'd rather have seen more volume on that first push down.

I'm incrementally adding to shorts positions this morning having up'ed that percentage to roughly 43% of the portfolio. Did add on long in PNX although buying breakouts here is a tough road. Just took a starter position there. The fact that the bullish forces couldn't do much with this positive news makes it look like a continuation of woes for the bulls. Keep watching the lows on the NASDAQ. A break could let the flood waters loose.

I started some additional shorts in individual names this morning that were listed on the boards. We've added LEN, MIPS, ILMN to our short list and are trying to do the same with HGT. The SMH is diving early and I can only remember our bad moves on Friday that have left us without the bulk of our shorts this morning. Live and learn as home runs are not the typical way you win ball games or make money.

Oh, if only it was as simple as counting the chips ... but it never is. As I took a long look at the graphs this weekend, it appears to me that we more likely that we get a breakdown in the NASDAQ instead of a breakup in the NYSE SPX. But that's what appears. It doesn't have to be that way. If the SPX can move back over 1155 or so and poke for new highs and if the NASDAQ doesn't breakdown within the next couple days, then the market might argue that we got a higher on the NASDAQ and a higher high on the NYSE issues really isn't that far away. On the flip side, if the NASDAQ does crack the lower end of this range and makes a lower low, then talk will quickly turned to a market that has topped. Which will it be?

There are a lot of pointers to a lower market. The time frames, the internals, the divergence, the inability to recycle good news higher. Although I still am of the mind frame that we head lower, I am respectful of how this market can chew up short positions. I've seen it; make that experienced it; many times.

So, the plan this week is to short into strength which is what we are looking at this morning and to attempt to keep time frames shorter until we get a decisive break up or down. Just chip away and put the gains away while they are offered, leaving some longs in select stocks/sectors on the tables, and the same with shorts. We will use our cash to dart in and out of positions as they provide the opportunities. I'm not willing to make the all of nothing bet either way. Doesn't make a lot of sense to take that stand.

Days like today's are some of the most frustrating. No we didn't lose anything ... unless you count what we almost had. Of the two plus years of commenting on this site, I can't remember more than a handful of times where we have gambled for a home run. It's just not something that is likely to happen. Although not as hard as hitting the lottery, it's certainly more rare than uncorking a special wine for your evening pleasure. But the swing for fences shot can certainly leave a bad taste in your mouth ... kind of like dropping the bottle once you have had that first taste!

Today we met with frustration on a personal note as the market had a good setup but we misread the strength of support as the NASDAQ neared it's recent lows. It's not something we should have taken so lightly. It was the first trip back down afterall. Timing is the spice of life though and a prerequisite to making money in the markets ... especially if you are shorting. Our timing and expectation of a bounce was way off today. It costs us potential profits.

Rather than lament further let's consider what's too come. With earnings pretty much behind us, eco news will be the primary driver. There's none of that until Tuesday and the docket is pretty light to begin with. So the market will have to make do with the news it has for the most part. Technically we have a weak market staring at us. It's hasn't broken down yet, but it's poised. So, you have to continue to be quite careful of anything on the long side, and we have to look to generally short into strength if it arrives.

I'm taking off a bit early so this is the wrap up. Have a great weekend and see you next week.

What a day, I'm beat and there's over an hour to go. Stepping back and trying to get a sense of the bigger picture, that series bounce back up came off good support levels and simply looks as if, when the market didn't break lower, the opportunity to run it higher and the get the shorts to covering was a greater opportunity than a risk.

I do not believe that this changes the technical picture for the coming week or two. I'm fairly convinced that we have a better than even chance of trading lower, not higher in the coming weeks. I'm also reasonably convinced that we have a better than even chance of taking out the 2K area on the NASDAQ. It's just a question of when and from what levels.

For my part, I'll look to short any strength into the close if it's reasonably significant. The shorts were put on the run and I'm wondering now whether that was all the bullish forces have to offer or if they are going to push further. Naturally I want a further push at this point having taken off the bulk of my short positions. Let's see. If we get what we want, we will add some additional short exposure. If not, then I'll write this day off, look the charts over for the weekend and sit on a lot of cash. No need to compound a day where we let good profits slip away yet we made money, turn into a day where we lose. We simply misjudged the strength of the move. It happens.

Rightly or wrongly, I've booked all the index gains at this point. I'm leaving the individual shorts (outside of INTC) in play, but with the market going green here, I'm waving the white flag and booking the gains rather than running the risk of losing them.

Most of this month as we built gains, we did so by booking the gains on either strength or weakness and then turning around and buying/selling in the opposite mode. Today we set aside that practice and was looking for the home run. As you know, the home run by it's very nature is not easy to hit and many times you strike out instead. Today was a good example of that as we didn't book nearly the gains that we once held in our hands today.

As I said to start this day, if we knew what the end of the game looked like, we could play it perfectly. Naturally that isn't the case so it comes down to what are you willing to risk. In this case we risk the houses money and ended up giving the bulk of it back. Next time!

Well, so much for the home run on that pitch. That's the problem with greed. Most of the time you strike out. We intend to continue to carry the PMCS short but are stopping out if needed on INTC, some SMH and potential the SPY to book gains if this market can go green again.

We have talked before about conviction turning into stubborness. It's a fine line as many lines are. I'm holding to my conviction despite this rally that's developed over the last hour. I'm not mindless in this convition and will pull out if needed, but I'm looking for a triple or a home run here ... something I don't do very often. When you are hitting for the fences, hopefully you have judged the pitcher correctly and you know what the next pitch looks like. That's my thinking and although I'm monitoring, I still holding quite short.

Note that a lower low on the NASDAQ is quite significant should it occur. This would be the first time in over a year that that has occurred.

The intraday low of the NASDAQ a couple weeks back was 2012.79. With the NASDAQ heading lower, expect a bounce from that area but don't expect it to hold. I won't even try to play it most likely. At 2023 currently, we will probe there before the day is out I'm sure. I expect that we actually will press against the 2K mark instead ... and it could be today!

Things are starting to happen pretty quickly here now. That 1140 area on the SPX is a fairly important short term support area. If that falls, it could get ugly for a while as stops are taken out.

There are some question on when to re-enter the metals market. Uh ... not yet is all I can say. I had some targets for the pullback which are already being achieved, but I'm not ready to do anything. That choppy toppy action that led me to state that we should stand aside, leads me to believe that we may be getting a more serious correction than expected in those markets as well. I'm standing aside and simply waiting for an entry point .... an it isn't here.

Intraday we have now achieved what we were after. Now the question is how do you play the good fortune. As INTC heads towards it's earlier lows, you can either cherry pick a good price or trail. The method you choose is based upon the level of greed you possess along with your conviction on direction for the day or for the swing trade if you are playing it from that perspective. Trailing it speaks to conviction of direction as well as a desire to capture greater profits. Cherry picking a certain price is to capture what you can at the moment but says your now as sure if the short term trend will continue.

I look back at that earlier statement I threw out that the fear of holding longs over the weekend is probably greater than that of taking profits on short positions. If the U.S. had raised the terror alert, it would be different in that it would be old hand. The fact that Japan has done it has greater merit. Hard to dismiss the first or even second time it happens.

I've been analyzing the intraday charts of all our shorts and am leaning to trailing. I like what I see, I've been pressing today and intend to press further on the day. I'll look to cherry pick at the end on partials. That's the current plan.

As I sit here trying to decide how the day will play out, I'm more convinced that the fear of holding over the weekend will be greater than the desire to take profits on the part of short holders. I say this primarily because you have Japan raising their terror alert which is something new and new things attract attention. May or may not play out, but something to consider as you position during the day.

Market has started to flatline a bit here. The INTC tell is suggesting that this market may be able to hold here today and that's a bit frustrating. I'm not ready to pack it in yet for a break today, but we need a lower intraday low to get things going again. Right now they are clawing higher and that concerns me for the added shorts we put on for a trade. May have to eat some of them if we rise too much. That's the risk when you press.

There's no mistake now, we are getting some of that melt we have positioned for. What I don't see though is a real push in volume. That tells me that there is still complacency by holders and they aren't dumping them yet. That makes me comfortable to stay short here and look for an opportunity to push those shorts a bit more.

I'm not even looking at long positions yet. I took off most of POOL when it violated the $33 region and booked those gains. That leaves us pretty much with just some Pharma longs of any size. That's comfortable here.

Whether it comes later today or over the next week or so, we need to see some real fear sweep this market before we give up on the short side. We need some volume expansion. Not even close yet from what I can see. Note that this doesn't mean that we can't see a bounce along the way ... it's just that we are setting up the best chance in a long while for some real weakness ... some of that gut wrenching type weakness that makes you want to puke up your positions.

I've not pulled the trigger on more shorts as I've had to stick that sticky note back on my terminal about greed. We can make good money here if we manage our emotions as much as our portfolio.

Volume is a bit heavier today, partly due to options expiry, but also do to some increasing fear it appears. Nothing major yet though. INTC has broken major support and I'm using that as a proxy again for the market. We need a lower high here and then a little whoosh to shake things up. Let's see if it happens.

I'm starting to press here on this little bounce. Incrementally shorting more INTC and PMCS

Still holding off here on pressing. We are getting the breakdown early as expected. I'm looking to press on INTC and PMCS if the opportunity presents itself. Othewise we ride these shorts on the books lower.

A flatish opening shaping up. CPI numbers a bit higher than expected. I'm looking for a quick breakdown. If it doesn't happen, I'll likely cover a bit of the shorts and look to put them back out higher.

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