The Daily Dose of Trading Comments

The same pattern followed through again today. First the move higher, then the pullback, then the continuation. This certainly is the most favorable pattern on these expected Fed announcements at least.

I bought some stocks as a result although I did start a couple short positions as well. As I've said all along, a burst higher here seems to be the perfect setup for a nice pullback. When and where that pullback sets in remains to be seen, but now's the time to consider playing both sides again ... thus the starter positions.

We saw a some volume increase and a nice break higher on the $SOX which has been a worry wart for a while now. I watch/trade the SMH and it has yet to confirm the $SOX though so not quite there. The BBH also gave a nice accounting.

On the high/lows list today, there were a huge number of new lows on both the NYSE and the NASDAQ. I've looked around and it appears the numbers are real. Strange though all day and especially at the ending. We'll see if it changes tomorrow.

With the NDX making a nice peek above it's resistance point as is the NASDAQ, they both have bumped up against another the last resistance line before the highs of early in the year. That suggests that we may turn as early as Friday, or we may extend a bit more into next week before the turn. We are already seeing the SPX struggling to move higher although the financials trading up nicely on the Fed move.

So, short term, it will be tough to get much more of a run. I plan to short a little into more strength this week and early next if that continues for a trade. Will look to buy a bit more on a pullback for what may be one more run higher but again although it's too early to tell yet. I'd rather wait to see how we handle the pullback ... is it more sideways than down or more down than sideways in a short space of time?

The knee-jerk was higher then back. Now what will it settle out to be? I'm looking to make a small couple of entry shorts if we can get a little euphoria. Nothing big but something on the other side of the books if the conditions look right.

Markets are just drifting around in front of the Fed news. If you intend to play the news, recognize that there usually seems to be a knee-jerk, followed by a counter move and then by the real move ... often in the direction of original one. I don't care to game this action and instead wait to see how it plays out. Keeping the books small and lean going into this set of news.

Quite choppy trading in front of the Fed. PMI was weak and that didn't help the bulls case. I don't think much can happen in front of the Fed. I've added a couple longs in ABMD and ADP with tight stops on the latter. Traded LGF weakness early for a few dollars. I'm on the road so will check back in later.

Yesterday we saw the tech issues inch up to their downtrend line in an apparent attempt to break higher once again. On the flip side, I notice that the financials have broken below the support points I outline previously. Look at the RKH as it now sits below 130 now. XLF also was weak. Both are holding their 50 day MA but it's getting dicey over there.

The more speculative stuff continues to jump though as the traders are pressing for a breakout. Witness the IWM pressing nicely higher once again along with the chips.

The problem we are faced with is that we continue to have mixed signals. We have the decay in time which makes the advance labored. We have one more event today that is widely anticipated to be a no-brainer and we haven't advanced strongly in front of it. The knee-jerk could likely be a bump up. Problem is, the employment number is due in a couple more days and then earnings follow that. The last earnings season went unrewarded. Will this one also? Are the companies going to guide higher and will the comps look as good going forward? Comps definitely are going to be harder to beat going forward.

All in all, I'm still looking to put a little short exposure on somewhere but am still waiting. The longer we get into this labored move, the better possibilities. A euphoric move at the end would be a nice setup ... as long as it doesn't go too far. I've said all along that the best way to end the leg higher would be with the entry of new money that gets sucked in just in time to be dead money. Whatever I do and whenever I do it, it likely will be slowly, in increments and without carrying tremendous risk as this market continues to be a battle royal.

Got in really late today and after looking over the days work, we have a nice setup for tommorrow. The SOX was able to pull higher and consolidate right at the downtrend line today. The same pattern on the BBH but more negative. These are the two charts I keep watching to confirm a breakout that could have more staying power. Not that I would want to chase it here, but certainly wouldn't want to fight it either.

Tomorrow we get the Fed action. The decision point is nearing. It's up to you how much exposure you keep here. The risks are high though so be quick and decisive when it's time if exposure is high.

Just stepped out of the casino to come out and check on the market. Heck, the casion is a lot more exciting than the dull trading I see here. With a couple hours to go, it's pretty much the same as it was a couple hours earlier. I'm doing better at the blackjack table than trading today ... that's for sure.

Seriously, not a lot can happen in front of the Fed. That's probably why the big gains yesterday faded as well. I'm staying out of most stocks and out of trouble in front of the news. I continue to believe that the market had it's best chance through yesterday to get a move of substance underway in the near term and that we are going to be fighting resistance in the form of time now for a while as we are overbought technically in terms of time.

I'm heading back to the tables for now. Check in towards the close ... unless the hands are too good.

Unfortunately, I was stoppped out on a tight stop in INTC for not much gain. Also stopped out early in SLB and now it's rocking back. Not a good start to the day for me, but for the markets, another story. SOX making a run back at that downtrend line. The weakness in the SOX and the BBH have been the main hindrance in my mind to buying the move higher wholesale. So, here's a try again in front of the Fed meeting. Will they get the push need to cause a short squeeze higher. Don't know and now have no skin in the game. I don't see big volume though, I know it's likely late in this latest move up and now that we have pulled most of our long exposure, I'm not going to be putting back on here with this type of strength. Let's see if they can break them higher and if so, we can consider the pullback later to add. If not, then we will be happy for our actions to date.

I've taken some exposure in INTC on the long side for a trade. Like the risk/reward here. Close stop.

General market acting well. Two black spots are retail and banking both of which are flashing warnings signs. Chips and biotech helping NAS finally in concert. Volume light though and I suspect that the chance for a big run has likely passed for now. Staying cautious.

Just looking over the charts before the day starts here and those numbers I published on Sunday are still in focus. Explains a lot about my cautiousness here. We've not violated any but are just hanging on in several of them with reversals yesterday. Here they are again:

RKH - 130
XLF - 28.3
SMH - bullish break above 39 - bearish below 35.7
SOX - more clear lines here - bullish above 490, bearish below 450. This one is the key for the NASDAQ
SPX - 1132 - A slip further here and we have a real red flag
DJIA - 10300 - Shouldn't trade below this. Another red flag if so but the SPX will likely warn us first
NASDAQ - 2K is the key area. NAS has become the strong member of the group now. Looks like the speculative money moving in here again ... at least for now.

There are a lot of data points to be had in the next week or so of trading. The Fed Reserve tips it's hand first and gives not only the first official raise in rates but an indication of what it's thinking on future rate increases. That could be a big event. The reaction will likely be bullish if 25 basis points and no rush to raise is forecast ... at least at first. Later the doubts no doubt will set in again.

Then there's the employment report on Friday. It's still in that mode where too big or too small is a problem. With warnings from Walmart and GM yesterday, there's some doubt about retail sales again. If we get a bad report, there will be doubt over the economy in general. If we get a robust report, then the interest rate doubts start again.

Then next week, we get earnings. It's already known that they will be really good again as there was little in the way of warnings overall. But is it priced in? I honestly don't know that it is or isn't. We will have to see if they sell or buy the news. YHOO, DNA, and AA kick it off next Wednesday. Lots of data, little time.

Yesterday, I took a lot of risk off the table. We had some decent gains and I started booking partials before the market turned. When it began turning I got more agressive in booking. Ended the day with not a lot on the sheets again. You can always buy them back is the way I look at it. Doesn't cost a whole lot.

In fact, there are some stocks that I indeed want to buy back ... already. We will see how some of these data points work out and will see how the stocks trade and make our decisions. I'm still bullish here although I am starting to look at some short positions as a trade. An example would be shorting ASKJ going into YHOO's earnings.

This was the first full trading day since we started this road trip. The weakness off that early strength caused me to continue to pare long positions and we end the day very light. I don't have a good feeling about the ability of the market to move much higher from here. I know there are arguments on both sides, but I've banked my gains and taking most of the risk off the table. I'll be on the lookout for the next move that we can participate in, but for now, it could be that we got shook out of some good longs or it could be the start of something more ominous. Either way, I'm off to the beach and will enjoy the rest of the evening.

This action has to be viewed as a major disappointment. Whether it stops this leg up completely or ends up being just a set back, I can't see much good in such a give up. I've continued to pare positions and am down to around 20% long or so. Have not taken outright short positions.

Market fading fast. I've sold off some more.

I'm booking a bit more here into the strength that persist. Staying bullish but cautious.

Although I'm wary here of what could happen, I've not really dipped my long side that much. I have made a lot of transactions today as I've booked some gains (partials) (sorry that the boards are not updated yet. I'll fix the problem soon) and have added some additional exposure. Added EGOV, MIMS, SLB and ZRAN the latter of which I was stopped out on earlier for a loss.

Booked partials in most stocks.

My net long is about 100K and we started the day at 113K so not much of a decline there as the adds make up for the bookings.

I don't like the behavior of the SMH/SOX and without that giving the all clear sign, I stay defensive. SOX butted up against the downtrend line and turned red as a result. If it can break higher, I'll look to get longer again for another round of trades mostly in the tech. May just take that index position or INTC which has a good risk/reward.

So, for now, staying long but booking partials on extended charts.

I began taking partials out this morning ... profits and losses as well. I just can't get over the SMH not wanting to participate and the fact that the breadth is coming in not expanding. There's some good momentum developing and that's why the partials, but it's time to book some as well lest it slip away.

A long time reader pointed out in some email to me last week about a possible break higher in the airlines. This morning it's taking place. Take a look at CAL (which he was real high on) and JBLU. I'm bidding on some of these if they come in a bit for a nice trade possibility now that they are gaining some momentum.

Although the indexes are holding their opening gaps, the BBH and SMH are playing around with red this morning which, of course, makes me nervous. I did add some issues and was stopped out of one. I'm looking to book gains in here somewhere and if the SMH can't lift this morning, I'm likely to do some of that sooner rather than later.

Here's a few more long possibilities before the bell. EGOV, MIMS, LUX, ADP. Of course, there are possible adds to existing positions on pullbacks.

I do not want to aggressively add on early strength. We've a Fed meeting and then unemployment numbers end of week and we are heading into 4th of July weekend which may entice more violence as well. If we make some trades, they likely will be offset by profit taking elsewhere as the week unfolds. Although I want to give the market a chance to break higher, a move into the last resistance areas (highs this year) will invite heavier selling. We are also approaching an overbought reading again from what I can see which makes upward moves more labored.

I awake this morning to see that the transfer of power in Iraq happens early and the futures are rocking as a result. Nothing like a surprise for the Street. It causes the well laid plans to become, well, unlaid for the lack of a better well. The market is a market of expectations and when the expectations turn out to be different, there's a shock to the system ... sometimes big, sometimes small, but almost always a shock of some size.

Monday morning rocket shots are usually not my cup of tea as I always wonder if they can stick. Friday we ticked right back down to the breakout point on the SPX. The NAS held up better though and was reluctant to give up it's gains. We saw volume better than recent averages last week and especially on the up days. Lots of tell tale signs that something was afoot.

Friday I sold a little and booked some gains although we continue to hold the meat of our positions. Today we looked to sky early. Do we book some into the opening buying frenzy? Given where we are, it sure looks like a test of 1160 in the cards on the SPX. As a result, I'll only book gains if we get abnormal pushes in given stocks, and then, only partials. Still a bit early to give up on the breakout thesis potential.

On the flip side, I've been browsing through some charts this morning looking for add ideas. So far I see ZRAN as a nice setup, SJH, SLB, and potentially ZQK if it comes in a bit. Will keep looking and will post new ideas here in a bit.

ACe Talking......Life beyond 1160;

It has never been a consideration with me, but it may be time to start thinking of life beyond that 50% retracement on the SPX. It does look like the market is setting up for a dash towards greater levels, and it may be earnings that are the key driver. I noted the strong revisions from companies like NKE, FDX, MAS, GS and ASD last week, all leaders in their particular field. Also note the performance of the TRAN index, which has broken above the 2001 and 2003 highs, and has the all-time high in 1999 within its sight. Short-term, it is overbought, but it is through a nice downtrend drawn from that 1999 high touching the 2004 high. This index is often taken as a lead for the DOW, and if I draw a trendline from the all-time high at 11,750 in early 2000, touching the 2001 and 2004 highs, we get the 10,650-700 area where the line crosses. Beyond that and we're staring at the 2000 high.

The late drop on Friday did little technical damage from what I can see, and was a result of the rebalancing in the Russell, and I expect they will come in on Monday and buy back stocks like GE. Of course, we have the big day ahead on Weds, but having bought the market ahead of that event, maybe it will pass without much action. We have to look beyond it, and I am seeing another set of earnings beating concensus. With the market having moved sideways for the last 5 years, there are some out there seeing it cheap, and that could pull some cash back in.

Beyond the next month or 3, I smell trouble ahead. China is beginning to cause concern, as there are moves afoot to pull growth down from the 13% rate to around 7 or 8%. Note the collapse in the Baltic Freight Index, which measures shipping rates. The surge in this index from 2200 in August 2003 to 5500 by Feb 2004 was a sign of the huge demand from China, buying commodities to feed their investment boom. In the last 4 months, this index has fallen to 2740, a 50% drop. It is telling us something, and although the Japanese, Koreans and Taiwanese should be more concerned, it has repercussions for Europe and America. Globally, rates are rising, and growth will slow, as the GDP numbers last week suggested. If the real engine of growth is also slowing, then you have headwinds into 2005 and 2006 beyond the lack of tax cuts and mortgage refinancing in the U.S. For the moment, I would be concerned at some of the shares that have been boosted by this Chinese boom, like steel companies.

You may question that China has been the real engine of growth, but it has overtaken America as the biggest export market for Japan, and the huge deficit being run in the U.S. is being fed by the Chinese and Japanese surpluses. Tell me where you think shares will be if 10 year yields head substantially higher. The Japanese could only get 0.5% yields on their 10-year bonds, so they had to buy better yields, like US T's. Now, Japanese bonds yield 1.83%, and they offer an alternative. In other words, life is beginning to change in the investment world. I can smell it. Shares are starting to get less attractive. That means that they will get cheaper. As earnings continue to run higher, and shares move sideways, that will be the method of cheapening. But soon, the earnings boom will be over, and those headwinds will feel like a gale. The hurricane comes later.

I also remain hugely skeptical of the quality of this little boom in the U.S. economy. It is built on sand. The US economy grew by $487 bn in 2000 backed by an increase in debt of $1.4 trillion. By 2003, GDP growth of $505 bn required an explosion in credit of $2.7 trillion. It just doesn't add up to me. How can you run an economy like this? Madness, and it will all end in tears. Not mine, as I will be short, and I hope the readers of this site won't suffer. But the rest of your country? It may be too late to save them.

But not yet. Consumer wealth has just hit record highs at $45 trillion, beating the $44 trillion of 1999 (it fell to $38 trill in 2002). This can provide enough energy for the stock market and economy to move forward for a quarter or 3. This little boom still has some energy.

So I look at the next few weeks as a little less certain for me. Getting short at 1150 and walking away isn't the game I'm afraid. The market asks for a little more attention, at least for the next month. But as I look at my Nikkei chart in that first bull run after the bubble burst (1993-4), I see that we did revisit the rally high 4 months after the first attempt, and even closed marginally above it. The SPX chart could follow that pattern, so maybe there isn't life beyond 1160 after all.

Let's find out from the market, as tossing a coin is not the answer.
ACe

Well, we are heading down the coast, not up as we need some sand and warmer waters. I'm staring at the charts this morning and am noting key levels on key indexes to watch next week. I'll share them here.

RKH - 130
XLF - 28.3
SMH - bullish break above 39 - bearish below 35.7
SOX - more clear lines here - bullish above 490, bearish below 450. This one is the key for the NASDAQ
SPX - 1132 - A slip further here and we have a real red flag
DJIA - 10300 - Shouldn't trade below this. Another red flag if so but the SPX will likely warn us first
NASDAQ - 2K is the key area. NAS has become the strong member of the group now. Looks like the speculative money moving in here again ... at least for now.

Today I made the pilgrimage to Wall and Broadway ... to that hallowed ground called the NYSE. Of course you can only view it from the outside anymore thanks to all the terrorism worries but to trade a few shares from just outside the NYSE on my laptop while I gazed at the columns was an experience ... at least for me.

Also made the trek up to the NASDAQ light display and the Broadway district. That Manhattan is all it's cranked up to be and a bit more. I've not seen that much city in this lifetime. Quite a spectacle to be had.

As for the trading today, it to was a bit of a spectacle as the early gains did not hold and we got a late day sell burst that took us right to the breakout levels of the down trend line. I'll be quite honest in that I don't like the looks of the trades on the NYSE today ... especially the close. And what's with this volume. I know there was the rebalancing of the Russell. Was that the reason for this big lift in volume? Unfortunately, I did not take snapshots of the volume through the day as is my normal practices as I was tooling about the streets of Manhattan instead. I've looked at what data I have and from what data I can gather from reading sites, as best I can and it appears that volume picked up rather significantly late in the day, not all day which suggests that indeed the rebalancing had a lot to do with the volume surge.

Now I don't want to make exceptions and won't in this case because we can except everything away if we start down that path, but it's something to remember and consider when we see what kind of volume we get on Monday and when we see how prices swing come that day.

In a nutshell, I am disappointed by the action and will do some serious study of the charts this weekend to consider what course of action we pursue from here. I did take some small profits today but nothing big. Caught a real nice move on CYBE intraday and booked that one. We have made some decent gains and after a 3 month drought, we certainly don't want to relinquish them. On the flip side, if this trend line break holds, there are more gains to be had so we don't want to be too quick with the trigger.

Lastly, one other item I watch is how many stocks show up on a scan I run that gives me a broad measure of momentum in the markets. When the markets are starting to gain some good momentum, I see a number of 400 or better. The last two days have produced just that. Today it shows over 800. Again, there's all kinds of strange data here at the close. I'll have to sort it out over the weekend. Have a great one. I'll be heading either up or down the East coast next. Haven't decided if it's Boston or DC next as I've have to huddle with the troops here and make a decision. I'll likely put a note out sometime on Sunday evening as to what I'm thinking.

We are getting the move higher here after a day of rest yesterday. It needs to hold. I'm watching carefully. Was stopped out of a couple things. So it goes. I'm nervous as usual in these cases where I'm extended in one direction but the market is behaving as wanted so we wait it out.

Last night I spent the evening, or what remained of it when I got back to work, flipping through existing positions; putting stops in place; tightening up the stop out areas; segregating positions I would want to hold and hedge against from those I would dump immediately; etc. Just preparing. The market is at a critical juncture here having just broken the downtrend line. If it is a true break, then the support at the line now has to hold. If it's a false breakout, then a close back below that trend line signals trouble.

That doesn't mean we have to break and run higher today although that would be preferable. It does mean that we need to close where we are or slightly lower at worse. If that's not the landscape come the end of the day, I'll likely lighten up.

I bid on some silver a couple days back. Pulled the bid though as I was rather uncertain. It was a good risk/reward but I didn't take the bite. Yesterday it was up huge. If it makes the higher high here, we have to consider trying to ride a bit of it as well. Take a look at PAAS.

Long time readers are familiar with this tune ... the tune I repeat over and over that says there are 3 or 4 times a year when you have to make your money. All in all, the market will present maybe 6 or 7 chances in a years to make some good money. It will fool you another 2 or 3 times with setups that fail. You have to catch those 3 or 4 moves and dog paddle the rest of the time not giving back what you have gained. I knwo this sounds kind of boring, but really if you make your money and as much of it as you can when the setups arrive, you can make some good change in the market ... if you don't give it all back on the in between.

We have one of those setups now where we can make some money. I've been pressing rather long for a while now thinking that the thesis could play out. Sure, it could still fail as well and we have to be on guard for that ... nothings for sure. But we do have a situation where we could get a quick squeeze higher that forces big money participation and if that occurs, there's a good chunk of change to be handed out to the participants. The down trend line was broken. Volume preceded and has continued to build as a result. We should see good support at the break point which is more or less what we saw today. Tomorrow will be interesting because it's in front of the weekend. Will the bears fill the pressure to cover in front of the two day respite as they definitely are in pinch here if this thing boomerangs higher, or will the bulls pull in their horns and try to wait for a Monday entry? If nothing goes terribly wrong this weekend, won't we see one of those gap ups on Monday. Again, we will play it like we see it. We are pressing here early and may press a bit more if things really get swing higher next week. Hopefully it's time to make some pennies again.

Just checking in here and market acting extremely well. I've added a bit more in SCMR and added to ABMD. A few more orders in that may or may not fill. Volume heavy today comparative and breadth good. This is starting to look like a trend line break that has a bit farther to go before pulling back to the trend line. It feels good to see a move of substance once again.

We have reasonably significant volume pick up this morning, good breadth but mixed headline numbers. I've nibbled on a few more names adding to some and picking up a couple new ones in GI, RSCR and AKS although I dropped the latter and am trying to pick it up even cheaper given the way it's acting.

I don't want to add much here, just a little on weakness mostly in stocks that were breaking out. PXR is an example of an existing name I've added to on the breakout.

The desire is to sell into this enthusiasm as it occurs and book some gains finally. It's been a long time since I've even mentioned that word and it's too soon to assume it so we stay on our toes and manage these positions carefully at this juncture.

The communications stocks where, as a group, the highest of flyers yesterday. A number of them are on my list to try and trade over the coming days. They are picking right back up and heading higher this morning. It's as if they were just discovered. Some serious momentum there.

Market starting a bit weaker but I would expect it to get stronger in short order. I've about 10 orders in to buy. Let's see if any of them hits.

With the closes yesterday in breakout territory, an attack on the old highs of this year look to be next. Will we zoom there or grind higher?

There's two views of course. The view that the weekend is upon us and the violence we are seeing in Iraq is likely to get worse over the weekend as we head to the end of month handover suggests caution still. That could be the biggest drag near term ... continued weekend worries.

The second view is that we have become numb to all this killing over there and unless something happens here we are pretty much in the ignore more now. Of course the breakout suggests follow through by end of month which is five trading days away. Also, nobody on the Street made much money to speak of this quarter and it looks like they may want to change that by months end.

So, it seems that by end of month, there's a pretty good chance that we will move higher from these downtrend line breaks. I've a number of stocks on my hunt list today and will look to add a bit more to existing positions on either breaks higher or pullbacks off zooms yesterday.

Over the next week or two, I intend to lighten up my load as we head towards the highs of a few months back and hedge some for a trade. I'm still thinking the best way to end this run is to suck in more money, get the momentum rolling and then sell to the retail crowd.

Today we finally got the lift that I've talked about for so long and I'm sure you were tired of hearing about. The trend line breaks occurred. It came on decent volume as that picked up again on an up day. We also got good breadth and good up/down volume spiking. I was looking around for something to temper my enthusiasm and the only thing I see is the potential follow through, or lack of follow through tomorrow. By that I mean that we should hold that break in the trend line now. If we don't then we simply have a false breakout. Right now I'd wager that we have a good 80/20 chance that it's for real and that we are about to see more of that sideline money come in. If true, then a push back to test the old highs would be next in the cards.

So, we added a little more today and are taking a pretty bullish stance as has been the case for a while now. If we can get a real push to take place, I would distribute some into resistance as a result. We have a lot of worries on the horizon but now we have some momentum established. I'd like to ride that momentum if we can.

With a little less than a hour to play, we look to be breaking out. Too soon to jump for joy and I've not added much of anything as we were quite long already. Let's see if we can finish strong. Would be quite bullish. Volume picked up earlier and continues.

In any profession, you consider what it means to make it. You know, one of those, if I can do this or that, then I am there. Today was set up to one of those days. You see, I'm sitting on the beach this morning with my laptop on my lap, a nice cold drink in my hand and ready to do what I've dreamed of for a long time ... make a trade or two from that position. Call it arcane, call it naive, call it what you may, but trading from the beach has long been one of those mental images that I've had of making it in this profession.

So what happens ... can't get connectivity. Try again. Once more. Not to be. Verizon fails me at the critical moment.

Oh well, some things are not meant to be. Another day maybe. It's coming. I can feel it.

As for the markets, they are grinding higher ... just as we wanted. They are nearing those trend line break points that if reached, will invite more buying as the sideliners will not be able to sit out another potential leg up. Don't know if we will get it, but that's the setup. Time is critical. Although it doesn't have to happen today, this week is a critical week in my mind.

Underlying stock acting much better than the indexes which leads me to believe that someone(s) lying all over the futures keeping this market red early. Looking for that to change soon.

So far so good. Early morning doubt about yesterday. What we need to see next is a steady climb. Not a runner, just a slow climb to put the worry in the shorts court. A steady climb will cause the bullish camps to get worried they may miss the next move and the shorts enough to keep covering and shorting back up to the trend line. We don't need another swoon here.

Yesterday the market delivered the proverbial head fake where it looked to break down but then broke higher once it had chewed up stops and allowed bearish players to make bets. Today we will see if the rally was nothing more than short covering or some real buying. The added volume yesterday looks good on the charts but it's Wednesday and as I've said all week, we need to see the down trend lines broken this week. I'll be increasing nervous if it's not accomplished today or tomorrow.

We are looking at a weaker opening according to the futures and that's a good thing as a euphoric follow through that gets sold would do us no good. Let's see if the buying starts shortly after the bell or not. Still watch the SMH and BBH. Both bounced rather strongly yesterday and have the chance now to tack on some decent gains. If they can, the NAS can make a run to the breakout point for the downtrend line on the chart. The SPX is in better shape and has been acting well. It needs one good day to get it's break.

So the market tests support today and bounces off of it. One more time down there and we may indeed break down. Getting a little scary on that side of the equation. We stopped out of some positions as part of that foray and now the market has set itself up for a retest on the north side ... if it can follow through. I say follow through because that's been a problem of late on either side of the equation. As I said Monday morning, we need to see a breakout this week in my estimation or I have to get a little leaner and hedge some. The risks are going to get heavier than the rewards soon if we don't get that follow through.

We did see volume pickup today and a strong move into the last couple hours of trading. Let's see if the market has a memory tomorrow or if amnesia sets in yet again. If the former, we may finally get the move we have begged for so long now.

I see that I have stopped out of 3 or 4 positions. The market is still holding support areas though it's tenuous. I'm still not making wholesale sales here as I continue to give it a chance to prove itself. Disappointing to say the least.

Breadth slightly negative, volume average of late and we are essentially flat again. There's not a lot doing still and the market is drifting around support levels. Needs to bounce again or we could get momentum the wrong way.

I spent some time late last night putting physical stops in on almost all my positions. I typically don't employ hard stops but rather mental ones as I'd rather exit at a better price than the stop price. The problem is that we are reaching what I consider to be critical areas here on the markets in general and some of these stocks in particular.

At times like these, I try to set conditional parameters on the indexes themselves as a signal to get in our out of the market. For example, if the SPX trades below 1123, I get worried. Under 1120 and I have to get out of most long positions or hedge heavily. A trade and close over 1143 looks like a short term breakout. That's the ideal case right now given our positioning.

On the NASDAQ, a close below 1970 is ugly while one above 2010 looks like a breakout. These ranges are tight and something will break soon. We just have to react quickly when it does.

It's been so long since I've had a significant positive that I've forgotten what it feels like. The frustration grows as a result. Today is a good example. We've positioned long, have tried our best to get good stocks and then we get whammed on a day where the market is flat. This flat, a little up, a little down market continues to wear you down to the point where you mind is mush. All we can do is keep plugging away and sooner or later the wind will shift in our favor again and we can make a move. Hang in there.

Although the markets have retained their bullish edge this morning, there is really no volume to speak of. The unwillingness to commit capital is a serious problem and has been for a while. Today's listless action tells us that Friday really was all options related which we wondered out loud about.

The opportunity to get a break of these down trending lines is here and is now. I continue to maintain that we need to see/get that break this week. Without it, I think we will have some serious problems that will begin to eat away and I will need to step away from the table as a result. For now I continue to lean strictly long but I have a number of stops in and will not hesitate to trim/hedge if need be.

Nice early action except volume. I've added a bit more.

Futures solidly higher this morning as some deal making has the bullish blood pumping. That and the fact that the leaders of the militants who were perpetrating violence in Saudi Arabia were themselves killed after they killed seems to be a win on the geopolitical front. I try to remain apolitical in my comments here but these beheadings are a bit much. Truly sickening.

I have a long trek across New York state today so the comments will likely be sparse again. It's been busy weekend with some weekend activities including a day at the Rock and Roll Hall of Fame as well as a viewing of the Falls in Niagra. Now we head to the Big Apple for a few days of fun in the city with the idea of a day trip north mixed in. I mistakenly thought that there would be some down time on this road trip but the schedule is busy leaving little time for reading and reflection.

Speaking of reflection, we should consider our timing with respect to this market. The higher open indications are quite welcome but will this be more than an opening flash in the pan? It needs to be. By my estimations, we need to see the break higher this week. The market needs to take the next step and to distance itself from support. A failure to do so will cause my concern to grow greatly and will likely cause me to either hedge or reduce holdings. We have steadily built the holdings up over the past week or so and are reaching a point where we need to reap rewards or reduce risk giving the timing. Friday saw a volume surge (options related of course) and a volume move up here would be most welcomed. On the flip side, a failure in that regard would not sit well. Let's see if the opening can hold and build.

Note again, I'll stop and post if I start making significant changes. Currently I have a few stop orders in and a few more buys in the wings if they hit. Also looking to attempt a long trade on the SMH. It's ugly enough to bounce and it holds the keys to the general market trading higher.

Didn't get a chance to put a wrap out yesterday so will offer it this morning. Although while on the road I do monitor the markets, I sometimes do not have the opportunity to post to the Dose ... especially when driving. Rest assured that if I begin a major shift (which could happen soon) in our portfolio, I'll post a note here indicating that. For now, it's minor trimming and adding. Yesterday the beaches were too good to pass up and it wasn't until late in the evening that we had had our fill. Thus, the note this morning rather than yesterday.

What we continued to see yesterday was a market that continues to wallow in a tight range. Unable to break up or down it seems, we saw a continued tightening of trading within that range. Although I've positioned for and continue to hold for a break higher, I have not lost sight of the fact that we could end ugly instead. With but eight days of trading left in this month and the first half of the year, I suspect many a portfolio is either flat or, worse yet, down for the quarter. That adds pressure to the managers for the remaining days. They can't sell them, lest they miss the move, but they can't buy more of them cause they aren't moving.

I'll be looking at some charts later today and tomorrow and will divide my portfolio into I really want to keep and I can let these go categories. This will allow me to dump quickly if needed in the coming week. I'm suspecting that next week we will likely see the break of the wedge occur. You will need to be ready to act as a result.

Well if you want volume, you have it this morning although it gets the asterisk of options related volume. We are seeing quite a nice push higher right back to the resistance areas. With each passing day, the resistance levels lower on the top end and rise on the support side. A breakout in either direction is likely to cause enough pain to cause momentum. Right now the bulk of the action seems to be in the big caps as our portfolio of small caps is underperforming. If you have not added yet, take a look at NOOF. Looks ready to break to $9 soon. Added a bit more yesterday and have another bid in this morning as we try to continue to build a position there.

I'm wrapping it up here this morning and hitting the road again. Looking to get into Cleveland a bit later, visit the Rock and Roll Hall of Fame and hit the beaches. I'll check in along the way.

I like the way it looks early and have added a little bit more in ZHNE, NABI and ADCT. Also closed the last of the shorts for now in XLF. Strictly long and looking for that upside move soon if it's going to happen.

Easy to get in, hard to get out. I must have driven six hours yesterday to travel 60 miles. When we arrived at Chicago, it took no more than 30 minutes to find our destination. Traffic was fine, the weather great, everything was clicking. Getting out was another story.

Easy to get in, hard to get out. The haze was abreast and the traffic was bumper to bumper for hours. Man, I would hate deal with that each day. Next we couldn't find the original exit we were looking for. Finally when we changed plans and found a place to pull over, they didn't support our needs. Late last night, we finally were able to accomplish our objectives but it was hours after we had expected. To make a long story short, the market is a microcosm of life if you look for the similarities. Right now it's easy to get in but it's likely going to get hard to get out soon.

The market has been mosying around now for a while. While the NASDAQ threatens to break down again, the SPX has been hugging the 1030ish level. The wedge that is forming is likely to break and though there's no guarantee of which way, triangular wedges like the ones we are seeing typically continue the short term trend ... which has been up. The problem is that they can break either way and we need to stay on our toes. You need to have an exit strategy in place as it could get ugly quick if we are wrong.

Today we have the expirations to deal with and there's a lot of macro events upcoming end of month that everyone keeps talking about. Those probably will get discounted next week. There's the rebalancing of the Russell, Iraq handover, the Fed meeting and discount rates. Next week the eco news is tame and we are in the middle of earnings preannouncements that have been far and few between in terms of downside surprises. The earnings news continues well and that season is soon to be upon us. Add to this the fact that the end of June many times is the start of the summer rally. And did I forget oil prices. Strikes in Norway today, etc. Oil has found a home above $35 it appears.

If all the above isn't enough, there's more that can be talked about but I'll not digress more. Leave it said that we must stay on our toes when the market is quiescent. It's during these times that it's much easier to get in than to get out.

We didn't breach key levels and I've just added a little WYNN as it has come in hard off the big moves of late. The gaming stock in general have continued fairly strong of late. Just getting a little exposure there as this one comes into its support area.

As long as the market holds the support areas, I'll continue with exposure. As we are getting later in the game here though, we have to become quite diligent and thus I'm checking in a bit more often.

To say things are ugly again is to put the best face on things this morning. Breadth is poor, volume a little higher than of late and the SMH and BBH are still looking more like they want to break down than otherwise. That is quite concerning as they are a major tell for me. I'm watching the key support levels that are just below. If they fail I will be forced to start trimming. Not what I want to do but prudent.

It's time to hit the road again. After a few days of rest, it's time to get the RV on the road and head further east. I wonder if the market has the same idea? After a few days rest here under resistance, is it time for it to pick up and head north? Today would be an appropriate day in terms of time.

We had the delayed PPI out this morning and it printed higher than expected. Given that it's old news, I'm not sure how much impact it will carry. The futures are not off that much to begin with.

I've been looking to game a move where momentum is forced on a break of the down trending channel that the market has been stuck in most of this year. In the larger context, you could argue that this is a way stop to higher prices. You could also argue that it's simply a slow topping out process as it's a 50% retracement of the large decline from 2000 and is simply a way station to lower prices yet to print. In either case, you can draw lines and make arguments. Of course what really matters is can we make money in between.

I've been buying good charts and looking for a potential break hihger that would propel money into the markets on the idea of being left behind. If that can occur, I believe it will lead to a false breakout that will be the biggest bull trap we have seen in quite a while. But that thesis will take time to unfold if it is to unfold. I said the same thing a good two months ago and it didn't unfold and we were left holding the bag on some longs that we had to liquidate. The problem was that in our disgust we threw out the winners with the losers and those winners went on to be bigger winners. This time we have to prune a little better if we are wrong. If we are right, the market will lift most boats and the pruning will still be required but will be simpler as the green will be everywhere.

In the meantime, we keep our focus on buying good charts as long as the market isn't crumbling below key support areas. As I stated yesterday, I am starting to put some stops in on some of these positions to either protect profits or limit losses where we are on the edge. As time passes that will be more and more the case as time changes all trades eventually.

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