The Daily Dose of Trading Comments

That last couple hours of trading took us all the way back to the highs and then back down to red again on the NYSE, slightly green on the OTC. As I look over the final numbers I see the NYSE volume quite high and I assume that's primarily the result of MRK. To be quite honest, we need a couple more days of trading to sort things out as so much of what transpired the last few days of up and down action could easily be just portfolio flowering as the large fund managers add here and take away their to make their portfolios look as best they can at the quarter end.

Personally, I'm leaning shorter than I am long and that's a result of my uneasiness and lack of belief in the ability of this market to move much higher. I realize that the possibility certainly exists but I'm not willing to trade that possibility without a number of shorts in tow. We saw a lot of green in a lot of places today, some of which don't make a lot of sense in the same day, but that's what this market has been doing of late. So, we end the day, the month, and the quarter with as many questions as we have answers and we realize that our success into end of year will be a result of our willingness to trade whatever the market gives us rather than the ability to make some prognostic call.

And talking of end of quarter. Here we are at quarters end with both the DJIA and the NASDAQ still underwater for the year to the tune of 3.6% and 5.3% respectively while the SPX is basically breakeven. Only the Amex continues to shine up about 8.4% for the year. Small caps continue to be the smart money this year it seems. Although not computed yet, our portfolio is right near it's highs for the year, up almost 10%. Though that beats the averages and is putting money in the bank, our targets are much higher. This has certainly been a difficult year to traverse once more. On the flip side, and you know there's always a flip side, the quarter with the most bang is right ahead. Here's to you and yours from me hoping the quarter before us proves like those fourth quarters of pasts. Cheers!

The last two hour trading window started with a pretty good push against my prevailing trend thoughts but it has setup an interesting end to the day with a potential intraday double top. That has allowed us to tighten up stops on both longs and shorts for an intraday trade breakout or breakdown. With everything going on today it's been prudent to trade with tight stops and book gains where you have them as we continue to thrash rather than produce trend days.

Just as yesterday we had to back away from trading as we couldn't get anything right with the thrashing that was happening, today we have fared much better. The negative bias continues to work well for us as that double top turned into a rinse move and we head back down intraday. I keep trading around positions and booking gains here and there. RTN for example took a huge move up only to come crashing back down. We caught some of that and are looking to reenter if it can come back into that breakout area around 37.60 or so. Volatility can work both ways, when you are on track it's great, when you are not, it's punishing. I'm still holding the negative bias into the close and the markets are appearing to work their way back down proving that bias true. Talk to you after the close.

I'm looking at the markets here in the midday lull they go through and thinking that the most likely scenario into the close is a continuation of the downtrend. Now whether that leads us to lower lows on this leg down or not is a bigger question. We could simply get a retest of the recent lows and a push back higher once again. Such is the nature of this perverse market at times. We have to keep in mind that this week, the short term oscillator was suggesting a possibility of a rally near term while the longer term oscillator suggested that whatever rally developed it wouldn't push too far. So, if you have to hedge your bets, you think a little longer term short with the ability to see a spike near term. For now, I'd like to get a decent push down and take a little short term shorting off the table and wait for the next move.

My boards are slowing turning red today and with the chips starting to sell down rather hard I'm not sure that the direction is going to change. If all this strength the last couple of days really was just end of month manipulations, then the downside will come rather quickly. Earnings are due to hit in a little over a week and right now the expectations are not particularly good. That glum heading into the season is likely to apply further pressure in front of the earnings themselves. Now that leaves and upside surprise possibility once they start to print, but it could easily go the other way. As has been the case of late, we have a lot of uncertainty heading into another earnings season and we had better be prepared to dance with the elephants when the time comes. Alternately, we could seek the shelter of index plays and exiting positions in front of earnings which, given our record lately, may be exactly what we do.

As for today, I'm looking to press a couple shorts a bit more if given the opportunity and I'm slowly trimming long gains as well.

The tide looks to be turning back towards the short end of the stick. I shorted a decent sized chunk of DE which is up on no volume, up big in sympathy with the CAT news of 3 days back and at resistance. Really not doing a lot but still leaning to the short side as I'm still expecting that side to win this battle zone.

My portfolio is flat this morning and I have no clue as to whether this semi strength can continue or not. All indications so far is that the market wants to inch higher but I'm not willing to make a bet on that. I've stops (either physical or mental) on all my shorts though and a couple have already triggered in the trucking sector. I'm pretty much standing aside and waiting here until I get a better feel. Yesterday I shot myself in the foot on each move. I'm feeling the same way today and am keeping the gun in the holster for now.

Also note the breakout on the metals group. With the weakening dollar, we have missed the big move there it appears ... for now as well.

The early economic numbers did little for the market although the unemployment claims moved higher putting more fear into next weeks employment picture. The PMI is due out 30 minutes into trading so I wouldn't take too many steps in front of that one. MRK is getting shellacked this morning after the cancellation of a major drug in their pipeline and that company specific news is going to pressure the DIA all day. Today is the last day of the quarter as well so you have probably some more whippy action as a result. Finally, there's the debate tonight which has the potential to be a negative for the market as they are already pricing in a Bush win.

Given that backdrop, I plan to do very little to start with. I've move more to the defensive side of the table again as I have little trust that this move higher is anything more than end of month type gyrations.

I'm becoming increasing concerned about the market as the day progresses. We are not seeing follow through but instead rotation and rotation into a sector that is notably fickle. Breadth is flat on the listed issues and so-so on the OTC although the short covering there has up/down volume up big. I've continued to trim longs a bit more and am trailing some winners with stops. Putting a little more shorts on as well. This is worse than the worn out swing at the corner park in Chicago. Back and forth ...

The market has taken me on a ride today, up one hill and then down another. Unfortunately, when the ride finishes here in a bit, my pocket books is going to be lighter than when I began. Seems I've shot myself in the foot on almost every trade as I reacted rather than anticipated for the most part and in and up and down market, that just doesn't work well.

Tomorrow we get some eco numbers before the open and then some more afterwards. They could be a factor. We are also closing out the quarter and I'm not sure if this strength lasts when that is done. I'm skeptical of the advance but wary of fighting it as well. Sounds like the middle doesn't it? Guess that's why I have a number of longs and shorts on the table as we straddle the fence here. See you tomorrow.

We are really getting bounced around today as crude falls precipitously and the markets rally as a result. I've vascillated today attempting to work a bit more to the short side while I was working strictly long when the day started. Unfortunately, this choppiness is to quick to allow one to work successfully and thus I'm moving out of the way and will see how this move holds. We are roughly 37% long, 25% short but we have stops in on some of those added shorts and if this strength continues we will get longer by virtue of them triggering.

I'm not liking the way the market is acting and I've started shorting more stock as a result taking a quick short in the QQQs and the RTH again. If we start to falter more, I'll look to short more most likely. We could get a rinse move lower before we get a real retrace back up again. Just playing the short term intraday trending moves here as the lack of aggressive follow up buying this morning suggests vulnerability.

Over the past year I've turned more and more to shorter time frames. Part of that is due a reaction to what the market is giving, but part of it is also the fact that I'm trading full time and I watch things more closely. I tend to cut losses and profits shorter with the idea that each day I should make money. I try and guage the direction early and attempt to trade mostly in the direction of that trend. It doesn't always work, but if you are willing to take smaller profits and move more quickly, it can pay dividends. Whatever your trading style, you need to understand what your time frames are on each trade you start and keep that in mind as you trade it.

For example, I bought some PLUG this morning as it is breaking higher on decent volume. Bought a little then bought some more on the retrace. The first batch was a "let me get a little in case it doesn't come in" type of trade. The second was the more measured entry. Now that we have a little room in it, we will look to make money ... that is not allow it to trip up into negative territory. It's volatile, but we should be able to limit losses now at worst as we have a clear bottom to work with around the low $6.30 area. If it moves to new highs on the day, then we can get more serious about profits in it.

The overall market is reluctant to work higher but the chips are really doing some short slaying and they are slowly bleeding into the rest of the market as we expected. Only big issue would be oil trading a buck or two higher from here. Otherwise a likely trend day higher as the tech shorts get squeezed.

Used to rotation would take place over a period of a few weeks, now it seems it happens everyday. Today's rotate play is the tech stocks as they caught a bid right out of the gate and they are pressing the shorts higher. Should bleed over and help all stocks as the day wears on.

Yesterday we saw, expected, and received a bounce from the support areas so what will today bring? Volume was higher yesterday and positive breadth was decent. Was it just short covering? Was it real buying? Was it in of quarter markups? Probably a little of all of these.

Truth be known, we were expecting the listed issues to lead us higher as they were quite short term oversold and right at support. That's exactly what took place as technology was the laggard and there were/are not nearly as oversold at this juncture.

Today I'm expecting some follow through early but that's certainly no guarantee. I have my eye on a few stocks that look poised to do some work to the upside (BOW, KRI I've found this morning along with those listed on the Trading Sheets) and a few to the downside although I'm not pressing that side quite yet.

The key right now, in my mind, is flexibility and the willingness to shift back and forth between long and short as the market dictates. I'm still expecting a continuation of this leg down but it sure would be nice if we did it from higher levels.

Even though our leaning today proved correct, our adds and subtracts today have not particularly helped us. Sometimes it works that way. Although we have gains to sport most likely by the finish, those gains were subtracted from by our actions today ... at least some.

It seemed likely that we would catch a bounce down here as it was setting up that way. It was apparent yesterday that they desire was there but they just couldn't get it going. Today they got the follow through though finally as the oil and chips did finally stand down. Now the real question will be how far they can take it. As I suggested earlier, I do not believe this will lead to higher highs but will fail short of that. As such, I'm looking at the longs in the portfolio mostly as trades not holds. I really like three sectors in general; energy, metals, and defense. That's where I'll continue to shop and sell on surges and pullbacks.

I'm off a bit early today so have a good evening. See you back here again tomorrow.

If the chips and oil could just relax for a bit and quit seeking new lows and new highs respectively, then the rest of this market could get a decent push north going. So far, all attempts to push higher or met with resistance from those two sectors. I've still got my neck on the line here pushing the long side for the time being but cognizant of how quickly this market can turn. If it appears I'm wrong, I'll likely move back towards a larger cash holding rather than chasing shorts at this juncture. Still thinking we get a push into the close though.

The market is finally finding it's legs after wobbling a bit early here. I've continued to position for a short term move higher off of support closing some short positions and adding some longs. Again, these are all very short term ideas and I do want to look for more shorting opportunities on strength but that's then and this is now.

It's a struggle early as the market clings to it's gains. Hard to get traction after you have sold down steadily. I'm suspecting that they will find some traction short term though and made a few purchases this morning as a result. Looking for some short term plays on the long side.

The metals are really shining here and although I'm keeping a watchful eye on them, I'd much rather wait a few days than to plunge in. I'm keeping the little bit of holdings I have but am reluctant to move unless they truly breakout here on big volume. I'm thinking that will not happen.

We have a rather perverse setup this morning with everything up pre-opening; oil, gold, stocks, etc. I'm expecting this week to be rather choppy. I do not believe that we can start a new leg up at this point but I do believe that we could easily trade higher off these support levels. I would want to short into strength.

There are some issues that have really been moving and if we can catch one or two we could ride their momentum north for a short trip. Fast trades to the north are what I'm seeing here but I don't want to be in the position of blindly chasing. For example, I still think the metals trade lower and this is that last short term burst after a bit of a pullback that sucks in the late money before they really retrace and setup a good buy. Hard to stand aside and we exited a bit too early I suspect. If you are trading them today think short term moves or you will have a good chance of holding them into that expected retrace.

Today I was in full retreat raising cash and moving more to the sidelines. I feel rather sure that we will not head straight down and I do not care to hold a large set of shorts if that is true. On the long side, I've pulled out of most of the metals and oils per the piece I penned a bit earlier. I believe that the easy money on the long side was made when we worked that bottom some 7 weeks or so ago and the easy money on the short side was made when we worked that top a couple weeks back. Now we are in between and this is not where the easy money is and thus we have to step back and be happy we've been able to do what we have and that we need to be more cautious for a bit.

Rest assured, there will be some good plays in the days ahead but we have to be patient for them to come to us. The metals are a good example. We don't need to rush into them or run after them most likely. They will probably give us a decent entry soon. Same is true of the oils. The end of month mark ups in that sector require us to back out of them for the most part and pick and choose re-entries.

As for those targets, we pulled much closer to them as the day wore on and we closed reasonably close. I'm not sure if we trade below them, just above them, or at them but they are close enough to give me pause to stay to short here. I ended the day pretty flat as a result.

Two sectors that have interested me greatly of late are the metals and the oils. A while back I remarked that when oil trades to $50, you probably need to exit these runners. We are just about there and they do look tired. I've been lightening up and am looking to do more of that before the day is done.

The metals are trading flat despite the rise in the spot price, especially silver. That suggests that the spot price rise was already priced in (which I think it was as we ran do to a technical breakout) and that they are looking heavy as well. I'll be trying to buy as they come in but am resisting doing anything here.

Overall, I've been raising cash and looking to the next move (up or down) as a point to start purchases or sells. I've done a little bit on the buy side, but not a lot. I believe we are range trading still and buying towards the bottom, selling towards the top is the best way to make money still.

I've been slowly closing full and partial positions this morning and raising cash. It's hard to do a lot in the middle of the range, but I'm looking more and more to the question of what to buy for a bounce. I'm being very selective though, either buying momentum breakouts or pullbacks where I can define risk as rather small. In so doing, I'm putting stops in immediately to protect myself. Not much so far, but have added some AES and LSS.

The market looks to be holding here and that could embolden a few buyers as we climb the proverbial wall of worry.

What started off as a pretty nasty day has leveled out for now. I've been trimming a bit on individual issues either booking gains or cutting losses. I'm rather disappointed that some of our individual positions have performed not as well as they should breaking down or up as it were. No matter how you plan and whether you are right or wrong, when you invest in individual issues they can certainly buck the trend on you and you have to take action if that occurs.

Looks to be a weak day and I've not purchased anything outside that first small ATPG add. All trades this morning have been trims. We are basically at the middle of the big range and it's hard to take any action at this point. We need more pressure to give us a decent bounce play and we don't have that yet.

There's no cheer in the numbers this morning if you are bullish. Other than the closing of our silver last Friday, our positioning was sound. I've made one move this morning buying a little more ATPG a bit cheaper than where we pushed it out Friday, but am quite content to let these positions work a bit longer here. Targets before a real bounce now look to be:

DJIA 9960
SPX 1094
NAS 1838

With crude almost at $50 and with stocks doing a deadly dance back lower Friday rather than holding, futures are looking rather bleak to start the day. Real support is still further down and we will most likely catch a bounce off of it, but that could be another couple days away. Minor support is right in this area though so if we hold early, the bounce could be as early as today but that's not where I'd wager my bets.

I've been busy the last hour or so repositioning into some new short positions and a couple longs. Made a couple mistakes today, with the most glaring being my closing of that AMZN position on trailing stops. Should have known better as I understand that volatility well.

With the belief that it's going to be a hard climb next week, I spent a significant amount of time scouring scans looking for patterns that could be shorted. I added a few new names as a result of that work including WLM, CARS, ALKS, JNS, ABTL, etc. I'm sure that not all of these will work and for those, we will cut them rather soon. If we have read the charts right, some 2/3rds will reward and we will attempt to harvest those dollars when the time comes.

It's been a while since I've talked about risk/reward and protecting your capital but today is a pretty good example of it. We took some nice gains in our metals again after some good runs. Is there more of a run left; probably. Will they pull back before they take off; I think that has a higher probability than a continued run straight. Thus, we make a short term sell and look to buy them back early next week. The spot metals were down today but the stocks held up because of the technical picture. I'm looking forward to Monday thinking that if the spot price opens lower, then we will see these come back in. If we are wrong, then we will wait and make some buys down the road when the picture sets up again. In the meantime, we can use the money elsewhere. A little here, a little there. As long as you keep a 2:1 reward to risk ratio and with a know trading style that produces 1 loser out of every 3 picks, then you can have the confidence to make these types of trades.

I took a look at the data again last night. I keep a record of all trades and the winners to losers ratio currently sits at .6344 over almost 2700 trades in the database over the past almost 3 years. That's up slightly from a .62 percentage earlier this year. Now there are other variables, but you will never know how you do or what to try and change if you don't track your trades. Data is critical if you want to try and improve.

I'm tired but have a little work to do before I call it a day. Hope your week was as good as ours. See you Monday.

With a couple hours left to trade this week, the market squeezed higher once more. I took off a few more short positions booking the gains but it's a lot of adding and subtracting. I've shaken off the ill feelings of this morning with a good long jog and am ready to continue to tackle this market for now. Sometimes you have to shake things up a bit as I usually jog later in the day.

As I've relayed before, if you are looking a week or two out, it looks pretty negative to me. Today though, they have a little jig going on in the listed issues as we had sold them down to hard for two long it appears. Despite the missteps by the NASDAQ, in particular the chips, the listed issues have shrugged off the pullback and continues to hold well. Breadth reflects that despite the lower volume. So we will give them their due and lay off for now.

I don't see a lot happening on my screens and am not really chasing after much of anything. I feel more protective today and am thinking that if they finish positive here today, the happy crowd will come bidding on Monday looking at it as an opportunity to buy the dip. Could be or then, they could simply be about to take a dip. As always, time will tell.

This is the first day in a while that I feel a bit out of sync. I've toned down doing much of anything as a result. I feel like I'll shoot myself in the foot. My overall thought is that there's no real meat behind this early move higher and that we will see it fade by end of day. I see the chips getting pretty red but there's enough other stuff hanging tough here so far. I have booked a few small gains but unless we take out resistance levels or some of the stops I have in place, I'm not going to do a whole lot else at this point. Also note the metals are finding their footing. That's a good sign for our trading today as well given our longs are metals and oils.

I was looking for the early push to fail but it caught some bids and continued. Now we are back to the first level of support that failed yesterday which now becomes resistance. If we push through here, I'm going to start booking a few of the shorts to get some profits before they evaporate. Still mostly monitoring. The oils are keeping us in the game today and most everything else ... well ... kind of sucking air.

We saw a little flurry higher but on lower volume. I've done very little this morning but am busy monitoring and make a few small trades around existing positions. If they turn it back down it will get ugly quick.

Durable goods stronger than expected. So far not a lot of impact. It's a mental crutch though and could be used as a support crutch if the housing numbers are really strong. I didn't mention them earlier thinking they wouldn't matter but now if they are stronger than expected also (out 30 minutes into trading) then that could provide enough support to get a reaction rally started. If not, we could get a follow through day down to the next major support levels. I'm still leaning towards lower today just to be clear.

Today is shaping up to be rather critical in terms of how far this selling carries. As I looked at the charts last night and again this morning, the SPX is sitting at it's first serious support level (1108) and has the next and most significant one a bit lower (1095). The NASDAQ has just broken it's first minor support around 1893 or so and has the first major support at 1860 and then the most significant support at 1820. As you can see, the listed issues were exhausted first and led to the downside which is what we expected a couple weeks back.

Now the question is does the NASDAQ pick up steam and draw back to it's first significant support level (1893) and assist the SPX in reaching 1095, or does the SPX hold here? My work suggest the former is the higher odds play and that we should consider a reaction move once those levels are reached. This morning though, we have to carefully monitor to see if the NASDAQ can trade above 1900. If it does, then we have the latter case most likely forming.

In the bigger picture, the question is "Is this a pullback in a larger leg up or the first move towards lower lows on the longer term charts?". On that count, I simply have to go with the trend and think a first move to a lower low is the higher odds move. That doesn't mean that we can't move higher before doing so though but the action of the past few days suggests a lower low is in the works. For this reason, although we need to anticipate a reaction move higher either today or next week, we should get scared out of our better short positions but instead should hedge them with other equities and take partials.

So, that's the thinking this morning as we get ready for the next in our endless series of moves in this larger than life game of chess. Key data out in less than an hour and that will be it for today. We won't see anything else until next Tuesday sentiment numbers on that front. Let's look at how the futures react to that durable goods number.

Boy on boy. Sometimes you have to have some really thick skin to work this game of trading. In some ways it's akin to fishing. You put some bait on a hook, work it into that perfect little nook and just wait for the right bite. Next thing you know the size of the rascal you hook is about to tip your boat over. You hang on struggling to regain composure but finally, reluctantly cut the line to save the ship. If you could have only reeled it in ...

Take a look at WRLD today. I bought some on that big drop into the $22 area and then added another scoop around $21.7 or so. Then I stuggle for what seemed like a couple hours waiting for the turn. Never came and I finally stuck a stop on it because I was too consumed watching the darn thing that I couldn't trade anything else. It hits the stop and later today just gallops higher closing back up at $23.36 which, of course, was a good 7% run or so from where I first hooked that rascal. No cigar. It hurts, but you brush it off and go on.

Today's market was like that all over. We got the trend down and the found some reason to rally intraday; enough to get the shorts to covering. That short covering carried us for an hour or so and then it was back to the trending down. That short covering rally took out index shorts as well.

We've a good deal of money on the table here. With the volatility what it is, we have the opportunity to either make or loose a decent chunk of change. Of course we believe we have staked out the right positioning but we have to remain diligent as anything can happen. I would like to see a nice push down tomorrow to begin taking away the notion of a imminent rally outside of the oils and the metals; especially in tech. If the SMH can undercut that recent low we could indeed get just that. A nice push down would set up a decent short covering rally next week and that would work well with our thinking in terms of positioning. After a good 4 to 5 months of not being able to get anything going, I'm knocking on wood that maybe it's time again.

With less than an hour remaining, I continue to play mostly the short side save for oil and metals. The markets caught a nice short covering rally, but I continue to thing that the fuel for going appreciably higher will need to be strong economic data and an a good earnings season with respect to expectations. There's a shot at some data tomorrow before the market opens and earnings are still a couple weeks out. Suffice to say, the longer term trend seems to have taken hold again and my guess is we get a little more air out of this market before we make that obligatory stab higher once more. I'm assuming that comes next week sometime (outside chance tomorrow if the data is strong).

I tried on several new shares today, a couple we had to exit rather quickly and about four that are still on the table. If they work, we ride them a bit. If they don't, they're out the door rather quickly. That's the story right now with this market outside a couple sectors.

I've been trying to use some of this volatility to work a few trades today and so far I've been stopped out of two attempts. That is frustrating but sometimes it goes that way. The latest was an attempted short on an intraday bounce in PHTN. Didn't work as it stopped me out.

SMH making a run as I type. I'll probably stop out of the index shorts soon. Still negative on the market but the short covering is always possible.

Lot of mixed stocks today, some down big, some up big some in between. Lots of volatility if you like trading. I'm doing my best to do a little trading. On the bigger picture of today, we are getting a series of lower highs and that suggest lower prices to come. I'm staying pretty short as a result although I've a couple longs on the books of reasonable size trying to catch a quick trade (ASH and WRLD) as I'm looking for a bounce in both of them.

I've started to put a few stops in place based on intraday patterns to protect some profits on these short positions. They may get stopped out and they may not. If they are stopped out, I'll probably look to reestablish them later today. We could get a swing back higher here today but I don't think it will stick and that by the end of tomorrow we will trade lower. That's the very short term thought and what I'm using as my short term guide. The damage from yesterday will probably not be undone that quickly.

We caught a good bounce off the support level pointed out earlier. Now the question is will it prove to hold. Chips are showing a good bounce as well. We know how fickle they can be so don't count out yet another reversal.

I'm not doing a whole lot but am trading around my positions a bit.

The LEI strength was less than expected and I've started a short in the Transports/Trucking as a result. They look overdone here and YELL in particular looks spent. Rising price of late on lessening volume and the inability to take out $46.

Staying short.

Other than buying a smidgeon of oil (UNT) this morning, I've done nothing. I'm content to wait for the LEI which is up in about 5 minutes. If it appears we will change a get a real bounce, I'll cover the index shorts quickly but I'm inclined to stay short here outside metals and oils. One other sector worth looking at is defense.

After the fall-out-of-bed day yesterday, we see some opening weakness follow through. That seems about right. The metals are catching a bid as the stocks have made some technical gains. I've a couple more on the radar screen for today. They have been basing for a while and are making an attempt to break back to the highs of the year. Don't know if they can make it on this trip, but you saw how silver reacted yesterday when it broke the recent highs and that's with a spot price that was not supportive.

Oil is quite so far but if and when it trades above $50 it will garner some real attention and it will be our signal to step aside. So, I have a couple oils adds on my screen as well.

There are a few others stocks that could be bought here but by and large, it's probably too early to think about buying very much. We are at a point where tentative support can be expected but there's no real reason to expect that it holds. It may or may not; certainly not worth putting your money on.

On the short side, we can look for some continuation pushes now and try and book partial gains on those pushes lower. I worked the charts last night and spotted some more candidates that I'll likely go after this morning. Note that I highlight these candidates most every evening here somewhere around 10 PM MST.

Lastly, expect early weakness the first 15 to 20 minutes and then recognize that the LEI hits the tape 30 minutes in. It could be a mover ... either way and likely will set the tone for the day unless oil takes over.

Whew! What a day. I've been running all day looking at charts, searching for ideas, reviewing existing positions, etc. Now that I've had chance to take a breadth and reflect, what I find is that this is most likely the first part of that move back down. It came on increased volume though no large fear was exhibited suggesting more of the same can occur from here. Of course, it all doesn't have to happen at once and it most likely won't. That thinking is what had me book some gains, cut a little short exposure that wasn't likely to work out, and to add some oils at the end of the day on the volatility. All those moves raises some cash and, though we are still more short than long, it puts us back to a third cash and a little less than a third long. Note that the vast majority of those longs are concentrated in oils and metals.

The fact that we came down hard pretty much on schedule is comforting in some sense and leads to the best back-to-back gains that we have recorded in some time. We are now at a juncture where we should see some sort of bounce attempt over the next two to three days. I would use any run back higher as a chance to lighten up on longs and look to put out more shorts. I'll be running through short candidates myself the next couple of days looking for patterns that fit that scenario.

On the long side, I believe you have to stay concentrated in the metals and the oils for now. I was considering the transports as well, but it's best we let them get beat up a bit more before fishing there. Today we saw a technical breakout on the silver charts and although gold made it to green on the spot market, the shares were not rewarded. Maybe tomorrow. For the longest now the metals have been tied inversely to the dollar's strength. Although that is still evident, at some point in the near future I believe we may see the metals move back to a fear of either inflation or deflation (which I don't know) and any news that supports either is likely to really get them going. That doesn't mean we can buy and hold with inpunity, but it does mean that we can play them from the long side scaling in and out on volatility.

And that brings up my last point. One of the things I have always attempted to do is to shoot straight. Unlike so many sights, I don't sweep things under the rug. Today we made a mistake early on the metals and on because this public portfolio is seen by all, it was clear what had happened to those watching the market closely. Luckily this time we were smart enough to jump back in a capture the rewards we otherwise would have left on the table. That's not always true and to my chagrin, when we do something dumb, it sure sticks out like a sore thumb. That's bad, but I suspect you view it as good since, as a reader, you realize that (a) we tell it like it is and (b) you can learn from our mistakes and lastly (c) you see that these traders out there make the same dumb mistakes that you do at times even though we should know better. We are all human and humans are subject to mistakes. With that I bid you a good night!

With spot gold moving back to the green, I ended up adding some gold shares in the last couple hours. All the long adds today were in the metals. Couldn't find any oil shares I wanted to add ... at least not yet.

With an hour to go, I still think you end at or near the lows and they could be lower than those printed already. I'm still riding the vast majority of those short positions although I am looking to book a little of the gains into the close.

Although I've looked through several oil related stock charts, I'm not comfortable to buy anymore at this point. I'll stick with the three we have.

Silver making new highs and I've continued to accumulate. I'm thinking we get a nice pop still once the nightly charters take a look at it ... if it can hold. I see the spot price of the metals improving so there's a decent chance.

Other than that, I've put in some stops on the added shorts in case the market turns and have taken a hard look at targets for existing short positions as you need to prepare for where you want to start scaling out.

That brings us to the subject of scaling. I remarked in some email to a reader last night that I thought I had made it clear over the past few months that I try to scale in and out of positions rather than all at one shot. This method has several advantages and with brokerage costs now minimal on partials (less than 100 shares), there's no reason not to do so. It takes a little while to get use to but it gives you a lot more advantages regardless if the market is moving your direction or not.

With about three hours to go, I'm thinking that we are likely to trade lower now having been unable to sustain any kind of lift over the past couple hours. With a lot of money on the table here and majority of that short, I'll be watching closely.

We are a couple hours into trading and I'm making the bet that we have a trend day down. In other words, I believe that we will close on the lows of the days and I think those lows will likely be lower than what we are seeing here. In between we could get an attempted move higher but I doubt it gets very far.

Given this, I've been scouring looking for stocks that, if they break their support levels, will likely pick up some momentum to the downside. Stocks like IFLO, RS, UTEX all fall in this category and I've taken initial short positions in each. Will look to make them a little heavier if they rise a bit from here or if they start to break down.

The silver charts are driving the action in the metals because the spot price isn't supporting the move. I'd feel better if the spot price could turn as well but with the dollar weak, that's not happening. Nevertheless, the metals and the oils are about the only place to hide today. I'm starting to turn my attention to the oils next, looking to pick some more up at cheaper prices being printed today in some of them which have ran a lot of late.

I made the mistake this morning of getting out of my silver stocks only to watch them rise right back up ... so ... I've gone back in and bought some back. In trading your reactions are sometimes just plain wrong and when you look at the charts again, you are reminded that it was probably wrong. When that's the case, you simply reverse and move on. Now there's always the possibility of being wrong yet again, but that's true of any trade. Each and every trade is a separate transaction. When I decided to buy PAAS back, I did so because irregardless of what I had done earlier, I would have bought this chart with the stock behaving the way it is. That simple.

General market getting pounded here. NASDAQ at a short term support level. Listed issues have farther to go to find there support levels. If 1890 gives way on the NASDAQ, look for a move back to 1875 as the possible resting place on this first reaction lower.

Other than trimming longs, I've not tried to add any more short positions. I'll look for an intraday play as the morning wears on if we can get any kind of bounce to short.

That's a very negative opening. I've trimmed longs as a result thinking this is probably a trend day down. This is just the latest reversal off a Fed driven rally in a long list of them now.

Gaming a turn is always difficult. It's necessarily so because you are going against the prevailing trend which can be quite tricky. Just as true, the majority are typically wrong at turns as well since the majority creates the trend.

If you look at a chart of the SPX, you see a reasonably well defined declining channel that spans the majority of this year. The top of that declining channel comes in right at the highs of yesterday; around 1132. If you forget the channels and just ask yourself where horizontal resistance is you get the number 1145 or so. You can bet there are a lot of stops sitting around that area.

Now, when you are gaming a turn, both sides know what the general numbers are. When you get to the top of the downtrending channel, those who can read a chart realize that if they are long and if we do not break higher, then they are going to be holding the short end of the stick. Just as cognizant, those who are short realize the same if the break higher were to occur. So in this game of chicken, both sides choose to hold the stick as long as possible hoping they have the winning hand.

My approach to the game is keep some select positions in the direction of the trend (in this case, the strongest stocks I can find) and to continue to probe with stocks in the other direction as we near the climatic moment. The most money is made at the beginning and end of trends since they are, one and of the same. The end of one trend is the beginning of the another as you can readily see.

Futures are a bit weaker this morning as are the metals. Oil is down slightly. There really is no economic news today. Tomorrow we get continuing claims prior to opening and the more important LEI a half hour in. Friday is durable goods before the market. The larger cloud might be continuing warnings. With 3rd quarter earnings season but a couple weeks away, the impact of lower earnings continues to be felt. Has the market priced it in and will rally as a result? Not clear to me and the technical work I follow argues against it. But that's a story for another day. For today, we need to see how the market digests the Fed news of yesterday. After the final surge yesterday, we saw some weakness into the close and it looks to continue a bit this morning. Let's see if we get the trend day down or if some buyers step up again. What the market does will largely dictate our actions. We are reasonably balanced for the moment but do have a few more ideas on stocks that we would like to put to work. Every day there are more opportunities as the chart pattern setups never end.

We end the day with about half of the gains I talked of in the last post being taken away. Honestly, I find it hard to see a rally developing and sticking on the back of this Fed news. The guess was right that we had a short covering rally develop and that old one step forward, then back and then the surge ended up being the same pattern play out over again. It's strange as you see it happen each time and you are so sure it won't do it again and then ... boom ... there it goes again.

We got some decent gains in our metals and oils today to carry us through and we put out more shorts in the wake of this move higher. A few new names and some adds to existing ones. How long and far we can carry here is debatable and we must continue to be wary of what happens if this market burst through the 1135 area on the SPX. I sure don't want to be holding and bag full of shorts if they get a short covering rally through 1140. That would be ugly!

So, far now, we hold what's working on both sides of the coin and keep looking for new names to add here. There's still sectors working along with those that aren't.

The broad move higher we are seeing now doesn't make a whole lot of sense to me. Sectors that should be opposing each other are moving higher in tandem. I'm doing nothing here as I wait for the dust to settle. This could be that last hooray short squeeze higher taking place. Sure feels like it.

I'm looking at how the various sectors are trading and what I come away with is that the market is probably thinking that more rate rises are to come but how many is anyones guess. The metals are guessing not much as they rally. Most other sectors are not so sure of that. It's more confusion it appears and I'm being careful not to do much more at this time. Still like the short side of the equation but there's no use in pressing ones luck this afternoon.

I've been nibbling at a fe

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