The Daily Dose of Trading Comments

We end the day a bit ahead of where we started it ... and that's a good thing. As we look to the horizon, there's but two months left in this year. With profits running about 12% this year we will either have to have a whale of a finish or more likely lower our expectations a bit this year as 30%+ gains are looking rather suspect. As I had told client recently, I'll be happy to hit 20% in this market this year. If we can get there given what we have had to wade through, that in and of itself would be quite good.

As for this market today, it has been pacing in front of the election and we will probably see more of that come Monday and Tuesday. I've a lot of work to do this weekend to prepare for the coming week. At this point, after a grueling week of travel, business and trading, I'm ready to call it a day. I apologize for the inability to post more frequently but at the same time extend my heartful thanks for those of you who continue to support the site. Have a great weekend and get some rest. Next week looks to be a potentially wild one ... one way or the other.

As the market sleep walks to the finish line, I find myself doing little with relation to trading today. I've traded in and out of some index shorts and still have some on but mostly am heading into the weekend with a lot of cash and skepticism. I believe that everything we have witnessed this week is a combination of short covering, hope for a post election rally, and mutual find window dressing in front of their year end. In my view, the market is overbought and I don't see the catalyst to drive us higher. At the same time, I'm not willing to make a big bet on that but at the same time I'm not willing to get long in case it happens. Instead I'll have to move quickly if it does breakout but I don't see that happening until the day after the election at best. Keep in mind that the employment number is Friday of next week as well. I just don't see much here and am staying liquid as a result.

As we more or less expected, we are seeing some profit taking today with a bit of flat intraday channel for most of the late morning trading. I did add a little to the SPY short as it moved to the top of that channel a bit ago. Looking for some weakness as we get into afternoon trading.

When the early strength began to fade this morning, I removed most remaining longs (outside the metals) and put on a couple short positions. I'm holding them for now. I don't expect a big move either way but think we could see some drift down as the day continues. I'll likely close the short positions sometime today though and remain with a lot of cash. The drivers for the move higher the past few days are about gone now (other than positioning long for the expected post election rally) and that is what today's pullback is likely about.

I've pretty much sat out the early strength although I'm trying to short right now. Bought some CEDC early but that's it. Looks like a give back day to me.

Back to the home office and it feels good. Problem is that I've been burning the candle at both ends, am exhausted at this point and am a bit out of sync. For me that means stay out of the way of the markets most of today and look to catch up on the weekend. I'm mostly in cash which means we aren't likely to get hurt. Until I get a better feel for what's next, I'm likely to play small if I play at all.

My sense is that we have a lot of folks positioning for the big breakout event and that's keeping this market elevated even after the steep gains of the past 3 days. With the election unknown looming and some technicals that could point either way, I think this is one of those on the fence moments where you have to hedge or play small to keep from getting hurt.

As I ready myself to head out the door again, the market is doing it's best to scratch back into the green. I'm rather underimpressed though as we are not seeing the wild speculative moves today that we have witnessed of late. It's times like these that you look at your earlier moves and ask "Was that the right move? Should I jump back in?".

Greed is the killer of profits and the maker of fools. You are always motivated to get as much as you can out of a move but we must realize that the odds of catch all of a move or so small that it's a fools dream. The meat of a move is simply where you want to be as the 80/20 rule that applies in management applies in the markets also. If you can catch 80% of a move and have the patience to wait for your next opportunity, then you will be fine. It's the sitting that's hard though ... especially if you feel you are missing the move.

My advice today is to relax. We caught a good portion of the move we were after. We made some good gains. We have booked most of them. Now let's wait on the next opportunity. Since my service will be spotty the remainder of the day, I've put some short orders out there on the indexes farther up. I don't expect them to be reached today, but if we do catch wind and rally higher today I'll put on some short exposure for a trade.

I was very busy this morning with concentration being placed on how to exit most of the long positions on the books. As the market rises my nervousness increases. Yes, it's been a heck of a move and it looks so speculative to me in front of big news so my reaction is to book gains. I'm back down to 17% long and rest cash. Of that amount, the largest part of those longs are still the metals. In fact, the only purchase today was to buy back some WTZ which we sold much higher yesterday. This interest rate increase in China has most folks scratching their heads today. To me it means that we are slowing the largest growth engine and doing so more aggressively. That suggests we will have more troubles longer term seing increased GDP both here and abroad. Slower growth without the ability to raise prices results in smaller profits. Yet another problem for a market that continues to struggle with the levels we are at now.

But that's all longer term. Short term we have a nice move higher and you would expect some sort of a pullback and further surge. With resistance at 1130 SPX, 1975 NASDAQ, I find it hard to get excited about buying up here. Not willing to short yet but not willing to chase long either. So, we go to cash, book our gains and wait.

I've been taking partial profits this morning. Too many cross currents after a big move up. I'm just being safe and scaling down exposure. If I had a better feel for continued momentum I would ride it out, but I don't and thus I'm booking some gains.

Chips are coming out strong. Although we are down this morning, I'm still looking to see if these indexes can go green within the first hour. If not, I'll probably book some partials.

Never was able to make that final post yesterday as my service is so spotty out here in the tri-state area and I'm working late into the evenings on what I came out here for. That will change soon, but not today. One more day before I head back to the home station.

The market was extremely strong yesterday as oil did a swan dive. With the mutual fund money pouring in, shorts being forced to cover, an inverse head and shoulders pattern setup, what was an oversold market, the end of the year expectations; it all combined to make for a powerful two day move. Now what. SPX has the next resistance point just ahead as does the NASDAQ. We have weaker futures but my guess is that they will make a run before pulling this back a bit. Add to it a strong week with elections next year and I would expect some sort of profit taking to kick in here today and possibly tomorrow.

We can either take partials in such a case or put on a hedge for a short term move if we believe this market has further to go. Honestly, with several failures behind us, the notion that we truly breakout has appeal but we can't assume it's going to happen. Better to be safe than sorry and look to buy a pull back or a breakout on high volume. I'll continue to lean long but will either book some partials or work a QQQ short hedge today.

We have ran right up to resistance here and that looks to be slowing things down. When oil reversed so did the metals and the rest of the market. That caused us to exit a lot of the metals and now I'm looking at booking part of the gains or starting a hedge. Haven't decided. Heading out the door again so the posts will once again be sparse. The market continues to gyrate in front of the elections as there's the desire to position long for the post election rally which is driving us I believe.

I have been unable to post all morning as our blogger service is down. I'm circumventing it on this post to get the word out. I've been buying some this morning to take advantage of short term strength. I was lying awake thinking last night, what if the 1090 ends up being the right shoulder? If so, I want to put some exposure to longs on down here. I've just updated open positions. Look there to see what I have made purchases in. Sorry for the inability to post earlier!

I didn't do much today as expected and our SPX stop triggered in early morning strength so our cash position grew even more. I talked of the possibility and likelihood of a rally somewhere in here and today looks to have been the day. I've been looking at what transpired and it feels as if we had a short covering rally but we'll need another day or two to decide if so. We have three things working for longs at this particular moment; year end window dressing for mutual funds; a stretched market that was short term oversold; and thus short covering.

I've not really looked at the charts but we moved higher than I expected in terms of resistance. That would likely have accounted for that reasonable push the last hour or so as stops were likely taken out. With the volume increasing today we will need to observe how it acts the next couple of days along with price to determine if this is what we think; in which case we will want to short into the strength. For now, realize this could be reversed rather quickly and that if you ware working long positions, don't get married to them.

The market continues to be a mish-mesh of uncertainty and I continue to stay heavily in cash. I took off about half our precious metals positions on the first bounce and will likely leave the rest on now. Too bad the earnings weren't out of the way already as we could have played this a little less conservatively but that's the breaks. I made one add in NITE putting some of that back on the boards. I intend to do very little more today partly because I'm busy elsewhere and partly because I believe any rally attempt from here likely won't get too far. I do suspect a rally attempt will manifest itself at some point however near term. I will look to short it a bit if it simply looks like a short covering rally. That's it for the morning wrap. I'll attempt to get a post or two in later today.

Yesterday started out as another down day with pressure being applied to the markets almost from the opening. The standout yesterday was the upgrade of the chip sector and it's refusal to roll over and die. Pressure was on the dollar again as precious metals spiked. A takeover in the steels pumped that sector. So we are seeing a bounce over there where devestation was wreaked recently. Those look like oversold bounces to me so I wouldn't be looking to re-establish in that sector. The gaming sector continues to rise but the oils are struggling to regain their highs established earlier.

Yesterday, because we couldn't monitor the boards closely, we moved out of most of our long positions save the precious metals and a few others. Got out of LUV but back in when it started to breakout. I was surprised that most stocks held in there given the internals from last night. Again, this market continues to be oversold and a short covering bounce in here somewhere still makes sense, but the question is, "Will it simply be an oversold bounce?". Unfortunately, I still think that this is what we face, not the start of the fabled November rally. Now I know that most are expecting the latter and attempting to position for it. They in fact will get a lot of press as the pattern has been so predictable for so long and we may indeed get it ... just later this time around. If the rally that is so envisioned doesn't take place in the next week or two, then you can bet you are going to see the money cut and run and pessimism then will get thick enough to cut. At that point we will have the makings of a good rally. This is my current running thesis.

Given the above, I expect a pop up somewhere here this week. Whether it's today, tomorrow or even Thursday, somewhere in here you would expect a pop up. At the same time, look at the NASDAQ chart. It broke it's up trend line yesterday; the SPX is hanging down in no-mans land and will have stiff resistance now just about 1100, etc. If the press the boards enough; stretch the rubber band so to speak, then it will bounce. We are getting stretched pretty tight on the listed issues and they likely will lead the bounce. I may put a little of those longs we liquidate back on to benefit from the bounce but the size will be light and we will leave the SPX short on and add to it as we close in on resistance. Another option is to lift the SPX short and then put it back out higher sometime this week if we can or lastly to simply ride this out as is and just add to the short.

The other big question is what to do about the metals. A number of ours report this evening or in the morning. We have large gains to consider and though we want to dodge the earnings, most of these charts are showing gap up breakouts. As much as I hate to pull these stocks, I've just put orders in on the three that report today and tomorrow morning before the bell to take profits on half the positions. We need to book some of the gains to protect against a surprise. The silver we can leave untouched for a while longer.

Lastly, today will likely be much like yesterday. When I get cell coverage, it's usually spotty when on the road out here and doesn't last long so I typically stop where I'm at, quickly check positions and make any moves needed and continue on. So, comments here will be spotty at best after the first hour or so of trading.

As I get ready to hit the streets and take care of some business outside of trading today, I'm struck by the continued optimism on the street. I see that bullish desire for a November rally quite evident in the early trade. I'm worried here but the optimism shown by the bidding up on tech stocks runs counter to that thought as they see this as yet another buying opportunity. I understand the seasonals but I also understand that the November run can happen from even lower levels than here and the technicals I watch suggests that any bounce from these levels is wholly due to the fact that we are still oversold and the bounce likely won't have much juice. That's my read and I'm staying safe rather than trying to catch a few points to the upside.

Note that the normal intraday updates on Current Positions won't be happening on schedule as I'll be logged off. I just updated now prior to departure for the day. Note I also closed that ASH long as it started giving up it's early gains. We'll look at it later. These earnings plays are so hard to work even after they report.

I used pre-opening orders and after opening strength to scale out of almost all my longs outside of the precious metals and oils. Not much left on the books otherwise. Also started a SPY and QQQ short. The early chip strength on an upgrade fizzled fast but it's attempting to take hold again. Optimism is hard to kill I guess. It did allow us an opportunity to escape some positions without serious losses. I made one purchase with ASH (oils) which reported this morning. A small starter position we will look to add to in the coming days.

I do have some orders to buy a few stocks but at much lower prices. If they come in hard and fast, I'll make three or four purchases but other than that, I'm staying out of the way here.

I have arrived in the tri-state area of Arizona, Nevada, and California to pursue some personal business. Have set up shop and will operate from here the next few days. I can see that today and possibily tomorrow will be spotty in terms of updates to you. I will post as availability permits but cell coverage is indeed spotty I found out yesterday.

The futures are quite weak this morning which I was concerned might be the case yesterday when posting. Overseas markets have all gotten clobbered. I've been liquidating what I can pre-opening as I don't expect improvement. They may fade this opening but if they do, that's your opportunity to lighten up or get short if you choose. I will choose.

Metals and oils look to be early winning sectors as the dollar continues to take a beating and that is likely to last this week given the uncertainty of the election. It could last longer, as I remarked to one reader, with the cadre of lawyers lined up to contest any and all election results, we could have that repeat of 2000 that we wind up with legal challenges to the election that go on seemingly forever. What a mess and what a shining example of what this country is famous for in they eyes of other worldly capitals.

I mentioned the need to lighten up on metals in front of earnings tomorrow. With the spot price breaking through the key 430 area this morning, that desire becomes more difficult. Remember that GG reported and actually moved higher (gave it back Friday though) so we do have precedent for higher prices in gold so far in this earnings season. We'll continue to evaluate today and tomorrow and decide somewhere in that time frame whether to hold it all or lighten up.

As for how far this market could fall, remember 1080 is my initial working idea although the bottom of the channel will be something more like 1040 on the SPX. 1080 is the current working thesis as it lines up an area of potential interest to the bulls. I have no idea if it will hold, but I suspect it's a good area to take a rest if nothing else.

Given my talk of yesterday and today, you can see my negativity; yesterday before the futures had started to trade and today now that we can see their negative bias. I only reflect what the charts tell us and right now they are pointing down again with a couple of exceptions. Unfortunately, it's not a high probability to bet against them.

A note this Sunday before I hit the road. I'll be on the road again most of this week and the posts might be a bit sparse as a result. We'll see how it goes. If something goes wrong and I can't post, then you'll know that I've not falling off the face of the earth but instead am having some technical difficulties. I should be able to post and trade fine but I'll see come tomorrow.

As for the thoughts on the coming week. We have been sitting in an oversold condition on the listed issues and it looked to be giving way to a rally attempt until Friday. We are now probing the lows on the SPX again. If we break early Monday, I'm thinking 1080 minimal objective. Since that's only about another 1.3% down from here, it's hard to think it's worth doing much about. Now if it turns into a retest of the August lows, then it's probably worth considering. My best estimate at this point is that if we do break lower (and I think there's a reasonable possibility now), we likely will catch support at 1080 and at least trade back to the breakdown area of 1100 or so. If that's the case, it's best to hold tight and look to short that move rather than to attempt this one. The channel suggests the possibility of a new low around 1050 or so by the time we get there, if we actually trade that way.

What suggests that we will sell down further but likely won't trade much below 1080; 1060 at worst is that the DJIA broke below it's support on Friday at roughly 9800. Additional pressure lower is likely as a result unless the SPX holds here. If the SPX breaks below 1090, then the DJIA should pick up velocity on the downside near term. Support there looks to be around 9600 if it continues to sell down.

So, on the listed issues, the odds favor continued selling this week and are almost guaranteed if SPX trades below 1090.

On the NASDAQ, we are right at trend line support and horizontal line support is at 1900. A trade below that suggest 1850 or so minimal. If the listed issues sell off, expect the NASDAQ to fall in line. It's still the stronger sibling but it will follow the other indexes if they begin to sell down.

So, although I believe we will see an opportunity to work these indexes long again, unless we hold Monday, I suspect it's later rather than sooner. I'm looking to cut my precious metal holdings (gold) as they report Tuesday AMC and Wednesday BMO. I like this sector but do not wish to hold as much as I have into earnings. GG soared on earnings but came back in Friday. Silver I'll continue to hold for now to have exposure to the sector.

Oil holdings are probably worth continuing to hold so I'll do nothing with those two issues.

I've just placed orders to get back into some stocks we have exited recently if they come in. INTL, CIT, KRI, KEY, AMTD all look appetizing when/if they come in. AMZN is a pure short if it bounces. Earnings projections killed it even while GOOG soared. And how about that selloff in ASKJ. Is that just pre-earnings movement? Lot's of cross-currents.

So, that's my brain dump heading into the weekend. Hopefully I'll write first thing tomorrow morning as intended or later this evening.

It was another strange week of trading where we end the week with the listed issues at new lows and the NASDAQ barely escape with a gain and only yesterday it looked so promising. It's another microcosm of the year where we thrash wildly one way and then the other. We did give up some ground today as we were all long but considering the fact that we ended the week with decent gains we have to feel good about our trading. If you ended the week with gains you should to. Heck, if you are up for the year you should feel good about your trading.

Now that the DJIA is at new lows for the year, the SPX not that far away and NASDAQ still underwater for the year, our measly 11% year-to-date gains look a bit better. Sometimes you have to repeat over and over to yourself that you are doing well, that you are a good trader. If you were average, you would be underwater for the year as well.

As for today, if we look for the bright side, the NASDAQ is still holding key short term support but the listed issues are looking rather suspect. Volume did pull back today and maybe that's trying to tell us something. Even though we are oversold short term, the markets have been unable to catch much of a move to the upside. On the SPX, that 1080 area should looks to be calling still. If we go much lower on the NASDAQ we definitely will look ready to test those areas. That's a shame as we have found some long issues that look really well here. LUV is shining despite all this carnage. So is NITE which we picked up today. How about AMD as well. Is that all fluff?

If we start lower next week, I'm going to have to put on a hedge and keep the best of the best. We may have to trim them a bit but I'm reluctant to throw them out at this point. Even if the short term doesn't give us a bounce, within the next 2-3 weeks our longer term indicators will be reaching oversold as well and that's when we could get a decent rally again. If I can paraphrase Jesse Livermore, "It's the sitting and waiting that's the hard part". As you all know, I find it very hard to sit and wait.

Thanks for tuning in. Next week promises to be another big week as we either get a rally or we work off the time remaing for one. I'm thinking the big boys might want to start loading up once more before the election as "Everyone knows this thing is going to rally afterwards". Say it ain't so. I hate it when everyone knows something!

It sure looks and feels ugly right now as we probe for lower lows. I've put a stop on that SPY finally using the day's lows. If it takes them out then I give up on that trade. Despite this heaviness, unless the lows of 1094 SPX are taken out, we still are holding support. The downside is that if we close down here we have a lower close which is not good.

I've made a couple small adds to existing positions where earnings have propelled the stocks and now they are coming in. The NASDAQ led us higher and now back down. I'll not be around for the close so any closing comments will come later this evening or this weekend.

Oops, there went that SPY long.

With this latest plunge, the market is really testing our metal today. We are closing in on 1100 SPX again and I will need to lift some inventory if we start to violate it. I've taken profits on and off all day but soon I'll need to cut losses if things don't change. Unwilling to give back all the gains of late although I'm still thinking we are wanting to lift in here somewhere.

When a market moves to a rather oversold or overbought condition, it allows one to take the opposite stance (for a little while) without the larger risk that would otherwise be the case. Don't get me wrong, there's still risk for sure, but it's playable. That's the thinking with the purchases in the listed issues today. We have avoided them of late but with an oversold condition, there's less risk to the downside and the ability to catch a swing move back up if you are picking anything of value.

I continue to buy and to sell picking my spots. You can keep up with things over on the Current Portfolio as it's updated during the day. Right now I'm starting to like what I see again. I believe these metals are going to turn and the internals on the market don't look all that bad. That's keeping me believing that this is profit taking only.

Well we indeed did get some weakness in tech today but it's not just tech but the listed issues as well. I've been very busy buying and culling stocks this morning. Lot's of moves. I'm thinking this is mostly profit taking and am sticking with the long only thesis a while longer but monitoring quite carefully. Look at the precious metals, for example. Spot gold slightly down as is silver yet the moves down are reasonably significant. That looks like profit taking. I bought a bit move silver and gold as a result.

I came into today thinking that we might get a little weakness in the NASDAQ ... or at least not the strong gains we have seen the past few days but GOOG seems to be lighting the fire under the worry warts. Up almost $26 as I type and continuing to rise that internet sector definitely was the place to be and will likely make everyone smile today ... if you are long.

I put on some early positions in the SPY which has gone nicely green and I'll look to add once things get underway. MSFT is even lifting on this optimism and is almost trading even now.

Take a look at CAMD. Earnings out yesterday; nice volume surge and push to a breakout area. I got a little piece on pre-opening and will look to add. Added some INTC back as well while it was still red this morning. The earning seasons sure get's the juices flowing. I was up quite early this morning sniffing around because when the market wants to move, you need to be there or get left behind.

We have talked about a tale of two tapes this week and as we ready for the weekend, it's time for the SPX to either start to put up or head back down. MSFT is weighing on all the indexes given it's monster status while GOOG is going goofy. I guess every fund manager has to stick that one in their books before close of business next week to show on their reports to existing and prospective clients. Going to be a nice fall in that sector a week or so from now.

Getting back to the listed issues. They have underperformed this week and now as the NASDAQ sits just under it's 200 day MA and previous top resistance at 1970 or so, it's time for the listed issues to find themselves and outperform the OTCs if this move is to gain steam into next week; which I believe it will. A push back to the 1115 area seems likely if we can hold early. I'm looking to work the SPYs long starting pre-opening and averaging in if the market supports us. KLAC looks to break higher on it's earnings. I'll see if we can catch a move there and of course am watching many stocks with an idea of adding to the long side for short term swing trades.

It was a busy day of trading today as we caught a nice ride on the money wago, made some good gains and cashed them in before the day was out. A little here and a little there ... you know how it goes. I've even continued into the after hours using the volatility off these big earnings reports to trade a little more INTC. Talking of earnings, it's been a long time (think 1999) since I've seen this much volatility afterhours. GOOG is got folks going ga-ga goo-goo it seems as I've watched it trade up as much as $15 and now almost even. No guidance, means no idea what earnings mean ... and thus we just see raw volatility as they bounce it up and down. AMZN has crashed through that $38 support line and that looks ugly for it. I've stuck an ask out there if it can get back close to that number for a short. MSFT is trading down as well. I guess it's just there usual cautiousness that is hurting that one as the numbers have beat the estimates.

Sometimes I feel as if I repeat myself too much but many times I think that the importance of the message shouldn't be lost. On a day like today when we have gotten good gains, it's important to book some of them. Take AMD for example. I didn't have a huge stake and thus I took it all out this afternoon after a great 3 day run into resistance. May be wrong, but I suspect we can buy it back a bit cheaper in the coming days. If not, we will just buy something else. There's always opportunity. LUV I've gotten a decent run in as well and there we are heavy enough to take a little off in case we can't break out tomorrow. If it comes in, we buy some more. If it breaks out, we will buy some of the breakout. A little here ... a little there.

I'm going to pack it in for the day. We have a full day ahead of us tomorrow given these earnings and I suspect a lot of opportunity remains. I'm attempting to stay away from earnings plays given the difficulty of that coin flip and instead concentrate on those that have already reported or won't report for a couple weeks or more. And in the back of my mind I keep watching the SPX. A break of the 1095-1100 area would cause some serious concerns that we get another whoosh down to that 1080 area at least and that won't sit well if we are too long. Need to be nimble.

Lastly, thanks for you support and please continue visiting our advertising sponsors on your way out the door!

This tape is being mighty kind to the OTC issues right now and we have benefitted from that. I'm still wary though as we have MSFT, GOOG and a host of other tech companies reporting after the bell today. Technically the NASDAQ looks strong, but the listed concerns are the main concern right now and if tech decides to take a day off we could easily be looking at another spurt downward. So I'm trailing my tech with some tight stops and booking gains before the bell. We can always get back in as there is always opportunity but we haven't had an outsized gain in the portfolios for a while and I'm not thinking of giving this day back on overnight earnings. I will look to book gains before the close ... at least partially.

The tale of two tapes continue with all things tech catching a bid and most others not. Now there are exceptions as there always are, but look at the relative outperformance of tech of late.

On the listed issues we are technically hanging onto the 1100 SPX area and it makes for a nervous long sider right now. You don't want the listed issues to crumble here as that's hot money pouring into tech and we all know how fickle that money can be. Nevertheless, unless you want to sit this out, you have to work what's working and stay away from what's not. No in between on that one.

I've added a few issues since I last posted and am starting to find it necessary to make some small purchases in the oil patch. I think it's too soon, but some of these earnings are propelling companies forward and I want a little stake in that sector at some point so ...

The market has rewarded our short term bias with what looked like a bit of a short squeeze higher led by the chips. We have flattened out a bit since and I've put a more money on the table today as prices allowed. One of the huge advantages the little guy has as a trader is the ability to swing into action and turn on a dime. If you can ferret out position plays and move into them, you can do so rather quickly and become as invested as your risk profile allows. At the same time, you can move back to flat or out of the market with a wink of the eye as well and that flexibility is our biggest asset.

I'm expecting some sort of intraday pullback in here somewhere and then probably a push into the end of day. Oil is cooperating, the financials aren't getting smacked wildly today, the technical setup is there, etc. We'll see if it plays out and attempt to capitalize on it while it's there.

Although we are not out of the woods on the idea of a potential move even lower from here, I kind of like what I'm seeing so far. Internals are mixed to negative but there seems to be some real buying taking place when the negativity hits like it did shortly after the opening. I've added some more tech names in INTC (long time since I've tried that one), EMC, PWAV (added on that early weakness), and INTL. Even added a bit more gold that we dropped yesterday in front of earnings (GG). Oh, and I spoke to quickly on the one earnings play we actually kept. It's down of course even though it raised guidance and beat. Hard to hold a stock that's near it's high into earnings. I've set a stop at the lows of the days but reckon that we will be able to hold this one and add to it in time.

I've been harping on the idea of sectors for a while now and thought it might be best to take a moment and say why as the past couple of years it wasn't as important. When a market is trending strongly, in either direction, it doesn't matter as much which sector you are in so much as which stock. They are pretty much all going up or all going down. This year, however, they aren't all going up or all going down. For the most part, there are a few going up, a few going down and the rest just sitting there in a drift. The internets, the gaming, the precious metals, the oils are all strong for now. The non-precious metals and steels were strong until a week ago. They need to base again in order to go up more if that is what the future holds. The same can be said for defense. Then there are those sectors that keep losing like durable goods, furniture, etc. When a market is trading in a slow trend or sideways trend, you have to look more to working stocks in sectors.

This morning we had a bit of a lower opening shaping up but the jobless claims seem to have helped the sentiment and the futures are perking up despite a weaker dollar, higher precious metals and higher oil prices. The big question is was yesterday's reversal for real and will it stick? The first couple hours should give us a good indication. Given it's timing, I suspecting it will for now. I'm looking to make a few more short term adds in stocks that have reported. Although we continue to avoid earnings reports like the plague, we took a bit of a chance last night holding a smallish position into earnings on CELG but that appears to be working well as they are bidding it higher this morning. Thank goodness we actually caught one and will look to add to it on the breakout now.

From brain dead to brain child in a day ... that's what the market can do to you. A reversal of a reversal. Talk about choppy. Remember choppy trading typically happens at turns ... not always but it's definitely a sign. I'm not sure this one turns right here as I would have rather seen the SPX trade down to the 1080 level (low was about 1094) but the market isn't always clean in it's actions. It could be that we still trade down there in the next day or two but no guarantees. Regardless, I see money that has escaped sectors that have been strong for a while move into technology. It became apparent about a week ago that something was going on. We dismissed it as likely being just some short covering. Lately we are seeing relative strength though and that suggests that it's something more ... real money being put to work. My guess is that the big fellas are gearing up for the fabled November run. Sometimes these things have a way of being self fulfilling.

In the meantime, there's a couple weeks to go and our longer term oscillators still suggest weakness ahead. Near term we have been harping on the oversold nature of the market and the likelihood of a bounce. Given all of this, I'm thinking short term move higher (or at least a pause in the downtrend) over the next week or so, then some resumption of the move lower. Whether that resumption takes us to the target of 1080 or lower, or whether it works lower is anyones guess at this point. A sharp selling stint would set up that November move the big money seems to be betting on.

Between now and then though, there's still a lot of trading to do. The oils and precious metals still look good from a chart perspective but the rest of the market is suspect. Tech has been trying to base a bottom. Maybe it's ready to shine again for a while. Good night.

I've continued to inch into a few longs but I'm being rather cautious about that approach here. The precious metals were a gift today but I have to tell you that the action in general today is somewhat bullish. The fact that we are oversold is showing as the pressure to descend is met with buying as things appear cheap. That's the whole idea behind oversold/overbought, the fact that things have risen to a level that they appear overvalued or have declined to a point that they appear undervalued for the time frame in question.

I'm pulling the one metal long GG, as they are to report after the bell. I'd rather not hold that particular stock given the risk so we'll book the small intraday gains. Again, I think risk mitigation is the best policy for right now.

I've completed the closing of all the short positions at this point although my timing on that SPY short closure left a bit to be desired. Unless the financials collapse again, it appears that this market is going to climb this latest wall of worry and allow the oversold condition to lift. At least that's what I'm banking on. I'm uneasy about the idea but I like the longs we have on the table so we'll run with them for now. With the obvious rotation into tech I'm going to try and work a speculative SMH trade to the long side as well. I don't know about you but this whipsaw ... can't make up it's mind type of market sure places a lot of pressure on a trader. I'll be glad when we see a strong trending market once again ... either way.

We are starting to see a lift in part of the financials and I'm looking to pull in my SPY short in here somewhere. The insurance policy is done and we need to lift it in here somewhere. The rotation into chips is fast and heavy today. This is a difficult tape to navigate as the money keeps sloshing around.

The financials continue to stink up the joint while the chips have put on a rally; maybe just a short covering one but a rally none the less. I'm still holding the short as a hedge and will do so until the financials start to turn if in fact they can.

Check out AME which announced this morning. They are breaking out on volume. I've added a little and am looking to add more.

The tale of two markets continues with the listed issues getting spanked and relative strength being shown in the OTC. The so called smart money is showing that the bet is still that chips will lead us higher in November. I'm not certain that this will be the case, but I'm not one to argue with the smart money. I'll simply try to ride along with them. In the meantime, the SPX has clearly broken down and today appears to be a trend day down. I'll look to add to the SPY short on strength intraday for a trade. We are still oversold getting more oversold on a short term basis and when we stretch enough, we will get an oversold rally. My guess is it comes from that 1080 area on the SPX. That could be today but is likely tomorrow or the next day. The question then will be, how far can a rally carry near term. My longer term indicators suggest not that far yet ... so we're going to have to be selective on long adds for now.

The NASDAQ is doing it's part with the current rotation to chips to hold this market up but I'm not sure if it's going to be enough given the latest Spitzer moves on ING. The financials are starting to shake in their boots with the lead indexes there down over 1.2%. The lead group today is oil and metals with chips and biotech holding steady. Most everything else is trading red with the heavy financials pulling hard.

As you know I had concentrated in cash not knowing the near term direction yesterday. I guessed wrong thinking that we would hold. Being in cash and being a little guy though affords the opportunity to move quickly so that's what we did this morning to capitalize on what the market is offering. The running thesis now is that a quick trip down to flush out longs will set up a good sized bounce in just a few short days. I'm holding my longs as a result and looking to add to them when the time looks ripe. In the meantime it's metals and SPY short to weather the storm ... as long as they hold their gains.

The market is trying to fade that gap down and I have put on some more SPY hedge as a result. I was fortunate to catch two more metal fish on the opening in WTZ and PAL. That makes today feel a lot better than yesterday ... so far. It's important how the SPY trades here in the next hour or so. Oil inventory numbers out in a few minutes.

I did put on a few trades before the pre-opening got goofy adding a decent chunk of PAAS and a little GG but that was all I could get in the metals so far. Started a short in SPY as well and will add if they do in fact fade this gap down.

I was trying to think of an apt description of this market and kept considering lyrics from songs like "It hurts so good" or "You can't always get what you want" but even those fail to appreciate the frustration one feels about being so right yet so wrong as it appears we will gap down this morning through support on the SPX which suggests that 1080 area is next. The frustration of course is that we reversed ship in our portfolios right before the event we had orginally considered most likely as we tried to time a turn. Now we are stuck holding the bag. All is not lost though and we should consider that we are 85% in cash here. It's just that the potential gains we were gaming will clearly not materialize as a result of our bone head moves.

Oh well, let's move on an consider the landscape. Last night's work indicated that a triple bottom on the dollar against the Euro was being tested and today it is failing. That hikes the price of gold and I'm bidding pre-opening for some although I doubt I'll catch any until I have to pay a premium after the market opens. This latest breakdown of the dollar and hidden tax on you and me could lead the precious metals to a breakout formation of their own and it's worth putting a little on books in case. The technical setup is shaky so we can't get too goofy in doing so but the linkage between the currency weakness and metal strength has been evident for too long to ignore.

As for the equity markets, I would expect them to fade this down open and then let her rip further. Oil will likely be the blame today as it's trading higher again but the deeper problem is the reversal yesterday off the Spitzer scare. This market is oversold but sometimes another two or three days to really oversold occur before relief. This looks to be one of those times.

Sometimes the markets have a way of making you look like a total idiot. Today's market has that flavor to it. I've been working the trend lower and after looking at the charts last night decided that another short term reversal was likely due. I began closing earnings related shorts yesterday and took most others off this morning. The Spitzer news though killed the SPX today and is making that trend reversal idea look rather lame at the moment. We are going to end today on a reversal from a gap higher to a lower close. That's not technically encouraging and I've pretty much backed off any new trades and am concentrating only on a few longs at the moment. I'm uncomfortable holding any size into an earnings report (too much risk still) and because we keep having to play trend reversals rather than trends, the difficulty of timing becomes quite apparent. Tough day for the longs and tomorrow sets up even larger as the SPX needs to hold support here.

This morning I talked of a tale of two tapes. This afternoon, the winning tape is the losing one, the listed issues. The financials have suffered all day under the weight of potential litigation from the NY Attorney General. That has weighed on them heavily. The notion that a lawsuit that may be filed could impact the market so greatly shows the weight that this one person has right now. He can literally bring down a market ... at least for a day.

I believe that the larger picture in the market currently is showing us the bipolar standoff that exists at this moment ... much like the bipolar relationship in politics. We have a market that cannot determine what the picture looks like 4 to 6 months from now. If that picture appears brighter than expected, we will get that November rally. That's what IBM was telling the market today. If the instead determines that the Spitzer view is more likely, where endless lawsuits and more brown clouds overhang the market, then that November rally will look more like a whimper.

The larger technical picture still suggests lower prices but the shorter term technicals suggest that we either rally or move sideways for a while in order to work off the pressure caused by recent losses. I appear to have made the mistake of exiting my short positions while they were still working. Makes me rather mad but the fact that we retreated mostly into cash eases the pain a bit as I'm not bleeding profusely as a result. Disappointing yes. Deadly no. Heck, sometimes moving to cash can actually help you as it gives you a little different perspective on the markets as the bias you always carry is removed to some extent since you no longer have skin in the game. For now I'll sit tight and look to add to these few longs we have started and maybe add a couple more once earnings are out on them. I don't want to dismiss the possibility of a tech led rally into November nor do I want to ignore the importance of 1100 holding near term on the SPX.

The fact that this market did hold up despite the serious raids on financially related issues has caused me to go ahead and cover more short positions. If you take away our long DIA position (have inched the stops up again), our cash position has grown to 86% which gives you and idea about how certain I am as to market direction near term. There simply is too much rattling of the cages here that is causing short term gyrations in the markets and thrashing most all who play. Wish it were otherwise, but it isn't. I've fallen back to mostly cash which guarantees that you don't lose big while at the same time providing no big chance of an advance as well. I'll just have to wait for a better edge before comitting significantly again. Until then, I'll keep looking to build some positions in stocks that have already reported.

If you are short term trading this market successfully right now, I tip my hat to you. The moves look pretty random to me. The Attorney General from New York continues to make waves and has simply single handidly destroyed this mornings rally on the possibility that he may want to move on the health care industry next and even the derivatives trading. That's where all this pressure on the financials is coming from.

So, what do you do. Just ignore it? That could be dangerous if you monitor and tune your portfolio on a regular basis as falling knives tend to cut. You could move to cash which is what I've been doing of late. I hate it as you can't make money in cash, but this market simply isn't offering up much as the chop just kills you.

I'm about to stop out of my DIA long unless this blows over quickly. My few long adds outside of AMD are starting to take on some water as well as a result of these disturbances. I'm just going to have to back away from the monitor and give this some time while I sit mostly in cash.

It still seems you can't buy a good breakout. This morning I bought some CELG and I'll be darned if it isn't coming right back in. Nice little base, some decent volume, but alas, it's a breakout and they just aren't performing because the overall market isn't supporting the moves. Look at PWAV for another example.

Now I'm not going to dump these new adds right away as a result, but it's frustrating if you are trying to catch a momentum move and the momentum dies right after your adds.

The financials are really struggling this morning and that's weighing on the listed issues now. I see red on my screens for the DIA and the SPY. Although we are oversold, looks like it's not enough to make us bounce and defy gravity ... at least not yet. Short term though, I think we have to stay mostly in cash and look to work issues that have already reported. I see too many examples of earnings coming out and stocks getting slammed. We need to avoid any potential slams.

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