The Daily Dose of Trading Comments

I thought I was done but DELL just hit the market with a warning and that took the futures down in a hurry. I've just covered that SPY short for a nice gain for about 20 minutes work as I suspect that the 1200 SPX level will offer support now and we are already trading the 1202 level with this after hours plummet. I'll put an order out there to short again in after hours if we lift or will simply wait for tomorrow. You never know ... you just work the odds.

Today ended up being one of my busiest day in terms of trades in probably a month or two. You never know when it will happen nor do you really try to anticipate it, but instead you simply look at the charts and ask yourself, "What is the likelihood that we trade higher or lower from here?"

Many times, the answer is a coin flip and you don't have an edge and therefore you do little. Other times, like today, you look at the run higher and say to yourself, well, the odds are not that great and a fade trade from here makes sense. That's the way it was today. As a result, I took profits on some individual longs, I trimmed some others yet I also bought some I liked. On the short side I added some individual names and put a hedge on towards the end of the day as well as traded in and out of the futures. Busy ... busy ... busy day.

It's Halloween and I'm going to shut down a bit early which will mean I have some late night work to do to ready for tomorrow. In general, the market did a lot today to confirm some follow through. Doesn't mean we trade straight up though and unless you don't care about the day-to-day movement, it is important that you pay attention to it if you intend to work the wiggles on the way up and down. Have a good night and get your treats ... not tricks.

They are pushing to the 121o SPX area so I'm starting to put a little out in terms of short positions. I don't expect a payoff today but with the Fed tomorrow with a surge into resistance, that makes a fade play here reasonable, especially with it acting as a hedge against our longs.

As I flip through the charts here I can see that the NASDAQ has kissed the underside of its 200 day MA while the SPX came mighty close this morning to the 1210 area we have been talking about. I'm not sure we are done to the upside intermediate term but the fact that we ran up to resistance points and then clicked back down suggests that there is something to them. The Fed head talks tomorrow and walks our rates up again. I don't think they are going to give this market what it wants in terms of accomodation in the wording of its decision. That likely makes some selling more likely.

I'm going to walk through each of my charts in the next hour or so and cull some, take profits, or simple decide to hold if they are acting well on decent volume. I will almost certainly be looking to sell and hedge a bit too come this afternoon (if we close at/near the highs) and or tomorrow.

I don't expect a lot of give back in price today and so far they are holding almost all those early gains. The give back comes tomorrow if the Fed doesn't say they are finished or almost finished. I actually expect us to trade into the heavy resistance zones of 10500 DJIA, 1210-1212 SPX before the Fed speaks.

The metals just fell off a cliff in terms of price. As you know, I've been thinking you buy weakness there and sell strength outside the two names that I keep a position in. FNX had good news again this morning and is once again bucking the trend. I was getting worried about it last week but just hung in there waiting to see what it wanted to do. It has now broken it's short term down trend line and is looking fine once more. I'll look to add to it on weakness if the general metal weakness pulls it in at all.

Just a note, I finally started a short position with a reasonably tight a minute ago in DADE. I'm watching JOYG also for a short start. I expect this market to have troubles around the 1210-1212 SPX area and am picking at a few charts where earnings are out and they offer downside opportunity.

It's been a busy morning as I've added a little to existing positions that are showing well, picked up some new starts in names like DJO, RCCC, ILMN, UTHR, and ICUI and even tried a fade trade on the futures for the DJIA and the SPX but the latter I pulled for pennies a few minutes ago when they didn't show well. That trade is there but later today or tomorrow but at higher levels I suspect. Bulls have the bears on the run and I don't hear cease fire from any quarters yet.

This week we have a full barrage of economic data points starting with the personal income and spending numbers that have already been revealed, the PMI which follows a half hour into trading, the Fed tomorrow, ISM and factory orders, and the payroll numbers on Friday. Technically we have room to run still to the upside before consolidation should set in on my short term oscillators. We are still within the intermediate term down trend but that doesn't mean you can't be long. We started adding individual longs last week as a result as we changed our short term thesis.

They are starting this market out with a lot of carry over from last week. A bit to exuberant and I suspect they will come back in but the 1200 SPX area is now support and expect them to buy that zone now on the day.

European markets are putting in a pretty strong push higher and the futures here reflect it. They opened slightly higher yesterday for the overnight session and have crawled higher throughout the evening. Fridays strong performance, the hammer buy signal on the SOX and the second trip in a week to visit the 200 day moving average on the SPX has the bulls literally knocking at the door. Last week we saw that there wasn't a bunch of stops sitting at the 1200 SPX level. They are up above 1210 to 1212. Look for a battering on the 1200 SPX door this morning and a likely break higher into the 1210 area. Fed heads give us another increase in the rates tomorrow and maybe there's the hope that they will say they are through or almost through. Or maybe it's simply the buy programs trying to get this market started because, after all, it's November. All I can say is that the timing was right for an attempt to work this market higher and still remains right for a further push. I don't like to chase higher openings on weekend carry through so I'll look for a pull back to work further longs into.

Our thesis for a week now has been that the market wants to work higher into November. It's November and there looks to be still more work to be done on the higher side.

With a few minutes left to trade, it appears the gains are going to hold into the close. I've had a hard day today not being able to really make a difference in my intraday trades. Sometimes that happens. When I talked about the lows holding a rally developing and the fact that we would once again test the 1200 SPX level, I really didn't think about this kind of thrust. I was thinking that we would work our way back to that level over the coming week. As I write, they are within a stones throw of that level. Go figure. Volatility continues and there clearly is a desire to position for the proverbial year end rally.

Crazy as it is, it is what it is. You can't make every trade and you clearly will have set backs, but the key is to be successful. To me that means positive returns, small draw downs, and outperforming the indexes. It's not easy to do and it really is a job. I'm tired and this will be the last post of the day. I've had a long week. I'm remaining long going into the weekend. You have to wonder if this is just another one day wonder. Wish I could tell. I suspect not but these giant moves smell of short covering. There's a point where the short covering becomes real buying. I don't know if this is it or not but I've got to keep leaning to the long side until they break the trend back down. So far they haven't.

Late day failures have been common place of late but today appears different. Early key support held and there just isn't a good reason to short this market on a risk/reward basis again just yet from a short term perspective. Look for the market to try and close on the highs. They have the momentum gain for the day and I suspect they will press it.

Personally, today has been tough from a trading perspective. That rally before the news broke has held and hasn't provided an out for anyone caught the wrong way. I'm not sure they are going to give them much of a chance either.

Contrary to my thoughts, they run this market higher in front of the indictment news. I suspect that will lead to a sell the news reaction when it's announced shortly. Getting very choppy. Bigger picture, they have held the levels they had to hold on the daily charts. That should lead to another test of the 1200 area. The next time up offers a better chance to move to the next resistance level of 1210 SPX. Talk about a tough road higher!

The indictment announcement is due out in about a half hour in D.C. and until that's announced, it's hard to see this market charging ahead. I thought that yesterday the gloom was leading to a reversal but it just never caused a lift. It's Friday and we may see it today as we have traded lower off that early enthusiasm. Very hard to gage intraday. No bias.

The little H&S pattern failed and now we are seeing lower lows. It's hard to find a positive in this market and now we are back to seeing if the bulls are ready to defend the 1180 SPX area or not. It's a rather critical stand. My support line comes in right now at 1178 which is slightly lower than yesterday's low. It appears now that there will be trades back to that area and I'm looking to find some more shorting on the next bounce to prepare for that likelihood.

The SPX seems to be carving out a little inverse H&S pattern intraday (yesterday and today) right now and that projects to a break of the morning highs. If that happens, then the market will have a little more solid footing and it may translate to some buying in the more beaten down stocks like the semis. I've worked my short early on the SPX futures and am waiting now to see if we can break higher.

They are showing a nice spike to start the day but I'm watching the NASDAQ and the chips. I want to see some lift come in there before I get comfortable. The chips are steadying ... lower ... but that's a start. I'm thinking we should see some volatility today as a result of the cross currents again and plan to use the futures to spread against the long SPY position for trades intraday.

Yesterday was dreary and they took these markets right back to the support levels that have to hold or I'm afraid the selling could get worse. Seemingly realizing that, the early futures point higher despite further draining in the chips. I rode the SOX down until last night and finally dumped the position taking a pretty good loss on that trade. After hours it just got worse and this morning they look mighty heavy as well. Until the SOX gives us a green trade, don't expect a whole lot out of this market. I'll be keying on them as part of the what's coming thought along with the Russell. The hot money is cold right now and if they want to lift now that they have shaken out those who have wanted to be bullish, those sectors have to lift as well and attract some buying.

A break of 1180 SPX isn't the end but I would get pretty nervous were it to happen. I'm about 55% in long positions overnight taking that SPY long exposure at the end of the trade yesterday. I would have to start lightening up if it appears we are breaking down farther and would have to consider some short exposure again.

That was ugly and after hours doesn't look much better. I'm having a difficult time finding a reason to remain optimistic here. MSFT trading heavy on its earnings as is KLAC and now the SMH has totally tanked after the close as a result. I'm turning the computer off as I simply want some peace of mind for a while here. Tomorrow will be a litmus test as it's Friday, the markets are at inflection points and the negativity build is great.

Well, we are there again; at the inflection point on the SPX. I've poured some money into the SPY here as I want to hold some amount of exposure overnight.

The disgust and ugly trading continues and it has reached a point where either this market will find a turn or the idea of this fledgling short term up trend will come to an abrupt end. The NASDAQ is testing its 200 day moving average (support) at this point and the SPX is close enough to an area that it needs to hold (1280). Same is true of the SMH/SOX. If there's much more give back the sour taste will turn bitter. For now, I continue to be patient and until now there's been little sign that a turn is in the cards. I don't like the way the Russell is trading as well. All in all, ugly. If they ever needed a strong close, today would be the day.

This market looks and feels very ugly this morning. Sentiment is not something that's easy to trade on a very short term basis unless you get an exhaustion or exuberance type spike that fade. There are times, however, that you get the feeling that one side or the other is really pressing while the other side of the equation seems to be giving up. It feels like the weak bulls are giving up this morning, especially in the chips. Although I don't like to simply take the other side of a trade because I think a washout is at hand, I'm holding my bullish leaning here on a gut feeling that the press this morning is just that ... a press. I may have to eat those words but when I get that feeling in my gut, I try to pay attention.

The market continues to struggle. I've been riding a short position this morning and have switched for now as we are getting climatic type selling intraday. Sure is getting pessimistic again. Chips are really struggling and they will need to turn for this market to have a chance to rise once more.

When you look at the market, you can do so from differing vantage points. You can look at the very large picture (time frame of months to even years), or the intermediate term picture (weeks and a few months) or the short term picture (days to weeks) or, if you care to, intraday. For regular readers, I know this is a bit of a repeat but as new readers venture to this site, it's worth repeating occasionally.

Here's a chart of the short term picture of the DJIA.

It serves the point and you could do the same with the SPX, the NASDAQ, etc.

I've marked in two time frames, the intermediate term down trend line and the short term up trend line. Currently this is my assessment of the market. Yesterday, the DJIA moved right up to the area where it threatened the intermediate term down trending line. Price was rejected at that point and we had prices back off and then sell off a bit into the close. That's when I wrote that I didn't like the way things closed and was considering hedging short overnight.

Now, zero in a little closer to a 10 day chart.

On this chart you see a slightly different picture. Here we have a break of an intraday up trend line late yesterday that ended with the gasp of selling to close the day. That was a signal of potential early weakness today and again, was what prompted the comment of hedging with a short overnight.

As you can see, there are time frames within time frames within more time frames. Some go up, some down, some sideways and many times all at different times. Making sense of them all the time is not practical because many times they are conflicting. Making sense of them some of the time is possible. Understanding what time frame you are trading with is critical.

So, turning out attention to today, I would expect to see some follow through selling today based on the shortest of time frames. A retest to find support somewhere above the bottom of the short term up trending channel shown above is likely. I expect that the test will succeed and we will be knocking on the SPX 1200 door once more in the coming week.

So, in my own trading, I'll be looking at short positions intraday today while continuing to hold and potentially add to long individual stock positions on an intermediate term time frame.

Today marked the 3rd straight day that the longs came knocking at the SPX 1200 door. This time they got it cracked and when they saw there wasn't mad short covering taking place on the other side, they closed the door and price came right back in to that first level support of 1192 which is about where they closed them.

The NASDAQ kissed the underbelly of its 50 day moving average and the DJIA fell just shy of that 10450 area that we were looking at a shorting opportunity from.

1180 SPX is critical to the market now and if they want to test the bulls once more, that's the area were the bullish resolve will come forward if 1190 gives way. Internals were weak again today and volume was up again on a down day. In short, there was no pretty dress put on an ugly face today. They tried but when it didn't hold, they scrambled and decide to wait for another day.

All of this so far is the up and back that takes place when a market is trying to find it's footing and climb the wall of worry. Tomorrow could bring some downside follow through early and we'll have to watch for that weakness out of the gate most likely. Technically we are still OK but the test is coming for bullish resolve and it could be as soon as tomorrow. I'm considering a spread short after hours here for some protection as I did not like the close at all.

As we head into the last hour of trading, I'm wondering if the bulls will dress this market up once more. The internals are like yesterday (so-so) and it seems that there is a desire to continue to show this market better than it is in order to attract further buying. I'm thinking they will try again. Let's see how it plays out.

We are once again at that inflection point where you either find buyers to start bidding or you find lower levels. I'm starting to nibble on thelong side again as a result as I like these kind o frisk reward trades.

As we inch higher in these markets I become more and more protective using the futures or the ETF contracts to hedge my long desires. If we can get this last spurt higher, I believe that will be an opportune time to short for a swing trade as the market digests and tries to ready for a year end rally. Don't know if it will give it to us but time is still on the market's side.

Today's action is back and forth and not overly concerning as it's within the context of the move higher. To get a good shorting opportunity we need an exhaustive type run into resistance when time is no longer on the side of the market. That setup is there for the next week or so. Could happen right away or later or maybe not at all. For now, I nurse my positions along and simply attempt to continue building on the recent gains we have shared.

We have an interesting set taking place now. 1200 SPX is falling and the NASDAQ is stuck at the underbelly of the 50 day MA. The question becomes, does the SPX pull the NASDAQ higher or go higher by itself to that 1210 area where it is likely to fail the first time around?

Note the 10450 area DJIA looks like an opportune time to short as well. Right now, you have to keep leaning long, expect up and back action and realize that we are still working within a intermediate term down trending market. That has not changed yet.

That push back at the castle door occurs again and we quickly retrace a good 3 SPX points. So now you have the set up for the bust out visit. Two times you knock, on the third visit you bring the axe to break the door down.

The question now is do they retrace this back to the 1192 SPX area or will we move back to the test from a higher point? I don't know the answer yet but the environment is favorable here this morning for another push before the day is out.

Like it or not, they do want to rally this market. They dressed it up in a pretty costume last night after it had been ugly all day. Again this morning, they took the tattered look away and gave it fresh life once more.

I've built up a decent sized SMH position already and just added on the break above $34.25. Market is definitely wanting to pick up steam here and I'm looking on the long side as a result. Resistance just above. This is the second knock on the door. The intention is clear; keep knocking until you knock it down.

The other tell in this market will be the interest rates. If they break higher, that will put pressure on this market, so that's one more thing to watch.

I've been making a few more purchases this morning in new issues, adding some DPZ and OMCL. Still playing it small for the most part but I did start that SMH long and will look to add further to it today and the remainder of the week. It's pretty clear cut if you are wrong there.

I'm running pretty late this morning having stayed up way too late last night for personal and market research reasons. If you want to keep it simple, watch the Russell 2000 and the SMH/SOX. If those two indicators are green, watch the resistance points get attacked. If they pull back further, it's the support side of the equation coming into play. That will be true the remainder of the week. The chips will make or break this rally and I'm considering starting a large long position in that index (SMH) as it's at a critical juncture where it will give a tell soon.

If you want to be bullish here, you got exactly what was wanted at the end of the day. The boys with the programs kicked in and drove the market up to make it look better than it was. Sometimes a mask will work for a while and right now they are masking some ugly internals in a pretty costume. It's all part of trying to get the market to work it's way higher in order to set up that end of year rally that is so coveted on the Street.

Look, I try not be cynical and look to simply take what they give. Lately we have been reasonably successful in doing so and ideally we will keep that going in the coming days and month. All year we have worked hard to stay even and to start getting ahead. Finally that is starting to happen. Hopefully the commentary provided here is allowing you to do the same.

Right now we are leaning long and wanting to slowly get longer when opportunity allows. This sort of back filling session like today allows that. The real problems lie ahead of us as we creep higher, not the back filling type action we are seeing today. Yes, we could sink into oblivion and that would get our attention if the general market started to do so but it's a little too early to believe that to be the higher priority scenario. Even if it were to happen, since most of our money is being deployed in stocks that have signaled earnings or have already released them and are sporting nice charts, we should have time to get out of the way as those stocks should hold up a little longer than the general market if and when the turn comes.

Everyone has a different style when it comes to the market. Some are faders, some momentum riders, some non-technical, some this, some that. If they are successful, then they have found a method that works for them. I tend to trade mostly as a fader but I will change my style for a while depending on what the market is offering. I bought my first momentum trades in light years just recently and they are working OK for now. That's a function of the general market supporting a continuation move. That's my style. You have to develop yours and you have to read my commentary in light of my style.

Enough for today. See you tomorrow. If our read on this market is right, we should see the market close near or slightly above the 1200 SPX area before the week is out.

Up 20 SPX points one day, down 10 the next; man is this volatile action? Pretty hard to game eh? I haven't really had much success today. Staying with the bearish intraday bias would have garnered some decent gains but I still think that that 1190 area should garner support if indeed the short term bias has changed which is what I do think. So, I'm pretty much in wait and see mode. I do not wish to forfeit recent gains and thus I'm not desiring to make a stand here with leverage or size. Easy does it, reasonably small steps here as I still lean long over all.

We are getting to levels now where the buyers should start to show up. I'm starting to make some index purchases on that side now. Again, this is nothing more than trying to take what the market gives. All mornings I've been looking for trades back into the 1992-1994 SPX area and we have gotten there now. If we are going to find buying it should begin to show up at this general area.

Trading todays market on an intraday basis is challenging as there is a confluence of factors tugging at it. There is still too much negative internals though so you have to continue to consider that today and the next day or two may be more about digestion of the move yesterday than anything else. That's my overriding thought process as I approach my intraday trades. On the bigger picture, once the legion of soldiers back this thing up and take another running start at that castle gate, the next hit will be more interesting and have greater potential to find those stops.

It took a while, but when the big short covering spike around that 1200 SPX level didn't materialize, we instead have seen the market trade back down. I would think that the 1190-1192 SPX area should provide pretty good support and I do think that some backing off here just sets up a better shot at attacking that resistance in the coming days.

I'm trading around a bit intraday today mostly working with the ETFs still. Having covered my shorts I've turned long the SPX looking for support to materialize here soon around the 119.60 SPY level. Just trying to nip small profits intraday while I continue to search for and add to individual stock longs.

It appears to me that there is a concerted effort to find and take out the stops that should be located around the 1200 SPX area. There definitely is some prodding take place as they search for them.

I'm sitting tight, long individual stocks and short the ETFs. I'm not inclined to pull those ETFs into the strength as I believe we still have a decent chance of coming back in a bit and rewarding our patience.

I'm a bit surprised at the metals markets today. The dollar is taking it on the chin and gold is skying as a result. I took out most of my positions yesterday because of low volume rises into resistance. Doesn't look to smart right now.

Note, even though I'm short into strength, I'm doing it with the ETFs as I don't think we get a big back off and secondly, I continue to add post earning plays. So far this morning I've added RNOW, WBS and JDAS for example.

Well, stocks didn't exactly crumble off that lower opening now did they? The internals don't look nearly as good as these headline indexes are acting and after a huge run yesterday, just seems like a little carry over buying and some more short covering on the weakness. I'm shorting a bit more into the strength.

Yesterday we got another one of those goofy runs (they come both up and down) where there's really no way to justify what happened. That run pushed the indexes right into resistance which likely will halt the rise again ... for now.

I suspect the trading is going to become more two-sided as we head higher and as a result, I'll likely look to work both sides in the coming days selling strength and buying weakness on intraday trades.

The thesis I laid out yesterday is for the push to the 1200-1205 SPX area and then a quick back off and another rise. The quality of that rise will give us a good understanding of the potential for a 4th quarter rally. For now, all we can say is that the setup is starting to appear. If you consider the 1200 area like a reinforced wooden gate at the castle of higher prices and that move yesterday as a legion of soldiers making a long run before ramming the castle doors, you can imagine why the door didn't collapse on the first hit. More likely, the legion will back up and ram it again. The question in the market, just like in the movies, is how strong that door is? Will the legionaries lose enough strength trying to ram down the door or will they instead find their way inside the castle. And what's more, is there a second door inside? In our case there is from 1210 to 1212 SPX.

Sometimes it amazes me just how much they can move the markets on emotion. The late day surge today was all emotion be it short covering or new purchases. I shorted that late strength and now we see the futures trading off some 5 points or so NDX.

I can't emphasize enough that you need to try and trade within reason. I purposefully haven't traded with size as a result. I'm inching into some positions instead.

If you haven't read the posts from earlier today, please do so and check the Trading Thesis as it was updated today. Expect more strength but at the same, don't expect these resistance levels to simply disappear without some sort of fight.

Well, goofy tunes again here into the close. I'm starting a short on the QQQQ as a result as I think 1200-1205 SPX will be resistance and 39.20 QQQQ the same. They may blow straight up here but I think the odds are not that great for a skyward move into resistance without some sort of back and fill.

I keep looking for an opportunity to buy some SPX or NDX futures intraday but they keep holding the intraday trend line higher and just are not giving that quick spurt lower. So we wait. No sense pushing anything here. If the thesis I've outline is within reason, then we are too close to resistance to buy and hold again yet too far to start a short let alone too risky. I keep looking at individual names as a result as there's some plays there coming off of earnings.

Volume isn't very heavy on this big rise and that's a little bit bearish overall. Add to that the chips woes today and you have a market that, although higher, seems to advancing in a climbing the wall of worry style. On the flip side, there are good internals on the push higher and the point gain despite the above problems is reasonably impressive.

I promised a few charts of how I see the markets at this point and why I think they are going to try and put together a year end rally once more. Earlier this month I put out a piece of work suggesting that the year end rally would not take us to new highs. That remains my thinking but given the levels we sold down to, I think they could still get their year end rally and stay at lower lows for the year. Take a look at those thoughts as I have posted them on the Trading Thesis link.

As I prepare a few charts to explain my thoughts on the year end rally attempt that the charts seems to potentially support, I'm also trading of course. I have taken off all the added positions from last week and am back down to the just FNX and BAA. I like those charts too much and want to hang on to small pieces of them at all times with the latter being one I discovered recently and am simply looking to build a position in.

As for the general market, a little wobbly action that was bought an new highs just made. Looks like they do indeed want to support this market here and the buy the dip mentality seems to be coming into play once more. Chips still struggling and they were the leaders down in that early dip. I continue to look to work trades from the long side in the futures today as I like the way the market is behaving.

I'm looking at these metals positions here and I think you have to consider selling them soon if you have added them last week. I've put some orders in up above current levels to take profits. As I said when I put the positions on, I believe we are going to consolidate at these levels for a while before we get a further push. I'm still thinking that way and am looking to trade them, not hold them.

As for the general market, it's holding well. I like the action early and think we could do well today on the bullish thoughts. The fly in the ointment is the chips as they continue to struggle. As long as they hold and don't bleed too red, we should be ok. They led last week and are consolidating short term.

They are taking them higher this morning and with very little let up. Retailers and small caps are strong. Chips struggling early. I expect some sort of back off after this straight climb up in the SPX this morning and am working a trade with that in mind. So far, the thought of the market working higher is quite on target as it sails in that direction.

As I looked at the charts this weekend, I can finally make out the potential November rally and bullish case for the market. The setup is staring us in the face as we walk through the last week of October. Essentially, the charts are starting to show the potential for the end of year rally and I'll post more thoughts on this as the day wears on with some marked up charts.

As for this morning, oil is under pressure as are the metals. The futures are pointing higher but I don't know how much we can trust them out of the gate. We have to be wary of options unwinding but more importantly, how the market reacts to the continued onslaught of earnings and economic related news including the Fed. It promises to be another week of volatility.

What is quite clear is that we have some lines on the chart now that we can use as a guide to tell us if we are breaking down further. When the market is trying to carve out an intermediate term low, where those lines will fall is quite difficult to determine. You look for live angles and support areas but the emotions of traders make it blurry at best. Once this settle down a bit the lines become more distinct.

I'm in a mode of wanting to lean long for a little while now. I'm wanting to do it primarily in the tech stocks and am using the NDX as the vehicle. I'll stick with this notion as long as it makes sense and that depends on how the market acts.

It was an up and down day and overall, they held pretty well with the DJIA weakness. Internals were good and now it's a question of whether there were options games on either side of the equation and how that plays out come next week. I continue to view this market as reasonably dangerous here and although I'm leaning long, I'm trying to contain that within bounds so as to control risk. I believe that things have shaped up such that there is a pretty good chance of a retest of the SPX 1200 area and the other resistance areas I've talked about before. May not work out that way and then again it may. I'm simply try to work trades according to what I see and short term, the market still has the opportunity to rise. Today did nothing to suggest otherwise and it did tell us that tech is where money seems to be rotating to. Have a good weekend and see you next Monday.

Given the behavior, I'm getting more bullish here. I've added a few more longs to the mix and you have to respect what really looks like rotation into tech. Although it's still a dangerous game and we have to see what next week brings, I can't help but think that they want to test those areas of resistance once more in the coming week. I'm not loading up on anything but I am leaning to the long side for the coming week.

It's been an interesting day again to say the least as they take them to the cliff but they refuse to jump. My SPY short insurance policy was cashed out at basically breakeven and I'm back into the wait and see mode. Right now it looks as if they want to gun them into the close but given that today is options expiration, I really can't bank on it. I'm itching to put on some long exposure in the NDX as that's where the strength is and may do so here shortly. For now, I remain safe and sound, mostly in cash and finally seeing the metals pushing higher once again.

Try as you might, there's no denying that what we are seeing is not bullish behavior by the markets. The DJIA is within a few points of it's recent lows. The SPX has gone negative on the day and the OTC issues are slowly coming in as well. As I said in my earlier post, I can't/couldn't put my finger on it, but my gut was telling me lower. Glad the gut call still works. I'm about 70% cash as I post and about even in longs versus shorts with the longs mostly in metals. The short is the SPY short that I'm still holding from this morning.

My thoughts are this. The bullish forces better make a showing quick or we will definitely start getting the flash back to October 1987. I'm not saying it's accurate or even that its likely as those events are unpredictable; all I'm saying is that the fretting will become more serious. As I indicated earlier, I'm protecting capital and am not willing to swing at any pitch in this atmosphere.

The more I watch this market, the stranger it gets. Today you have positive internals suggesting that most stocks are up yet you have the pressure being applied on the major indexes (listed issues so far). As I said earlier, something just doesn't feel right and although I can't put my finger on it, I'm not sure I like it.

We definitely have an out performance in the OTC issues versus the listed ones. Whether this is more than a one day wonder, I don't know. If you are going to get a 4th quarter rally, it will like come from those sectors so maybe we are getting the positioning starting now. I'm torn on my own thoughts as I think we are close to some sort of attempt to move higher but that lingering question of, from what level, continues to bother me. Today is a good test, next week a better one. All in all, if they do succeed in taking this market down today and violate the lows of last week, all bets are off as to what that starting level will be. I remain cautious.

I can't shake this feeling that we are not done to the downside. As much as I try to find optimism in what I see, I continue to come back to my gut feeling that we are not quite done here on the downside. Can't put my finger on any one statistic or signal, just experience. I've started a short in the SPY and am looking to do the same in the DIA. Because of the volatility, I'm laying off the leveraged positions.

I missed my short on the futures this morning on that spike higher and have since simply watched. I do not trust this market further than I can throw a stone; especially on options expiration day. Protect your capital which, on a spiky day like today, means to take smaller positions and to give them more room. No bias, up or down.

Late yesterday I bought some SPX on the notion that it was a good risk to reward play. A few minutes ago I took those profits and didn't ask questions. GOOG seems to have the imaginations running wild this morning with its huge profit report. Today is also options expiration; the day the

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