The Daily Dose of Trading Comments

Today really saw some mixed trading with the tech stocks holding up while the listed issues broke down for the most part. Small caps actually did ok as well overall. This morning I talked about a potential spill and that the OTC issues had already broken their steep up trend line while the listed issues were trying to. Well, today, they broke through as well is a convincing fashion.

At this point, with a whole slew of data tomorrow and then the employment report on Friday and with an ugly looking decline on the charts now, we could see some firming up tomorrow in front of the news. I see after hours buying taking place in conjunction with that thought. SPX 1246 was the breakout area and we closed at 1249 ... not too far away from a natural buy point. The NASDAQ is also resting on it's live angle line that crosses the tops going back to the first top in Jan 2004. In other words, things line up for a some sort of counter rally tomorrow.

I took some profits on the short index position today catching the meat of that move. If we get the counter short term rally, then the long position we took in the indexes will pan out as well. I believe it's still too early to pile back into stocks here and would rather wait that out a bit as other indicators suggest more declines are likely in store starting next week or even this Friday if that employment number prints badly.

Did someone spill the milk today? As I log in here late today, with the markets having already closed, I see that the spill we wondered about early indeed did come around. That topping action indeed did turn out to be so and we have seen the price points cascade lower as a result.

I'm changing the format around a little here for now. For the forseeable future, the day end wrap up will come later than has normally been the case; as late as 8:00 to 9:00 pm EST. That will give me a chance to digest the days action and make a more informed post and look ahead to the next day. I'll start those posts later this evening. Until then ...

I've continued to sell down long positions this morning on the early strength and have actually increased my short positions for an early trade. I don't like the early strength again and believe we are setting up for a spill.

If you pull up charts of any of the major indexes and draw a trend line across the lows since October 28th, you'll see that the NASDAQ has clearly broken it's steep trend line while the listed issues are doing so now. Now scale your chart back and just look at a 6 month chart and notice the two day stab down off the highs. We are at a dangerous juncture, a point where the market either does the two day pull back run again song and dance, or one where it corrects more deeply.

If my work on other fronts didn't suggest otherwise, I would go with the two day pull back and run again scenario, but there's too much data suggesting a further retracement. I'm sticking with caution here and continue to hold and net short position at this juncture. I do not expect this market to find it's footing at this juncture. It appears more likely that a more significant retracement is in the cards. A push lower that scares more longs to book gains and step aside. The fear needs to grow here to get the next run higher.

They couldn't take everything red but they took the majority. It was another day where the bullish forces couldn't keep the train steam rolling and the cracks appear to be getting a bit larger as a result. If you haven't made plans for how you ride out the pullback, it's not too late just yet but clearly, after another test of recent highs fades to red, you have to wonder how much longer we play around up here in this rarified air.

In terms of a pull back, you have to ask yourself just how far could it go. Would SPX 1245 be too much? That was the breakout area after all and that's a decent clip down still. What about the 1230-1235 area. Even a pull back that far wouldn't undermine the intermediate term up trend. It would feel terrible and would cause most bulls to stop and scratch their heads a bit were it too happen, but it's clearly no inconceivable given the gains we have seen in this short month of November.

In trading, you have to have a plan. A plan for where you enter, a plan for where you exit, and a plan in between. If you lay out scenarios and then use developing evidence to support the thesis or to invalidate it, you can work the in between times intelligently. Right now, the thesis is for the year end rally to take place. We have seen a large part of that unfold in front of us already. A very short term thesis is for a pull back and then a retest. We are waiting for the pull back to unfold. It should happen this week in earnest if it's coming. Let the data tell you whether your thinking is correct or not. Use the data that the market provides to allow you to profit.

We are seeing the opening enthusiasm fading as the day progresses with the NASDAQ going red at this point. There are some real issues associated with further upside progress at this time and today's trading reflects that fact. I am net short and continue to remain that way. We should see continued weakness develop in this market near term and you need to be appropriately positioned as a result.

The indexes are solid green to start the day and unless the confidence numbers disappoint here shortly, there's not much of a fade to the opening buys. Even if they push things higher here, I believe it is way too dangerous to buy at this juncture. The risk to reward is not in you favor. You may not want to short, but buying here is not the answer. The buys come down the road, not here. I'm sitting still with what I have and waiting this out.

Futures are up strong pre-opening. Durable goods just hit and that didn't have an effect. Next up is confidence numbers about 30 minutes into trading. The remainder of the week holds a lot of data and likely causes as spiky market as a result. A spike up and down here makes sense if we are building an intermediate term top or even just working off the push that has already been seen. Working on a level above all of this is the end of month window dressing. So, in summary, we have a confluence of factors that should make for a choppy environment. If you plan to play in this environment, recognize that the play is between the extremes. The up only bias is taking a break now so you can play the pushes in either direction with the fades as the edges.

The other option is to simply wait this out. Rather than play ... wait. You don't have to play if you don't want to. That's the great thing about the market. You can choose to play or not. You can choose to buy or sell or do nothing. Now mind you, eventually you have to do something to make money, but you don't have to jump into every opportunity and every opportunity sometimes has a way of draining your account. Instead, read the charts, develop your thesis and then wait for the reward to risk that works in your favor based on your trading style and time frame.

I'll drop a short post after we open to see if we can get a sense of whether this market wants to fade that opening or not. With the confidence numbers 30 minutes in, my guess is they will hold it steady out of the gate.

Mr. Market treated us to nice sized pullback today and although we prepared for this occurrence, you never are quite ready for it to occur as it plays out in different ways. For example, our oils were crushed and we took several stop outs as a result. We also had built a decent sized short in the DIA which was down the least in percentage terms as the big caps held up much better than the small stocks. Eventually that was taken out on a trailing stop as well.

All in all, through stops and a few trades, we reduced our portfolio size again today as the decline did begin in earnest. The question now is do we get the two to three day variety pullback and a surge or something more. We will have to consider that after more of a decline if in fact that is what occurs. There are, however, a number of factors at work that may help the market hold up the remainder of this week and then we get the real decline with the primary factor being end of month window dressing an potential economic news.

Right now your focus should be on safety and capital preservation. If you caught a good chunk of that run this month, you need to make sure you don't give the majority of it back. A good pullback here will set up trading into the end of the year. If you took profits on the way up and are mostly in cash or hedged now, then you should be in good shape when the next setup occurs.

Last note is on the metal stocks. They have acted heavy of late despite the continued run in the metals themselves. I ended up taking all my metal stocks off the table. I do not like the setup here at the highs for continued exposure.

Finally getting a chance to check in here. Market is weak today as we thought early and I don't expect it to find much, if any strength, into the close. We do have potential window dressing that may kick in tomorrow but I would worry more about the pullback than the bounce at this moment. See you after close.

There's an old saying that you seldom appreciate what you have until it's gone. In a twisted sort of way, I would hope that the readers of this site feel that way over the coming weeks and months. After providing daily commentary for two years running all during the trading day, outside obligations will cause this to cease for a while. I don't mean to be facetious as much as to hope that my work means something to most.

The market started out with strength in the futures but here at the opening, it looks more like sell, sell, and sell. Our time frames suggested that this week would a lot more two-sided if not downright one sided selling. We have moved to slightly net short in anticipation. It's likely to be a bit choppy as the dip buyers step in, but if they are not rewarded quickly, they will add to the pressure. I expect that to happen this week. Preserve capital at this point.

With less than an hour to go I have pushed my portfolio around to the point where I have about as much short as I do long and about 40% in cash. I'm preparing for a pullback; freeing up cash and putting short positions in place to try and capture some points on the expected retracement. If we get the hard pull back it will be difficult to step up and buy. It will likely be one of those hold your nose and buy situations.

If your portfolio is extended, it makes it just that much harder to do any buying in such a situation. Now if you have lightended up it is a bit easier and if you are actually coining change on the way down as well, then buying here and there as they come in is that much easier. Trading is all about market psychology; both yours and the rest of the market. You have to try and put yourself in a position to trade to win. To me, that means you have to prepare for what is the most likely occurrence and position in front of it so that if it plays out that way, you can make your move and not second guess. When you are losing money it all becomes second guessing. Don't leave yourself in that position.

This is my last post for the day. I'll be wrapping it up shortly and heading out to do something fun with the family. Have a good weekend and I'll see you next week.

For two years straight now, I've offered my thought on the markets throughout the trading day. Today will be last day of that format. Starting Monday I've agreed to do some consulting through an old colleague for two or three months which will necessarily curb my comments during the day. I'll still offer opening and closing thoughts and may manage a post or two during the trading day, but my focus will shift more from intraday trades to the swing trading that this site originally started out doing. We'll see how it works out and how much I can comment intraday but I will definitely not be working intraday trades as my focus will be elsewhere; especially initially.

The market is really struggling here today and that's rather interesting as today is typically a strong up day for the markets on thin volume. Wednesday probably offered the tip off with the late day selling and today is showing some follow through on that thought. I've shifted my assets around further already and have gotten a lot more balanced in what remains in the portfolio. Although we could move higher still from this area without a pullback, I would put the odds at a about 80 to 20 that we move lower before higher and that the move lower likely is a fast and furious one when it hits.

If the first 30 minutes is any indicator, it's going to be a slow day. I did use the early strength to position a little more net short in the portfolio as the oils and metals are the leaders to the upside while the small caps are still showing relative weakness off of Wednesdays late day selling. The chips stocks are still attracting attention but outside of that I don't see much strength.

My thoughts today are to get a little lighter on the long side and a little shorter on the short side. I'm just buttoning up the portfolio as I ready for a quick midday squall.

Wednesday, after I had reached shutdown mode, we finally saw afternoon weakness/profit taking. It's been a while since this has happened. After five straight breathtaking moves higher, they finally decided that rather than stuff the shopping cart, they should put some back out.

These kinds of moves are rare and this one comes at a time where it had to in order to make the year for many a portfolio manager and bonus boy. Now that the measured targets were touched on Wednesday and we saw the first bout of profit taking ensue, you have to be even more careful as a decline is even more imminent. Today should be a feel good day of trading and Monday could easily open higher once more, but after that, all bets are off. I will look to position myself more cautiously today as I await a decline that is likely on it's way. I'm not doing the Chicken Little thing here, just recognizing that all moves come to an end and even strong moves have pull backs. It's not too late to ring the register if you have simply rode the move higher. The exit is as critical as the entry. It's time to consider it.

I'm nearing shut down mode as the bulls just keep pushing this market higher. I did add to my DIA short just a couple minutes ago here on that latest push and I keep bringing my stops up behind what I have in the portfolio that is moving. I'm growing more and more cautious as this week winds down, as measured targets are hit and as the time table reaches that point where the positive action is likely behind us. All in all, its a rare feast we see unfolding in front of our eyes and it appears that all those bonus boys are going to be able to have a heck of a feast tomorrow with smiles all around as the year end rally has played out once more.

If this ends up being the last post, have a Happy Thanksgiving from myself and my family to you and yours. There are so many things to be thankful for starting with health and family. Sometimes it's easy to forget what is important. As I sit here typing in my home office listening to my young daughter mastering yet another impressive piano piece I truly am heartened by how fortunate I am in so many ways. Have a great and happy Thanksgiving and take the time to count your blessings. Life is but a fleeting moment in the race of cosmic space and we are but a spec in that race. Good night.

Lately I've received a few emails asking me to post what stocks I'm moving into rather than having you wait until the end of the day and I've obliged. I typically don't do this that much as I certainly don't want the appearance of impropriety with respect to goosing a stock I own. You know, the old pump and dump trick that so many are guilty of. Trading positions change all the time. Yesterday I was buying the oils but after looking real hard at the charts last night, there were those five I mention earlier that I decided were not right to be in. Since that post I have rid myself of three of them. I'm undecided about how long I keep PKD as it could get a nice move if it pops above $9.25 or so. ARD I'm just waiting for it to scale a bit higher to leave undamaged.

I generally tell you what I''m doing in a more broad fashion. For example, I've actually took on some individual short positions in the last half hour as this market has scaled even higher. 1270-1275 SPX is a measured move target and we are starting to get mighty close to that target. I'll likely be scaling into move ETF shorts on Friday as well. I'm just preparing for the pullback and though I may be early, I'm rather certain it's coming. I expect it to be a fast and hard one and you have to be there before it happens. Of course, you can't get there too early or it will be meaningless, but we have been patient and have waited for this market to get really extended which is what we are seeing now.

Now I can't tell you that this or that will work with certainty. What I can tell you is what I've always told you ... it's just the way I trade. It works for me. It makes me money and as a result, I continue to do what I do the way I do. If it works for you, great. If you adapt it to fit your style, even better. The key is finding what works for you and trying to perfect it. That's what successful trading is all about.

When a market is trading like this one, there are day trades in invidual stocks that can work based strictly on momentum. I dabbled in TONS early to make a few bucks as AKS provided a sympathy trade. Right now I'm working a trade in BBBB which is breaking out and has the momentum move taking place. This is not something I do a lot of as I'm not the best momentum trader around by far, but when a market acts this well, with the backdrop that we have in place right now, these trades, if you catch them soon enough, can provide a nice little return to your portfolio.

The general market made it's push already and that push likely sets up another one into the close. I actually expected it to be a little more choppy today but it really has been a continuation of the slow melt up other than the early weak opening. What can you say ... when things are good they are good just as when they are bad, they are really bad.

For anyone foolish enough to be strictly bearish this market at this time, it's been another day of pain. The Street just keeps taking the bid higher and the chickens are yet to come home to roost. This morning I have began walking through charts that have shorting potential. I have also parceled out a few more long positions into the strength but am mostly putting stops in behind those that are moving and simply giving them room to climb. The day after Thanksgiving is typically a very positive abbreviated trading session and if that holds true again, look for the following Monday to be a continuation trade.

My personal portfolios haven't done that well today as I started shifting to the oils and they are taking some lumps here. We have a few fliers that are participating but my reluctance to hold a full portfolio this late in the game shows today. It is what it is though and I wouldn't trade my growing cautiousness despite the extra gains that could be made.

The positive holiday tone is pervasive this morning as no one appears to be willing to step in front of this runaway train. That one early opening dip was bought quickly and we see green right away. My oil buys of yesterday are sour this morning and I trimmed a little early when the red appeared There are five stocks added yesterday that, after I looked at the charts long and hard last night, I've decided to back away from. They are ARD, EOG, EPEX, KMG, and PKD. The others I like for longer term trades. API inventory numbers due up in about 30 minutes and that could exacerbate or change things.

The metals are seeing a bout of profit taking as well. That chart shows great support at the breakout point though so the profit taking should be reasonably contained for now.

I've talked quite a bit of late about the idea of a sharp and sudden reversal that makes the bulls wonder why they are bullish. Here's a chart that visualizes what I'm thinking. Earlier this year we had the same sort of advance take place and although it wasn't as straight up as this move (which means we have more danger now), it was of the same character. Look at the pullback that occurred.

You have to expect that this is what is coming and you can't wait until it starts to prepare. Futures flat early; day before Thanksgiving with a short day of trading afterwards then the weekend. Not a time to think they take them down. More likely they run them further but that steep two to three day drop can come at any time now so beware.

So, it was yet another day of unbridled optimism on the Street as the bulls took turns bidding up the price of most everything once more. I end the day with some decent gains; with the start of a longer term trading hedge for the expected pullback in the coming week or so and with an actual increase in the size of the portfolio over yesterday as I decided to shift into the oil sector. The OIH broke out to new highs today while the XLE is on the verge of setting up a retest of it's highs earlier this year.

Today's news was that interest rate increases may be about through and that provided yet another excuse, as if one was needed, to buy more. As I've said here repeatedly of late, this will come to an end and I'm suspecting that could come as early as next week. That time frame of a six to seven week straight up move would coincide with my intermediate term indicators topping out along with my short term ones. Put it all together and you have the makings of a longer term pause at best; a decline at worst. After a long uninterrupted move like the one we have seen, that decline should take on the marking of a sharp two or three day decline that makes all those who bought late gasping for air. But that's next week and the party this week is in full force. As they say, it ain't over till it's over and that ain't happening yet. See you tomorrow.

I am starting to average into a DIA short. The DJIA has been the laggard index and it is now bumping into what should be an area of more significant resistance. I'm probably a bit early and I plan to make a total of 4 sales into this average on the way higher and may broaden to the SPY as well. This will be my hedge as I can hold overnight and won't get hurt. I suspect that the pullback, when it occurs, will be to violent and out of the blue to work as a trade on the futures. So, I'll turn to the ETF instead. This is all about money management now and how you want to work your positions. I'm taking a two pronged approach. I'm slowly moving the bulk of my holdings into the oils on the long side until we get a good pullback. Secondly, I'm going to average into a hedge we can hold for a week or two if needed until we get that pullback that will allow us to stay in our other long positions.

One last thought. Those FOMC meeting notes should be bullish for the precious metals. Rather than chasing back into a number of positions in that sector, I jumped into a larger NEM position as it's the lead dog in that group and it still has a breakout ahead of it and thus isn't too extended yet.

It's just more of the same as we wind down another day of buy and buy more. We are bumping up against the highs set earlier on the release of the FOMC meeting minutes and it appears that the only turkeys on Thanksgiving this year will be those who either wouldn't go long this morning or those who tried to call the top. Although my fears of a quick retrace continue to grow, you can't deny that this market is making a believer out of everyone at this point. As soon as we feel it has most sucked in, it will be time to consider a hedge again or simply to lighten up sufficiently to avoid the pain of a quick deep retrace. So we wait ...

Very little data this week, but the FOMC minutes release a few minutes ago has spiked this market higher. Given the day after day rise in this market, I'm curious to see if this sticks and we move higher into the close once more. It's another day of weakening internals and a low volume rise. Although it doesn't matter till it matters you have to have your head in the sand to ignore the risks as we keep scaling higher and higher. That doesn't mean I've sold off everything, just that I am more and more cautious as we move higher. You should too as the time will likely soon come where we get one of those spikes down for a couple days which really serves as a slap in the fact for those too extended.

The market is drifting around today with bad internals once more but there remain plenty of players who feel they have been left out who are willing to buy even the smallest of dips that we don't see real pressure on the general index levels.

I'm off doing other things today as I have no desire to make any big moves at this point. I'm in a wait and see mode taking partial profits where extended, buying some dips but all in all, other than the buys in the oil group earlier, I'm not doing much. I'm expecting the strength to persist here for a while and will look to scale out further as the week goes on.

I've spent most of the morning so far walking through all my energy plays and picking up some stocks in that group. I alluded to that earlier and although I'm concerned about the general market pulling back, I'm thinking where we might rotate to next for the December time frame. This group is gaining strength and the charts are setting up for another move. At least that's the way I see them and I'm staking out a position as a result.

The metals stocks not only were trading heavy this morning they in fact have turned into a full fledge sell down at this point. I took most remaining profits out of that group and will now wait for the next re-entry point.

Outside of those two areas, I've done pretty much nothing. A little adding and a little selling. Although I don't see the bulls letting a pullback go too far this week, next week holds greater promise for some ugly type selling that makes those who have been accumulating of late, reconsider their motives.

The chips just keep chipping away at higher prices and are on the verge of breaking a down trend line this morning that's been in place for 4 years now. That's got the folks who feel like they are being left out up in arms here.

I made a few purchases this morning but nothing big. A few more days of exuberance should set this market up for a reasonable and likely fast pull back. For now, enjoy the ride as it doesn't get this way that often. Despite so many reasons we should be pulling back now, the holiday trading is still trying to take us higher.

Last week I started buying a few shares of companies in the oil sector. This morning I stepped up and starting buying a few more. The charts are starting to look promising again after that steep set back in October. Shares of GMXR (which we have bought and sold over the past couple of weeks), ARD, CRK, EOG, HWK, DESC, and others. Worth taking a look at.

General market taking it on the chin early, but don't count the bulls out just yet. They have had their way of late and I'm sure they'll try to make a run of it before the day's out.

And precious metals. The stocks are still trading heavy compared to the metal. I'm riding out with what I have left but will looking to book remaining profits as it appears reasonable.

Yesterday I got it in my head that it was time for this market to, at the least, mark some time. I went short on some index futures and was slapped rather hard as a result. The short was at the end of the day and not a moment before. Futures are weak this morning and we may get the little pullback today before the two weak volume days where they push the indexes around again.

I've been lightened up quite a bit of late as it appears to me that a set back of larger proportions is just around the corner. Given what happened yesterday, it appears that next week is the best bet for that setup. So, we need to be patient and wait it out at this point. A good set back would allow us to purchase back some shares we have let out for a slow melt up into end of year. I can almost guarantee you that after this big push, the bonus boys are not going to let it all slip away before end of year when volume is lighter and bonuses beckon.

So, my thoughts are reasonably the same. It's a time to consider being more careful than you have been of late. Don't let your profits slip away and don't be too quick (as I was yesterday) to short into strength. There's an agenda out there and it's year end bonuses and they intend to get there diamond bracelets and fast cars for their sweethearts.

Well, they handed my head back to me after that last squeeze higher. I ate that short hedge as a result of the squeeze and end the day disappointed that I tried to be to tricky in what I was doing. This is Thanksgiving week and that seems to be all that matters. I out of here for the day. The squeeze higher continues and though I'm certain it will end ugly, it will end when it ends and playing for that is very difficult.

With but a couple hours to go, the resilient market continues to hold up well. There just seems to be too many people that feel the need to buy no matter how small a retracement occurs. I'm biding my time and treading water so to speak. We have seen strong closes for a while now and you almost feel like we are setting up for another attempt the way things are shaking out here today. Given that I'm still hedging, I don't like that thought but will deal with it as needed. Can't say that this has been one of my better trading days as the gut feel for some weakness has yet to pan out.

In an earlier posts I talked about not profit taking in precious metals but after seeing the way they have traded today, I've gone ahead and extended my profit taking to that sector as well. Still like those charts but the metals have a way of moving rapidly both ways and I'll trim here and take my chances that I can add these back cheaper as well.

The last couple hours my focus has been to reduce long exposure to roughly 25 to 30% long. That's down from 95% long last week in stocks. That was a lot of selling over the past couple of days. If our timing is reasonably right, we should see some profit taking take us lower within the next week or so at most and then we can consider adding some positions back if it makes sense at that point.

The concern I have when looking at my charts is that despite this run higher, it has come on weak internals and so-so volume of late. We are also seeing more thrashing which is typical when you reach a point where the buying and selling are more even in size.

Probably the hardest thing to do when you are trading is the exit. The entry is easy as you are not taking a loss or a profit upon entry, your slate is clean. The exit is more difficult as you are taking losses or profits with the losses being the most difficult to stomach yet the profits seemingly just as difficult to take because there could be more to come. It's rather common to see one sell a stock and a couple days later seeing it skying higher. That's the nature of the beast. What you have to tell yourself though is that there are always opportunities and that the one you let go of wasn't the only one.

When a stock gets very extended, trimming or removing it is prudent. Book your gains and set an alarm to buy it back on the inevitable set back. Taking profits on the way up is a sure way to outperform the market. Doesn't mean you have to sell everything but parceling some out here and there at peaks, not valleys, is the key to the gains.

Market has come in off that opening high. We are bouncing around a bit as we reach a support line intraday on the SPX. Tech is weak and putting pressure on the market. They squeezed that higher early but that squeeze looks to have played out now. I'm looking for further pressure to develop.

I may be overly worried for nothing here, but despite this continued push, I just don't sense that this market has a lot left in it right now ... in fact, I'm more worried about a quick hard shake out than a fast push higher.

I hedged earlier this morning and have been trimming some additional longs over the past hour on strength. I'm just too concerned that we are going to get a quick and hard correction. I may have misplaced fears but they remain nevertheless. Although not frequently, there are times I look to my gut feelings to decide what I should do and this is a gut call right now. I believe it's more important to be careful at this point than to be reckless. I would not, for whatever reason, become more extended long at this juncture unless you are doing so in liquid issues and can pull the trigger quickly if an exit is called for.

After a shaky start, this market continues to show there is very little in the way of give-up in it's current move. The slow climb higher here this morning is perplexing as the options expiration hangover looked like a good reason to see some profit taking. Instead, a slow climb higher here continues on this holiday shortened week and so far it's looking more and more like the positive Thanksgiving trading is taken the upper hand over all other factors. Although I'm still suspicious of the ability to rise much more from here, I respect that I could be totally wrong and will admit that if we move much farther.

It looks a little tentative this morning. I've put a hedge on removed a couple stocks and added a couple more. Just playing it safe and working issues that are moving here early.

So far this market has taken those with a ticket on a wonderful one way, non-stop ride higher. When does the ride end though and will it get bumpier now that we have pushed to new highs for the year?

We have been fortunate to latch on to this move early and to enjoy the fruits of that labor prior to the risk levels getting higher and higher. Thanksgiving week typically is a good one but given that we have 5 straight weeks of higher and higher moves, the risk levels are different now than they were even two weeks ago.

I began taking and booking some gains on Friday, removing about half of my portfolio. This week I will likely trim that further before the week is out. The more I look at the charts, the more I see the likely scenario being one of those two-day quick and hard pullbacks and I do not care to be extensively long when and if that occurs. I would rather be in a position to buy that hard sell off instead.

Gold is strong again this morning catching it's second wind. I was hoping for one more weak day but it appears that just one day is all we get. Although I didn't add as much as I would like back, we did stock back up for the next move there. We can let that run a little while I suspect and I'll not be too quick to cut things there.

Trading's getting tricky. Stay on your toes, lean long but don't get too greedy. Thinking shorter term at this point.

One last thought here as I end the day. They did indeed rally them into the close but the leader of the pack (NDX) was still sucking air into the close as it's had a heck of a run of late. Now just because your tired doesn't mean you can't run anymore, but it sure makes the length of the steps a bit smaller and it usually slows them down as well. Think about that if you, like so many other players in this market, think this is the time to back up the truck and load up. It will definitely take a while to kill this momentum bull, but that doesn't mean it's straight up from here.

Good night.

Well, they just won't give it up. Every dip this afternoon is find buyers and I've pretty much wrapped up shop now. I cut my position size just about in half today booking a bunch of gains from the weeks trading. I wish it were as easy as black and white but it really isn't. It's a lot of give and take, push and pull.

Unless there is a heck of a run in the last half hour, this market will end up with some stains on its shirt going into the weekend. That bothers me on the one hand while the normally positive Thanksgiving week of trading lies in front of us. I've toned down my bullishness a bit as a result and will concern myself with a more thinly traded market starting next week.

Have a great weekend and I'll see you here then. Best to all of you.

One of the things I've seen in momentum moves and we see playing out here again today is that the dip buyers are one resilient group. They don't care that we had a gap opening that filled and has potentially setup a larger sell/consolidation signal so far today. They are more interested in buying. Of course, I think they are wrong which is why I lightened up quite a bit today and have been shorting each of these stair step intraday climbs.

I came into the day thinking that we could get a nice move through Thanksgiving week and that may still occur, but I'm less inclined to think so given the way the charts are setting up today. As a result, I've moved much more to the protect mode than the all out attack on the long side. Could be just me, but after some big gains and will a intraday reversal, I believe it's only prudent to protect at this point. We can always buy more. Sometimes it's hard to sell though without taking a beating.

There wasn't much of a real push and I ended up shorting as a hedge again. This chart is setting up ugly today and maybe ... just maybe ... they are planning on thrashing around for a while if not really declining. We know the air is thin up here and we know that the odds are that this will take a toll at some point, but momentum has a way of screwing up your thinking. Don't expect a collapse over days at this point, although a collapse intraday is always a possibility.

There are a lot of ugly reversals out there off of this mornings enthusiasm. When I listed the potential top targets this morning before the bell, I suggested new highs on the SPX that takes out stops and the 2240 area on the NASDAQ. Well, the SPX did it's thing and the NASDAQ got as high as 2236. Pretty close!

I still think the bulls who missed the party are going to give it another run here intraday and I'm will attempt to examine the strength of that rally back higher this morning (if it unfolds that way) and look to short it. I had not planned this strategy earlier this morning but I just take what unfolds and work with it. If the reversals hold today we could see a little downward acceleration into the close as a result.

Well, they sold it off even faster than I expected. There was no bounce and now we have filled the early gap. It's always an interesting tale this market of ours.

I did quite a bit of trimming once I decided we had seen the highs as the gains can disappear as fast as they come. I still would like to put some short exposure out there given the way this candlestick is setting up today especially on this heavy volume but I don't know if the market is going to accomodate that thought.

I believe we have likely seen the highs on the NASDAQ already today and am looking to spread short there on the next spike back up to retest those highs. I have continued to trim some this morning booking some good gains we have accumulated. I sold off some gold yesterday and again before the opening today and am not putting order out there to buy some back on quick retraces. Don't think that move is done by any means yet.

So far this market is looking sticky once more. The gap up is holding across the board and although I've done some trimming this morning and a quick fade on the indexes, I'm not about to stand in front of the freight train. I have been busy putting some stops in to capture some profits if we turn but I'm more apt to let most things run rather than trying to call the top. Remember, next week is usually a strong one so I don't really care to let the majority of my stocks go here. Note also that the Russell is leading the pack once more ... just like yesterday. Since our holdings are mostly there, I'll stay with this strong momentum a while longer.

I'm taking a few more profits this morning on the opening strength.

They are flushing the shorts on the opening and I'm fading that nonsense. Getting pretty giddy up here.

Lots of buyout news starting to hit this market. I see deals with CSCO, GE and AT; all contributing to a bump up in the futures. When things get rolling, it's hard to find fault with the market isn't it. Just seems like bad news is good news as is good news.

As you know, I'd rather subdued openings rather than bolts out of the gate as the latter encourages faders. I may be fading if we get too goofy to start off the day.

Big mo is on the move again and now that we have new highs on the OTC issues (NASDAQ) we should expect the listed issues to follow (S&P). So far the DJIA and the Russell are the laggards. I would expect the Russell to continue to try and make up ground and that's where we are mostly rooted. So, as far as the market is concerned, they have momentum again. After the short pause they are once more pushing higher. It's a dangerous game and that we all know. The question is when will the music stop. It is our job to anticipate that and to lock in some profits before the chairs all disappear.

To give you a flavor of how I try to do that, it happens in three ways. First, I try to get a feel for where the next resistance points should be. On the SPX it's just beyond new highs. The way it usually works is that they take out the stops, spurt as a result and then fall back. On the NASDAQ you have to draw some live angles and then project. Right now that looks like 2240 or so.

Secondly, when my portfolio gets this large (vast number of stocks in it) I have to review it daily. I usually get up pretty early or stay up late and walk through every chart adjusting alarms. As it gets more dangerous, I setup a dump order ... an order that in one fatal swoop I can dump any number of shares with a single click. That's what I've been doing this morning. I essentially walk through every stock and if they are too extended or not looking as healthy as I would like, I add them to the dump list and decide how much, if not all, to sale.

Although I don't expect to use the dump order yet, it's better to be safe than sorry and having your orders ready to go is one way to be ready. It's not as emotional as trying to decide during the heat of the moment, what to sale and how much.

Of course, the third method is to hedge. You like to use hedges at the edges ... when you believe the move is too extended and in need of a pullback. After yesterdays breakout and with the holiday shortened trading next week, I'm not as likely to put a hedge on here. Too thin and unpredictable to carry such an instrument. We can try to trade counter to our leaning during the day but holding it overnight is a bit too much this early in the latest leg up.

So, a couple hours till open. I've a number of charts still to review and then a quick scan for anything else I may want to pick up today based on yesterdays trading. Lot of preparation. Lot of work!

Man .... what a day! It's getting harder and harder to remain somewhat rational in an irrational setting. I usually don't try to judge the moves as being reasonable as that's better left to those smarter than I. All I try to do is look at some charts and consider what ifs. What if those seeking performance are forced to pay up? What if the pull back doesn't come and we are squeezed into options expiration and then Thanksgiving week? What if this, what if that?

One of the things I like most about technical analysis is that it doesn't pretend to know what will happen, it only provides clues. It's not dressed up in some cloak of secrecy. It's interpreted by practitioners but all it really does is provide clues as to what the real participants in the market are doing at any given point in time. Through perseverance, conscious consideration of risk versus reward and, above all, the preservation of ones capital, one can eventually position themselves for opportunity and even take advantage of that opportunity when it finally surfaces. As regular readers know, I've struggled mightily with this market for the majority of the year and I'm sure I'm not alone. I've read clippings of under-performing managers in mutual funds to hedge funds; of folks simply folding shop given the lack of returns. It's been a hard year to say the least. Finally we have caught a decent move and, though we have gotten every piece of it, we have gotten a decent portion. Our job as this move plays out is to protect yet to work the move for all we can. It's not a simple task and it's a bit taxing at times. Moves like today simply make it more difficult as the risk grows increasing high the higher the market scales in this runaway fashion.

Remember, we don't make the market and no one is bigger than it. It's our job to consistently find a way to profit by it, to realize returns that are greater than the general market and to minimize our draw downs all the while. I've been chastised at times from some quarters and I have and continue to receive rewarding feedback from others. It comes with the job of opening ones books for all to see and to honestly say what you think ... right or wrong. And with that, I'm off to do a little home work for tomorrow and then hopefully catch a movie with the kids as you have to take your mind off this beast for a little while at some point. Good night.

With an hour left to trade, what a wild ride we have going on as even the DJIA has finally broken topside. I continue to take profits here and there but I'm not doing a lot of trimming yet. With no eco news tomorrow and options expiry, we could be building for another topside run.

The Daily Dose of Trading Comments

Contributors

Wednesday, November 30, 2005

Tuesday, November 29, 2005

Monday, November 28, 2005

Friday, November 25, 2005

Wednesday, November 23, 2005

Tuesday, November 22, 2005

Monday, November 21, 2005

Friday, November 18, 2005

Thursday, November 17, 2005