The Daily Dose of Trading Comments

New site addresses

It's was brought to my attention today that some of you have this link as a shortcut and are not seeing the new posts. Here's links to the new site addresses.

The Daily Dose ---- now called ---- Trade Chatter
Smart Charts ------ now called ---- TA Charts
TA Charts --------- now called ---- TA Daily
Chart of the Day -- still the same name

Wake me up when it's over!

Pssst! Wake me up when this year is done so we can start trading again. Other than the big drop on Tuesday, this market's been a sleeper and today was no better. With but a day left in the books, I don't expect any fireworks until the new year begins so ... wake me up when it's over as I'm pretty much done for the year.

In all seriousness, there's not much to say about today's market action. It's hard to make any sense of anything here and I've continued to pack it in and wait. Other than my boredom trade that cost me a bit earlier today, I've tried to control myself and not do anything too stupid. There's just nothing to do here and we really need to wait for something a little more interesting to happen ... like the new year. I'm taking tomorrow off with writing to this log although I will look at any stock you are interested in over on Smart Charts. I'll be back with a preview sometime Sunday for the coming year. I've already laid out my thoughts in general in Naked Trades and of course, I'll keep posting a chart of the day where I line up one pick that makes a lot of sense. Since starting that service this week I've given you 3 picks ... all of which still make sense and which I'm involved in (I did cash out of CAT this morning for some small profits but am looking to re-enter short). I try to provide a pick that will make money and that I'm either in or wanting to enter. I welcome your comments on those stocks where I've made it easy to post comments as your read. You can ask additional questions or simply chime in.

Lastly, let me say that now having published here for some 4+ years, we have made a lot of good returns and trades over those years. There have been the expected ups and downs. That's the market. The site has undergone some changes as I continue to look for that content that excites and rewards. It's continued to be rewarding for me as writing and explaining keeps me sharp. I know from feedback from some of you that it has been rewarding as well. There are times where the hecklers are a bit of a pain when things are going bad, but for the most part the reader base continues to grow and with these new services I've added, I believe we are starting to hit on something that is somewhat unique and valuable. I continue to ask for your participation and feedback and, of course your support. If each of you could tell one or two friends about us, that in and of itself will help. Of course, if you want to write off an expense going into the end of year for your trading gains, you can donate here assuming that you continue to find this site and what it has to offer valuable. I leave that up to you.

Have a happy and prosperous and healthy new year. My best wishes are to you and yours and I look forward to another year of writing and teaching and, of course, adding to our pocket book. This year marks the 4th consectutive year of double digit gains and more importantly, of successful trading where success has and continues to be defined as (1) positive returns, (2) keeping drawdowns to a minimum, and (3) outperforming the average of the averages. Peace be with you and good night!

Frustration Mounts

Anyone looking for some life in this market is getting frustrated. I know I am. After working an early trade that was ok, I took the bait and tried again as I wrote here earlier. Mr/Ms Market decided to eat that trade as we kind of fell apart and my stop was triggered. So, I'm back to just the basics for now; what's in the portfolio. That portfolio size has been whittled down of late. I did take off one short (CAT) and added AGE back for a trade but for the most part I've done little again. I still think there's a trade in here somewhere to the long side with a good short covering spout to fuel it, but I'm not going to play it again today most likely as it's chump change and I'm on the giving end.

Remount the index longs

I've restarted those longs but it's an iffy situation early. Feels like the market decided to take out the marginal holders with another drop early as that rekindles thoughts of the past two days and gets the shaky ones to exit early. Let's see if they can pick it up from here. I'm keeping a tight stop but looking for a rally out of this area that may catch the shorts napping.

Fear of the New Year Prevalent

Small caps are weak out of the box again and that drags the majors back. Chips also have turned red. I took some small profits on the index long early and am looking for the remount. The bounce is in here somewhere and the risk/reward pretty well defined and decent.

Balancing act

Yesterday I continue to raise cash and balance myself before end of year. This doesn't mean I've given up on the thought of a Santa Claus rally into year end. In fact, I took some NDX futures long on that thought last night after hours.

This slow dull trading with some probing to the downside has setup a decent bounce situation in the indexes and if we get some juice the technology arena should lead the charge. That's what I'm looking for with respect to a short term day or so trade.

Otherwise, it's more of the same. I'm eying a gold short as well although I would like to see the bullion make it to the $522.50 area basis the February contract. That would mark a 62.8% retracement for the bounce play (which we didn't catch by the way) and would likely setup a decent short setup. Will wait to see how it acts today and possibly tomorrow.

That's about it for this morning. My suggestion is to stay balanced or get that way before the new year gets going next week.

Slightly positive day at a time when it really doesn't matter

There was some continued late day selling which has been a problem of late. It took the indexes off their intraday highs and makes tomorrow a little more questionable in turns of the fabled Santa Claus rally. So far, Santa has been a no show and that has some worried.

All in all, breadth was decent and stayed that way into the close and the day had the markings of a decent setup for a little bounce into year end but, like the rest of this year, it's not easy taking pennies out of this market. Just as I totally misjudged that short covering move in the gold sector, I could be misjudging this as well. I am considering a play on the notion in the futures market (going long some SPX if this evening's after market numbers allow a good risk/reward setup) but it's just a thought right now (the futures are down slightly as I write).

The problem, as I have talked about at length is it's a question of what do you want to do into year end and how do you want to be positioned starting the new year? If I do a trade in the futures, it will be for a day or two at most. More likely it will be a few hours. I have no desire to take a stand in front of a new year when the gyrations are likely to be high given the uncertainty of the present situation. It's far more acceptable to be careful and to begin with a resonably equal mix of longs and shorts that will hopefully outperform the general index no matter which way it rolls.

That's it for tonight. Have a great evening and see you tomorrow. Don't forget to check out the new resources available to you that have been added recently. There's the RSS reader capability finally (was asked about doing this about a year ago and have finally added it). There's also TA lessons and chart markups and more that are new and garnering good interest. Check out the links to your left of this text.

Gold read appears to be correct

It's looking more and more like that was nothing more than a short covering spike this morning and it reconfirms my thoughts that I want to wait this precious metals market out rather than chase it. We should see a few more attempts to push higher in the bullion but the advance off the initial leg is likely dead and more consolidation is needed. That leaves range trading if you are interested. It also leaves open the idea that the metals stocks will come back in and with that notion I wait.

As with the general equity markets, there is some attempt to work higher but it is labored at best. The problem is that with volume so thin, any move (higher or lower) can be exacerbated short term so you have to be careful with any short term trading ideas. If you intend to play the short term, I would do it with a momentum trade off an multiday setup using the breakout point as a stop in case you are wrong. That way you can keep risk small, grab a few points and exit before the move vanishes.

Beware of the lazy slow trading

Lazy, slow trading has a way of being manipulated and given that this is year end, it certainly has a higher probability of manipulation in the current setting than most. I did book some profits early and brought my portfolio in some as I count down the days, but I'm still waiting for another spurt into week end. I'd be very surprised if there isn't an attempt although, as I said earlier, I'm not playing the bounce with additional longs for a trade as I don't care to shoulder the risk here.

If I did want to walk that line though, I would average into some index longs looking for that trade as the setup is interesting this morning. One more spill today would setup a good trade as performance concerns might cause a little more dumping than would be expected at this juncture. If you look at the general indexes, few money managers are matching or outdoing the indexes and to see their November gains slip away is probably got them a bit worried right now.

It's late in this rally

If you look back to other times where the market has behaved as it is now, you realize that we are late into this rally. I have sold down a decent number of long positions this morning on that early strength looking to book some gains and get more careful. Although I do not expect a huge downdraft into year end, I realize that the risk isn't so favorable over the reward and that, after making a nice comeback into year end that there's no sense in risking a good years returns here.

What you do in your portfolio is largely a function of your recent trading as well as how you see the risk and reward versus your tolerance for pain versus gain. It's your call but as I've said consistently for a while now, the rally is getting long in the tooth and while the trend is still sideways short term, bullish intermediate, we are getting closer to a point of turning those trends around. Doesn't mean it will happen but that's a risk.

Gold starting to come in some and it looks like that squeeze is wearing off. I had a mind to short it but, again, I don't see the reason to take large risks this late in the year.

Tighten up those stops

For the most part, if you have stocks that are working, either trim or tighten up the stops as we head towards the end of the year. There's no sense in allowing all your profits to get away from you so tightening up your stops in behind those issues that are moving up is a way to particpate but not to exit ... unless the stock changes direction which is of course the point.

I'm not seeing a thrust of buying and this market could turn so I'm being quite careful with tighter stops and having taken some partials on longs.

Gold breaks higher technically

After a huge push higher, then then the recoil, pause and further recoil, gold is finally getting that bounce play going in earnest where the shorts get squeezed higher. Right before the opening they broke that $512.40 resistance area and then the flood gates opened and we see it up almost $9 now. Too early to short again and my thought of cheaper metals is going to have to wait now. That early comment/thoughts was proved wrong short term ... and that's the market for you.

I've let out a little of my long stocks here early.

Futures higher

Futures are steadily gaining ground from the overnight session. Yesterday's selling came on a little heavier volume than Fridays up day but it's really hard to read anything into the action at this time of the year. It's more about being long good stocks or stocks that show signs of a turn with clear stop out areas and short the opposite breed of stocks where appropriate than to make any kind of macro call here so that's what I'm doing.

Talking about macro calls from a sector perspective, I do believe the precious metal sector is going to come back in some again and I'm looking to let my last one go thinking it's ran just a wee bit to far right here (TRE). I talked last week about sub $47 NEM and I would be doing some heavier buying again if and when they come back in to target areas.

Oils I just can't make up my mind and I'll be looking to trim some profits on my small holdings there.

Elsewhere it's a lot of mix and match type action so it will be trimming and adding and potentially stopping out on an individual stock basis. I'm probably through adding for the most part as I intend to wind down the portfolio size and move a raise a little more cash as we head to the end of the week.

Lot of Red Today

There was a lot of red on the screens today as the market started higher but began a fall soon afterwards that lasted until the closing bell. Of the stocks in my portfolio, some 20 were down by 1% or more (good thing some of those were shorts). Those up a like amount could be counted on a single hand. It was that way through out the market as well as the internals were quite ugly and uninspiring. Volume was light but this is that time of the year when you try to make much sense out of a single days action be it strong or weak.

I've little really to say about today other than I'm just rolling with the punches right now. We have to go further to signal a trend change and I suspect it's going to be hard to get that to occur in front of year end bonuses, so I wait. Good night.

Gravity turns to a strong magnet

Prices have receeded steadily and now threaten some key areas. A break here of 1258 basis the SPX puts 1248 back into target while 2220 basis the NASDAQ seems to be in play again. I thought the weakness would come end of week, not start and thus I'm carrying a bit more than I should on the long side. My attempt to spread early this morning failed with the NDX not bouncing enough to get in a short so mostly I'm observing and not allowing individual positions to get too far underwater. I find it hard to believe that we can get a hard sell off into end of year given the need to keep these balls afloat for bonuses. Right now the bonus boys are getting a good dose of selling to keep them worried. Let's see what the afternoon brings. For now you still have to consider buys on weakness, sells on strength and so far, today is no different as the sells early were there to take.

Early buying dissipates and gravity returns

The early buying has faded with some real weakness showing up in the oils, the internet sector and in the small caps. I even see the chips fading now while they were strong early. All in all, it appears it's going to be difficult to keep these balls suspended in mid-air this week given bad memories for traders at the start of 2005. That fear is causing some consternation it appears and making upward progress difficult. Gravity indeed appears to be alive and well as the anti-gravitational forces abate.

In an odd way, this skepticism is actually making the thought of a stronger start to 2006 and more real possibility. I thought the weakness might show itself end of week but as we see today, no one care to hold the bag when the party is done (even if the party's end time hasn't been announced).

I'm pretty much inactive and allowing stops (wins and losses to work). I've no desire to do much in the current environment with the year end within spitting distance.

Anti-gravitational pull?

Quite and positive tone this morning. There seems to be some anti-gravitational force pulling stocks hihger into year end each year and this is no exception. I made a few buys early and have pulled most remaining orders and plan to spend a quite day mostly away from the screens today.

With the year winding down, it's ride their coattails for now and consider how you want to be positioned for the new year. My desire is to be balanced into that time frame with the idea that they may indeed shake the trees a bit pushing prices even higher come new year if we don't get a sharp selloff to begin things.

Twilight Zone

This week's trading will likely resemble the twilight zone more than anything else ... that space between reality and imagination. With low volume, end of year trading tends to be a slow climb as few players tend to want to get in the way of a rising market regardless of what else is going on.

The biggest question in my mind is what the new year brings and will there be some selling in anticipation of that. If so, you should expect that anticipation selling to show up towards the end of this week. Until then the conditions favor a continued slow rise.

Slow listless type trading

The malaise continues and I'm about ready to wrap up shop. I've some things to do with family and I prefer that rather than to stare at the screens. All in all, it appears that the bullish element is still working albeit it timid. I'm seeing more and more charts like PMCS and CAT which are begging to be shorted and I'm obliging. Just slowly stepping into some short trades here as I slowly rebalance as we head into the new year. If this turns out to be the last post, I wish all of you the merriest of Christmas' and would like to extend my heartfelt thanks to the increasing participation both here and on related blogs we have began on Smart Charts and TA in general. Each of us, in our own ways, truly are blessed in one way or another and it's up to us to see it. Best to each of you and yours. Have a safe weekend and enjoy your loved ones.

Small players in the sandbox today

The small caps are where the players are today as the general indexes are struggling and simply bouncing around. I've made a few trades today as I try to game the gamers but it's pretty much a small range for most stocks with a few offering something of interest. I've been concentrating on SIGM from the long side for some day trades as it's offering some good risk/reward setups if you are interested.

As we head into the end of year, you have to consider how you want to position for the coming new year. Personally I believe you want to be a bit cautious coming in but I have this sneaky feeling that the if we don't see a quick collapse, the buyers are going to spring forward when the new year rolls in.

Mixed session so far

It definitely feels slower today and kind of choppy as was expected. I wouldn't count Santa out just yet but his bag must be heavier this year as his strut to the top is labored.

I'm not pressing my luck much as we head into the end of year although there are still buys and sells to be made. Mostly I'm just trimming a bit and taking a stab here or there. For example, I believe gold is setting up for a pull back again and am looking to play it that way. I put a short on CAT a few minutes ago as the risk/reward looks good while on the flip side, MDT has retraced back towards support and I've started a small stake long there. I've taken some losses to pulling more oils off the table for example. We never did get the broad advance in the oils, only the drillers performed (OIH) so you had to be concentrated if you wanted some returns there.

All in all, it's a little here and a little there as we try to squeeze a little more performance out of this portfolio into year end. Despite a slow start that lasted most of the year, we have been able to book some nice gains the last couple of months which, once again, makes our year.

Christmas is upon Us

Today promises to be a slow and potentially choppy day. With yesterday's late day strength we have a good chance of upside follow through now. The desire, a as a trader, is to pick your spots and capitalize when the getting is good. The rest of the time it's about waiting. Livermore used to say something along the lines that he made most of his money sitting not doing. The longer I play this game the more I begin to understand his thought process. If you ever get a chance to read Reminisces of a Stock Operator, you'll find it wonderfully fill of many such thoughts. I'm reading it again now for the third time.

I'll be looking most from the long side today although a reader did inquire about a short on PMCS last night and that one looks appealing.

The Bull Within Us

With about a half hour to go we are starting to see a real rally take shape. We've been nursing along our longs in anticipation of this and we will be looking to exit some of them (or at least partials) into strength as Santa mounts his sleigh and heads our way. As I have talked a lot about lately, we want to sell into strength and buy weakness and this is strength, not weakness. Weakness was late last week when we started our adds.

Hopefully you are along for the ride here and have both merry thoughts and bulging pockets as a result. My mother always said to not count your chickens before they hatch. Well, you can see the littler birds pecking from the inside on these eggs so the counting should begin soon barring a real surprise.

Merger news stoking gold again

The merger news this morning has some short covering taking place in the gold sector, and though I'm bullish on the sector, I suspect you still have to buy weakness and sell strength in that sector. That's what I'm doing. In fact, I let most of my metals out this morning on the strength.

In the popular press and the literature, you see a complete concentration of entry and even then, entry is almost totally skewed to buy entries. What isn't covered is exits which is where the money is made or lost. I'm not downplaying entry, but it's not everything. You can have the greatest entry in the world, but unless you exit at a better price (long or short), it doesn't mean anything. You can squander great entries.

I plan to use the TA Charts blog to discuss subjects related to TA and this is one of them. You'll see me talk about this as well as setups, risk/reward, etc. Remember, it's important to catch the meat of the move to make money, you don't need the edges and you don't need to see, nor do you want to suffer through the market's habit of taking the meat of your gains back from you.

As for today, we are seeing some sticky price action here early. Two hours into trading and the market is slowing climbing on light volume again with generally stronger internals. Although I'm embracing this move and expecting a slow creep higher, I'm not losing sight of the fact that this is year end and we have to consider what's next. I let some of my marginal oil trades go this morning with that thought in mind, for example. My desire is to catch a nice big up day somewhere along the line either this week or next to sell into strength in a general way. We'll see if the opportunity comes along.

Tis the Season

A pop up again on the opening was met with the usual selling we have seen of late, but once again, prices look sticky and we could be seeing that subtle shift I've been watching for. Although I made a couple buys this morning and have orders in for a few others, I've also taken a couple stops so no real net change. I have physical stops in on almost every position and I'm pulling them up behind moves as they are made ... being as careful as I can not to compromise a stop out on normal fluctuation, but to protect these nice gains we are accumulating once more.

The metals are out of control again with gold spurting some $9 this morning and NEM breaking higher. Our timing on the metals has been impeccable of late. Doesn't always happen that way but sometimes you simply fall in tune and every swing is a hit.

Little time remains

November saw one heck of a run on the street with the bulls ramping the induces up to positive levels on the years. Wall Street bonus compensations, as I understand them, are based primarily on year end numbers and that's why we see a push in the fourth quarter most every year. This year was no different. It feels artificial and it probably is, but it is what it is and if you ignored it, you miss the best opportunity of the year to make money and it continues. I have been slowly building the portfolio long size back up over the past few days and telling you I was doing so. The setup is there for another run into year end. December we have gone nowhere working off the excess of November through time and sideways price action. Whether it makes sense or not, it's been unfolding in front of our eyes. It may end up not being that big of a deal or it may end up bigger than we think. We don't control how high or how low prices go; we only control our entry and our risk. We project our potential gains given the charts and we use that to understand if the risk/reward is in our favor. Don't make it complicated. It isn't.

Bears tried to sell it back down!

After a good week of higher openings, lower finishes, today looked to be another feather in the bears cap ... until some late day buying showed up. That doesn't mean it was a great day ... it was ok. The small caps continued to find some interest and that usually is what happens in the Santa Claus rally ... the speculators come out of the woodwork. What we didn't see though was a strong finish. A strong finish, where we ended up the day near or at the highs, would get some real momentum going. Right now, that's still missing which brings us to ask the question, how lasting can a rally be?

Although I've been working to put the finishing touches on the next iteration of Naked Trades, my time is limited and it takes a while. My concerns surround the notion that this year end rally looks a whole lot like last years and we know what that means.

As for our portfolio, we made some further gains today. I like the way the precious metals are shaking out. In case you didn't notice, I've started the TA Charts blog to do more of what I like a lot, teaching. In this blog I'll take a given TA matter and take as many posts as is needed to work through it as I see it. Your comments are welcome (just post them on the blog) as well as your requests (just jot be a line).

I'm out of here early today. Got a basketball game to attend with the big fella. See you tomorrow.

Readers chime in ...

Since we unveiled our new service allowing you to input your requests to TAT for TA, we have had a number of requests that have provided good entry points on various stocks. Although I didn't get an entry in all of them, the request for TA on CLF displayed impeccable timing (thanks Rally-to-Yearend) and OIH (thanks Jason) as well. There were others and indeed this is what I had hoped to see happen. Message boards are the old thing and just don't receive much participation. They seem static and stale. But for you to see the potential in an issue that we can all trade, bring it to my attention as well as all the readers, and then I provide my analysis and you have the ability to add your comments, that's a match made in heaven.

As for the market, it's either time in kick in or kick out. The inclination to sell strength is high right now because the late day fade has been the regular attraction of late. If they can hold these gains at this level it will bring out more buyers and should further short covering. If not, well the opposite. I'm still working on the year end rally to develop and am giving my portfolio the room to work still.

No let up today ...

The fact that early gains stuck has a bit of a scramble taking place this morning as players are caught poorly positioned. There was somewhat of a disbelief that the Santa Claus rally would show, not for the lack of trying mind you. But with the push this morning, it just may come to pass and that has players scrambling a bit to increase their size or to cover their shorts, both actions which causes prices to get even more sticky.

I only had two buys this morning (the two precious metal purchases) and a couple covers so far to book gains. At this point, I believe we have the setup we were looking for and now we have to be patient and allow it the chance to play higher. That doesn't mean I'm ignoring a potential downdraft as I have taken some stocks that have just taken off and put some stops under them, but for the most part, it's give them room to work higher for now.

Higher prices look to stick this morning

Unlike recent days, the prices look sticky today. I've added a little gold back in NEM and PAAS and am on the prowl for other opportunities. Tightening up my short stops as well.

Holiday Shoppers

For the past few days we see the retail crowd buying early yet being disappointed. In other words, we start higher but finish lower in dull listless type action.

Yesterday I added some names to our portfolio as I spread some risk back to the long side looking for that fabled Santa Claus rally to visit Broad and Wall. We could be fooled and disappointed or maybe not. Despite the persistent weakness yesterday and the late selling in the small caps, there was a sign that they may want to turn this for the holidays yet. This morning it looks the same. Let's see if they take away more bonus points today as well. It won't take a lot to get a short covering rally going with this thinner holiday volume so beware if you are part of the short crowd.

With my portfolio with but 13% cash, I'll turn to the futures again for extra juice soon if it appears it's time. I do have a few orders in again this market as I've been busy mining the charts looking for individual stock set ups to buy. Just a couple shorts and note I'm trailing stops closer now to lock in those profits if we turn.

Positive seasonals just wasn't enough

Despite the favorable seasonal winds, the bulls just couldn't get it going today. Despite this, the damage was held to a minimum and the intermediate term outlook remains the same ... as long as they don't give up too much more ground. With but a handful of days left to year end, you would expect a push somewhere in here and that's what I'm still working for. I keep adding here, selling there as I prune the stretched as well as the weak. In most cases, I'm using a scale approach to entry and taking profits will trailing stops or outright sells when targets are reached. I'm not interested in long term trades in most cases, but continued small profits to ratchet up the returns into year end.

Today we had more light volume, mixed internals and more confusion. It appears that, with a couple hours to go, the market was going to claw out a winning session over all the major indexes, but that thought faded late afternoon. So, we wait for tomorrow and the last three days before Christmas to see how this Santa shakes out. There were some positives and some negatives and with the bonus boys keen on getting the largest bonus they can, we have an artifical floor still that offers protection against an ugly downdraft for a few more days.

Oh, and checkout the latest addition to our site. A long time ago I used to offer TA lessons as part of the Naked Trades series. With my desire to somehow finish my the TA part of my book, I'm looking to add some TA examples on a daily basis that I can use to that end. Enjoy, tell a friend. Your help in growing this site is all I ask in return.

Market clawing higher

With a couple hours to go, the market continues to climb higher. The most encouraging sign, from a bullish perspective, is that the small caps are no longer being pounded. That's where the more speculative action takes place and the speculative players are the ones who will get a rally going at this juncture if it's going to happen.

I've continued to work the long side at this late date because of the holiday trading. These days are generally positive for a number of reasons and it's hard to ignore seasonality in your general trading strategy. That doesn't mean that we throw caution to the wind, ignoring all clues of potential storm clouds on the horizon, but if we worry only about the horizon we will be forced into inaction and indecision. Just take what they give.

Hugging the flat line

Indexes are hugging the flat line but we are finally seeing some bounce in the small caps and the chips which is the first sign of life in about 4 days in those areas. That bodes well for a bounce attempt at worst and if the internals start to turn, we may see that develop. I'm sitting tight now having been quite busy this morning taking some short profits and entering some new positions; mostly long. Oil stocks are getting some traction again but precious metals still having difficulty. I'd still like to play that bounce trade in that area but it just haven't given us the real bounce yet. Be patient.

Busy morning

I've been quite busy this morning making a few buys, covering a few shorts and actually putting out a couple more. As I've said a lot lately, this is a two-sided affair right now and working both sides is the only way to make some money.

Market tried to open higher but the technology selling continues rather unabated and the majors are red now. I'm tightening my stops up some on the shorts as I follow them lower. I'm expecting a reversal at some point and I'll book some of those gains if it happens.

PPI Mirrors CPI

Numbers just hit and they are as deflationary as the CPI numbers were last week. Stock futures ticked up on the numbers while the metals tailed off. Housing starts strong as well in another release.

Sometimes I wonder just what all these numbers really mean. I watch them due to the fact that they can change the market on a short term basis as traders trade off of expectations, met or missed. For a long time though I've talked about how this hegemonic manipulation of inflation numbers makes them so much more meaningless now than when I was a kid. This sure looks and feels like the 70's again to me ... anyone else?

Yesterday we saw a clean break on the NASDAQ making an outside down day after hanging around the highs. With us so close to the end of the year it's hard to believe that the bonus boys are going to give it up here but they may let the trees blow in the wind a bit more before kicking those buy programs in. The key number is over on the SPX. That low yesterday broke the 20 day MA and a retest of 1250 looks more probable now.

So the backdrop is for a continued pull back here this week. Again, unless this market cracks hard, this still looks more like last year than anything else and it's starting to set up for a strong year end close and carryover into the first week or two in the markets.

I spent a lot of time digging through charts yesterday identifying both longs and shorts. I've a number of orders in again this morning, 3 of which have already hit pre-market. All I'm doing is scanning for setups where my risk reward is good and the probability of success given the pattern looks good. Last night, for example, a reader of Smart Charts inquired about CLF. For a bounce play, it's a decent chart. All time highs, hard retrace to the 50 day MA. That's a setup I can live with.

Steady declines into the close

From the early bell, this market just couldn't get any traction. This is week 3 or 4 depending on how you want to count it, of a sideways type action. That's plenty of time for the market to find itself and put it's best next leg up jingle into place. If that doesn't happen pretty soon, then the worriers will indeed start to fret and they will likely sell and that will likely cause a little more selling and pretty soon, you have a lot more selling. It's herd mentality you know since no one (or practically no one) really knows what this paper we buy and sell is really worth. Anymore it's buy here and sell there or sell there and buy here; it's not about value as much as it is about gaming. Now that likely will turn a few folks upside down and question my late year sanity, but isn't that what TA is all about? It's about using patterns to clumsly predict what the herd is going to do. Making money with TA is taking that knowledge, wrapping some money management around it along with some simple probabilities and then clicking the mouse with your buys and sells.

In any industry you look at, you can either approach it from the standpoint that it's really complicated and too hard to understand, or you can say to yourself that, other than the constant flow of abbreviated buzzwords and folks scurrying from here to there, it's really fairly simple. I've found that most things in life can be learned by most people; you just have to have the confidence to try and lack the fear of failing. This thing called TA is no different. It's really not that complicated after all. Like most of the soft sciences, it tries to get a grip on what people will do and what the repercusions of those mass movements might be. Not a lot more or a lot less.

Anyway, back to thoughts on todays market. It pretty much was a series of failures across most sectors today. Technology in general along with the small caps were under the most pressure and typically that's not a very healthy sign. I've seem some writings recently suggesting that it may be the case that the small caps have had their run and it's time for rotation to the big caps. I do remember that in the late stages of the bull market that turned into a bear market throughout the seventies, that was indeed what happened. Back then they called them the Nifty Fifty, fifty big cap stocks that ruled the roost and defied logic. The rest of the market pulled back but they kept the indexes up due to their large cap size and the fact that the safe money kept buying into them. Of course they collapsed eventually, but on Wall Street, it's not about value (as I said above), it's about perceived value like most things in life. Thinking that one a while and you'll see what I mean.

I'm out of here. Don't forget to check out the new service, Smart Charts, where you can become more interactive in your TA future. As I've shown here for over 4 years now, TA along with simple probabilities and active money management is successful. It's really not a fluke as some would have you believe.

Getting more interesting

With the selling continuing on a quite day we are seeing a more interesting test starting to take place on the NDX. It's back to retest the lows of 11/30 and 12/8 today and a failure on that test could easily take us back another 15 points basis that index. The same is true on the broader NASDAQ as well making a 25 to 30 point drop from these levels a higher probability. Both indexes are below their 20 day MAs now and if they fail, they are likely to drag the SPX below it's 20 day MA as well.

All of this assumes that we get continued selling pressure today or tomorrow. The selling seems to be orderly and on low volume and thus, as I said this morning, it's going to be hard to read anything into the markets as the low volume distorts most volume tells. I guess what I'm saying is to keep it two-sided and careful. If you want to make purchases on weakness, consider your stop outs and respect them. For me, I'm going to continue doing little and allow positions I have to try and work for me rather than trying to make new ones.

A little more selling pressure

That NDX long was eaten and we are simply seeing chop trading today outside the small caps which are experiencing pain trading. Most of my stocks are red today ... good on the shorts but not so good on the longs. I had concentrated in oils and golds mostly although I ended up taking off all the golds except TRE reasonably early. That bounce trade didn't get a lot of bounce so we took what it had to give while it was giving.

The best thing on a day like today is to do something else and that's what I'm starting to do. Trying to work trades here is worst than standing on the corner and handing out Christmas presents; might make you feel good to give a present to a complete stranger but it's rather expensive if you stand there too long. And just like the corner analogy, the strangers typically don't give much of anything back ... not even a thankyou!

Market's mired in muck

Stuck in the muck here as there's little happening today of note other than the small caps taking a beating. I'm not doing much today as we have some longs and some shorts and some good gains and we're not caring to lose that. I did put out an NDX long as the intraday charts has me thinking that we might see some strength come in there but the stop is rather tight and it may or may not work. No need to push hard here as there's just not much of an edge. My mantra continues to be buy the weakness and sell the strength and that may last all this week as well.

Gold unable to get the bounce trading going

So far it has been unable to clear the 512.4 area basis the Feb contract. As a result, I booked my gains in all but NEM and TRE taking a partial bounce. Don't mean that it can't come on again, but on a bounce trades you don't look a gift horse in the mouth. I'll let NEM be as long as it holds $50 and TRE is a longer term play.

I've made a few adds this morning, have a couple more orders in as well and shorted BMHC which is an accident waiting to happen (it's volatile though given the low volume). The general market is marking time for the most part and I'm doing the same. Nothing big. A little here and a little there. Still think that you have to think of this market as two sided for now.

Tough sledding for Santa

The NASDAQ and the small caps still can't find the sleigh as we see red start to appear on the screens. I'm seeing a real bloodbath in some small caps and that has been the case the past few days. One thing that you quickly figure out on Wall Street is that it's more about gaming the gamers than the game itself. In other words, last year we had an ugly sell off to begin the year in small caps and technology which spread to everything else. Well, the gamers are gaming that thought here into end of year it appears as they are trimming rather quickly to keep from being gamed themselves.

I've done absolutely nothing to start the day.

It's time for Santa Claus

With but a couple weeks remaining in this year of trading, it's time for the Santa Claus rally to come to the forefront. I've been slowly getting longer the past week or so preparing for that possibility but am by no means as heavily invested as I was for the that last spurt. The problem with Santa Claus is that he's uneven and usually without much volume so it's pretty difficult to get any real reads ... in other words it's more about hope which I tend to shy away from.

PFE got a favorable ruling on Friday and they are taking the drugs up as a group this morning. Futures in the green and that precious metal sector looking to bounce. I was looking to get back in there last night on the futures but there wasn't a lot of opportunity early as it trade flat to slightly down and then just headed higher. We see it up $5 this morning already ... back to the resistance area that it failed at Friday. A break through that 512.4 area and we are officially in bounce mode.

I rolled out that new service this weekend and there's been decent response already. Check it out. As I expected, I've picked up a couple trading ideas already from the input. That was the idea. Working together we all get a little better. I've one more idea that's planned before end of year and when I get it up and running, I'll let you know.

So, with the end of the year approaching, you have to consider how you want to position yourself coming into the new year. Do you want to be long, very long, balanced, mostly in cash with a prove me attitude, or even short. You control your future and your financial destiny. I simply offer my thoughts and show you what I'm doing. I've got to get around to another Naked Trades article on the New Year with a discussion of these thoughts.

Pretty much done for the day

I was stopped out on my trailing stop in the gold futures. A bit of a bummer as it has the potential to be much more but you have to take what they give and you simply can't give it all back. We'll pick up this idea again Sunday evening when they start trading again. I'm done for the day here unless some of the metals stocks we have picked up trip on their stops. Same idea there.

As for the general market, the early squeeze higher is fading and it doesn't look very interesting to me. The bifercation is now leading to agitation for the bulls as we sink slowly into the red. There are a lot of warning signs out there not to get too comfortable with this idea that we have to go higher because we really don't. We have waning volume and momentum and we are approaching end of year where the apple cart was sent reeling last time.

I'm calling it a day. I've a few more buy orders in as well as sells and stops of course. We've had another good week and will close the days at portfolio highs for the year. That's the way it should be. This weekend I'm going to roll out a new service. It may be a bit clumsy at first and maybe if I get a little more time (or one of you programmers out there wants to chip in) I'll pretty it up, but we can work with the tools at hand to start it. What I'll do is to allow you to ask me to take a look at a stock for you and I'll post my thoughts about it. Naturally I'll try to do a little mark up on the chart as well. Depending on the volume of requests I'll do as many as I can and it may work out to be a good thing for all of us ... I may discover some winners I've missed and you too may do the same. Check in next week to see what you think.

Have a great weekend and do something fun. Get the Christmas shopping list whittled down as there's very little time left. Good day!