Current Long Positions (stop-losses in parentheses): VMW (83.70), RRC (44.59), ATVI (11.93), APOG (11.56), BIDU (105.80), ESV (48.75)
Current Short Positions (stop-losses in parentheses): DTV (40.50), GOOG (590.10)
BIAS: 22% Long
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Quarterly Services Survey (10am), EIA Petroleum Status Report (10:30am)
My Observations and What to Expect:
- Futures are mixed heading into the open.
- Both European and Asian markets are mixed as well.
- Yesterday’s trading action was extremely disappointing for the bulls after gapping above the 1227 level, it sold-off in late afternoon trading, failing to hold the important price support level.
- If you look at the weekly chart, we are essentially stuck in a sideways market pattern between 1186 and 1227 – a 41 point price range.
- Volume was extremely high yesterday, despite finishing flat.
- As a result of the action seen yesterday, we are now looking at a shooting star pattern, that can be a trend-killer. The last couple of times we have had one on the S&P, we’ve seen consolidation follow, which would seems like a high-possibility at this point.
- I am on “high-alert” for a possible change in the short-term trend in this market. I recommend traders to the long-side show a lot of caution as well. While I am not yet willing to close out my long positions right now, I will not hesitate to close out my long positions should we see further selling into today.
- The current rally on the daily charts still has the makings of what we saw back on 9/1 which rallied for over two months.
- Dip buying will continue to be the name of the game for traders.
- Dollar and gold seem to be once again trading inversely to each other. Dollar rebounded yesterday, but still did not manage to improve itself from a technical standpoint.
- For the bears – hold on to the late day sell-off, and push the markets lower today. Doing so will cause the bulls to reconsider the legitimacy of this rally.
- For the bulls – reclaim the 1227 level on the S&P and be sure to close above it.
Here Are The Actions I Will Be Taking:
