Reluctant Market That Might Fade

The market seems to be reluctant to buy or sell. The economic reports this morning were somewhat of a non-issue, just as I thought they would be. Oppenheimer and Meredith Whitney continue to pound on Financials, and JCP pounded on itself - which was great for me since I had puts. As always, I sold half the JCP puts when it was down in the 36.50 area (it did hit 35 out of the gate, but only for a nano-second before it bounced). This is the beginning of earnings warning season, and ORCL and JCP, along with Oppenheimer are setting a tone that earnings won't be spectacularly good. The market isn't ready to throw in the towel just yet and roll over, though, because we have the two biggest economic reports of the month next week and we still have a lot of other companies to get guidance from. The market does look like it's going to fade into the close, so I will ride my puts right into the close before I scale out of any more.

Evening Post: I did sell half the AEM puts for a 1.03 gain as well as half the JCP puts (mentioned above) for a 3.10 gain (78% return in 2 days).

Monday is going to be all about the End of the Quarter and the Chicago PMI and how those two things either harmonize or clash. Normally I don't pay a lot of attention to the Chicago PMI, but because of the current conditions and the timing, it could be a real market mover. A reading of 45 or lower is probably going to start some serious selling early in the day and send the Mutual Fund Managers screaming into the woods to find some hemlock bark to chew on while they mutter and snarl and walk around in circles counter-clockwise. A reading of 48 or higher will give the Fundees a natural high early on that could lead to so much "window dressing" that we might have to duct tape bowling balls to their ankles so they don't float away. I reading between 46-47 and the market probably chops a little and waits on the more important ISM Report on Tuesday. The Chicago PMI come out 15m after the open on Monday. So here's how I'm playing it: 46-47 and I nibble out of 3/4 of my puts, 45 or lower and I ride the puts hard and take out half of everything by the end of the day, and 48 or higher and I probably stop out of just about everything and start nibbling on calls - and load up on more calls if we get a strong ISM on Tuesday.

Here is some interesting reading if your bored:

This is an article on the Fed getting more power to monitor and control outrageous speculation in various industries of the economy. Two things about this.....One is that America continues to be the safest economy in the world to invest in because we have outstanding oversight, while at the same time maintaining a certain amount of restraint to allow capitalism to flourish. Sometimes we go too far, sometimes we're not perfect, but all in all, a darn good system. The second thing is that while it's a noble effort to try and control greed and speculation, it's a little like trying to catch Niagra Falls with a thimble, there's only so much you can do.....Fortunately, market corrections usually do the trick, that's why they are called corrections. So again, the combination of good oversight and allowing free markets to work is what makes American markets the safest in the world. Here is the link:

http://www.nytimes.com/2008/03/29/business/29regulate.html?ei=5065&en=7ba12b1b93b17830&ex=1207368000&partner=MYWAY&pagewanted=print

Remember how I have spoken about the concept of "rumoring the market" and manipulation. Here is an example of how that plays out. Two things about this.....One is that, fortunately this doesn't happen all the time. And because of the way I trade very short term in uncertain market conditions, I usually don't get affected much by this stuff. The second thing is that this is exactly why I tend to stay away from sectors and stocks when they get too "newsy." Here is the link:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPyQ_7G9wJ2M&refer=home

I will continue with a weekend watchlist tomorrow.