Soft Market With a Fade

Todays price action played out pretty much how I described it on Friday. We started out soft, got some more bad news in the Financial sector, and faded into the close. We hit new closing lows and we're getting near the January support on the Dow and the SPX. I was busy scaling out of my puts all day. I have about 25% of my put positions left over in case we hit support or even go through. I may create new put positions on the DIA and SPY, and other stocks, if we break support, but I will be very cautious and nimble, and probably take half-profits on those types of plays on an intra-day meltdown. Remember, the Fed can nail us again with an early cut like they did last time, so I don't want to ride new puts for a week, I want to be quicker than that. Incredibly, the Fed Funds Futures are pricing in a 14% chance of a 100bp cut! (I know, insane...). The FFF are also pricing in a 100% chance of a 75bp cut with a 95% probability of success (or happening). This 75bp seems to be in the books and it may happen right about the same price levels on the Dow and the SPX as it did with the 75bp cut in January. This is another reason why I am looking for a Fed speculative rally sometime in the next day or two that carries us into next Monday or Tuesday morning (even on just short covering alone). I could be wrong and support doesn't hold, so I have some puts I can do, but if we do bounce I am still looking at the Gas stocks (APA is hanging really tough, DVN, XTO, and EOG), some Tech (IBM and HPQ), and a smattering of others like CRM, maybe TEX. I'm not as keen on the Commodities stocks (steel, copper, chemicals, etc.) right now, or the Biotech stocks (GILD, DNA). Alot of selling out there, so I want to be just as nimble on the call side if we bounce.