Early Pop Leads to Late Drop

The futures are up a bit after the ADP jobs data came in positive. The report is largely unreliable, but it could start the speculation on a positive Employment Report on Friday. BBY also had positive earnings, which is good for the retail sector and positive for consumer spending. We may go right out of the gate and head to 12,750. If we do, then I will just ride my four calls from yesterday and maybe nibble on some DIA and SPY calls. If we run right now, we may end up consolidating for the second half of the day, we shall see.....

We did gap up a little right out of the gate - a common gap, not a breakaway gap. If we Flag off this gap then I might have an entry for my DIA and SPY.

The market is fading the gap, so we may get the consolidation this morning, which bodes well for a possible mid-day or later-day rally into the close. I am sitting on what I have and watching how this potential intra-day pullback forms up to decide whether or not I get some more calls.

I will pick up a half-sized position on the DIA and SPY in the upper 125's and 135's respectively, if I can get it. Then I will watch for a double-move on the 15m charts, which would be a Flag on the 30m charts down to 125 on the DIA and 135 on the SPY. If we get that, I will pick up the other half of the positions. I want to see 124 and 134 hold, and the markets hold, in order for me to remain bullish short term. I want to get out if yesterday ends up being a one-day short-covering wonder. My sense is - for whatever it's worth - is that we will carry through today or tomorrow. By the way, I'm not doing the Q's because of RIMM risk. If RIMM blows away earnings after the close, then the Q's gap up tomorrow. If RIMM blows chunks on earnings, then the Q's gap down tomorrow. I don't feel like playing that game today.

The market is still trying to press up after Bernanke talked about recession and the IMF is lowering global economic growth. I think shorts are still on the run, and this may go Flash Bang right now. So I am actually nibbling out of a little of my four calls from yesterday on this upswing, with really nice profits. If we swing back intra-day on the 30m charts and hold, I will add back and look for another leg up. If we just go Bang to 12,750 then I'm out of most of the rest of the calls.

And there you have it.....The early pop led to a late drop, just as I thought. If the market had flagged early it had a chance to finish closer to the highs, but it shot for the moon too early and got too close to resistance immediately. Therefore.....selling more than half my calls into the early bump right up to the market resistance areas was correct. I'm not doing anything with the DIA and SPY other than a small position on the SPY I picked up before the close yesterday that I took profits on today. Overall, it was a nice two day Flash Bang. What I want to see is how the market closes out the day. If we are weak, then it is probably going to be up to RIMM to give us a pop in the morning, if they can do it. I'm not looking for a break above the highs of today until Friday. It may happen tomorrow, but I think it's going to take a great Jobs Report to bump us up to 12,750 or beyond.

RIMM is up 4-6 points after hours, so tomorrow morning the market will probably get a little bump back to today's highs. I don't see enough volume from yesterday, and enough conviction from today, to lead me to believe the markets will break key resistances tomorrow. It may do it.....but it's more likely that the markets will wait for the Jobs Report before making the next swing move, either a breakout or a rollover. The RIMM report will probably give me a nice exit tomorrow for the rest of the calls I'm still holding.

Evening Post:

Here are some bullish movers on the day, or stocks that have been relatively bullish: Gold bounced and looks like it's headed towards tighter consolidation. ICE broke out of a Rectangle Base and might Bang to 153-155. Steel&Mining is a strong area with CLF, AKS, and X, although the swings are probably just about done. Energy caught fire with Oil Services leading the way (SII, NBL, NE, and SLB), although that swing looks just about done as well. Some other Energy looks strong too, like MUR, RIG, APA, and DVN (swings mostly done). PCU just broke out today and may be a candidate for a 1-2 day type play. Some Biotechs continue to be strong like CELG and GILD (reversed today and swings mostly done). Some Tech is performing well like ADP, RIMM, ERTS, and AAPL (swings mostly done). Some Retail is strong like AMZN, NKE, URBN, WMT, and GME (swings mostly done). Some Financials are doing better like HIG, COF, PFG, PRU, FNM, FRE, and AXP (swings mostly done). Coal appears to be in a Bull Flag (ACI and CNX). Some Transports and Machinery/Construction are doing well like FDX, FLR, PH, and CAT (swings mostly done). MMM is right at a clear resistance so it's make it or break it time for the stock. KO is testing support.

Some potential Bearish setups are: PEG, NRG, JCP, and AA.

The market looks like it's most of the way through the current swing. Tomorrow, RIMM may bounce us back to today's highs and maybe even to the 12,750 resistance level on the Dow and 1385-90 on the SPX. However, we may have to wait for the Employment Report on Friday to see if the markets break out above Intermediate Term resistance or if it rolls over on the Short Term upswing.