Market Confirms Short Term Rollover

Oppenheimer stated that Banks may still write off more than $170 billion of additional reserves by the end of 2009. And here's a big surprise.....inflation is up.....Core PPI came in higher than expected as producers deal with higher costs. Meanwhile, Oil hit a new high above $128 per barrel after Boone Pickens became the latest "guru" to throw his hat in the ring (along with Goldman Sachs) for Oil hitting $150 per barrel.

So there you have it, Oil and Inflation Up, and Financials with more write-offs to come. The market will probably be down a little bit early in the day, and we may have a short term pullback in the markets for a couple of days.

7:50 am MT: I stopped out of the PCP calls for an .85 cent loss, or 18%. I stopped out of the VMW calls for a .90 loss, or 30%. I am riding the 5 puts from yesterday. I added a little more to the CF puts, and I'm getting ready to add a little more to the MOS puts.

8:40 am MT: I added a little more to the MOS puts. I also nibbled in puts on RTH. I am also looking at possibly picking up a little of one or more of the following: LM, FDX, MS, JPM, HIG, or ALL. I'm not sure yet.

8:55 am MT: I nibbled on FDX puts. I'm not super excited about the strength in the Chemicals right now, so I'm watching those pretty close. One thing to keep in mind, I don't want to get too loaded up on puts for two reasons: the first is that the market is still more bullish than it is bearish, and the second is that I don't want to underestimate the desperation of bullish traders this year.

9:15 am MT: I scratched out of TRA for a small .05 cent gain. I want a little less exposure to Chemicals right now. It may be that the Chemicals drop sharply from here, but I don't want to hang around the "Desperate Bulls" with my puts, so I culled a little.

9:35 am MT: I culled out CF for an .80 cent loss, or 8%. I still think Chemicals will go down a bit, but I only want to play puts on MOS for now. I also picked up puts on LM and MS to give me enough trades after selling the two Chemical puts.

12:30 pm MT: It looks like the market will start dropping again in the last 90 minutes after a mid-day consolidation. This is just how you draw it up for a fade into the close. I will continue to run with all my puts. Watch MER, it is getting close to my first target area around 45.00 - 45.50, where I will sell half the puts.

1:15 pm MT: I set a stop at breakeven on HPQ, which took me out. So that's a scratch trade. As for the market, it's still hanging around, but it may not make much noise either direction between now and the end of the day.

2:00 pm MT: This is a preliminary Market Wrap: The Dow and SPX confirmed their Shooting Stars, and the Naz confirmed a rollover/Hanging Man. The probability of the downward move I spoke of yesterday played out today. The first Naz support level is 2,465, if that doesn't hold then the next one down is 2,450. The first Dow support level is 12,750, if that doesn't hold then the next one down is 12,700, and if that one doesn't hold then it may go to 12,600. The first SPX support level is 1,404 - 1,400, if that doesn't hold then the next one down is 1,385 -1,387. Note that the Dow has changed the IT trend posture from Bullish to Neutral today. This doesn't mean a whole lot by itself, but could be a possible warning flag. The SPX and the Naz are both still IT Bullish. A good way to think of the market posture is this: the market is still more Bullish than it is Bearish, but not by quite as much as before today. I am still emphasizing calls over puts for the time being.

7:00 pm MT: After going through all the major indexes and about 700 stocks today, here are some notes on what I see. Energy (and some Commodity) stocks have had an almost unbelievably bullish run to date. I don't know how much more Parabolic they can go. Gold stocks like ABX are reversing bearish trends.

Here are some interesting Bullish Movers: SKF (Short Financials ETF) bounced out of a Bull Flag, ABX broke out of a Double-Bottom, and PX bounced out of a Bull Flag. Also: WY, LUK, and TIF look intriguing.

Here are some interesting Bearish Movers: FDX and HIG bounced down from Bear Flags. Also: ALL may start a Head and Shoulders top, KO may bounce down from a Bear Flag, TRV is starting to break its uptrend line, NYX broke its uptrend line, and ZMH looks interesting.

The market really looks like it has one more down day in it, it might have more, but at least one more day to reach key support levels. I may be wrong, it may turn and burn from here, but it looks like we haven't reached support yet. You can get a sense for it by looking at the Dow and SPX index charts.

One last note: all of you are doing a great job supporting one another with your comments. I just wanted you to know that I have always been pleased with the comments, and I have never had to delete a comment. Think about that for a moment.....and you will realize that you are really being a tremendous strength to your fellow traders. If you have friends, acquaintances, or even people you just met at some kind of activity, and they are struggling with their trading, they are welcome to join this "trading family." Keep supporting one another with your comments. I am amazed at how much of a trading support group this has become, and so much of it is because of your genuine concern and efforts for you fellow traders.