Momentum Pullback Day

8:15 am MT: YHOO thumped down this morning on MSFT pulling its offer to buy the company. The market is a little soft as a result. It looks like the market could roll over short-term. But Energy and Commodity stocks are continuing the bounce. Energy and related areas are particularly strong. I have been scaling out of some of the Energy positions and holding on to full positions on some of the rest. The Energy trades have been HUGE profits for me so far. I locked and walked on PH for a total gain of 36%, and I scratched out of GS for a breakeven trade. If the Energy stocks (and some Commodity stocks) finish the day strong, despite the market softness, then I will hold some of those positions overnight. I did pick up calls on EXM and AGU near the lows of the pullback intra-day. AGU is probably going to be a quick play.

8:45 am MT: The market is holding up ok. Tech seems to be doing fairly well despite YHOO, which is a good sign. Energy and Commodity stocks continue to bounce, which is also good. There is still a long way to go today, so we shall see.....
One thing that always makes me a little nervous is phone call volume. I am getting slammed on the phones right now with people wanting to buy the market. The contrarian in me gets a little apprehensive when all the retail traders think the market is a buy today. We shall see part II.....

10:00 am MT: YHOO is down, but is being offset by gains in MSFT and GOOG, which benefit from the pulled offer. Financials are softening up on a warning that AIG may write down $12.7 billion in CDS or subprime derivative losses. I am completely out of SWN and CHK, and I am down to half a position on CNX. All those trades were big, big gainers. I did a day swing on RIG last hour for a 7.5% profit in 20 minutes, in addition to the huge gains I have made or locked in on RIG from the Daily Swing that started Thursday, and the Day Swing from Friday.

8:00 pm MT: The market pulled back a bit today, although it looks more like a Momentum Pullback rather than a true rollover. The market is poised for another down day tomorrow if the last two Momentum Pullbacks are any indication of the current chart pattern. ISM Services reported stronger than expected numbers indicating that the economy continues to hold up despite the predictions of analysts, economist, and politicians. This should come as no surprise as I have pointed out countless times on this Trading Page that the economic reports have yet to show true recessionary numbers. In fact, I have been thumping the table time and again that the market/economy would have been better off if it was allowed to consolidate more than it did. I have warned over and over of Energy and Commodity inflation since the beginning of the year, and that is exactly what we got today with oil hitting another all-time high because of the solid ISM Services number. Factor in the summer driving season, the interest rate cuts that are starting to take affect, and the fact that the economy never really slumped like the yappity yappers kept saying it was (of course the yappers all have their own agenda, but we'll leave that out of this discussion.....), and we could keep seeing record oil prices all summer long.

Well, what is there to say other than we might as well make money trading calls on Commodity and Energy stocks.....

Every single bolded stock from the Commodity and Energy related areas on my Bullish Watchlist from yesterday went up, some rather sharply. The only bolded stock that went down was a Retailer, KSS, which is exactly what I warned of yesterday. I said that a run up in Energy and Commodity stocks would probably be the catalyst for a drop in other sectors like Tech, Retail, and Financials.

Today I just absolutely whaled away on Energy and Commodity stocks. I have been hitting them hard and often since last Thursday, when I warned you about the big Hammers forming that I started jumping. Here is one example: I played the Hammer on RIG Thursday and sold half the position today for a 65% gain in 2 1/2 trading days, and I'm still holding half the trade. While I'm riding the Daily Swing I did another trade, a Day Swing on RIG Friday. I sold half at the end of that day and the rest today for a 22% gain in a day and a half. I hit RIG again for another, shorter Day Swing today and made 7.5% in about 20 minutes. And I hit RIG again before the close for another Day Swing, which I'll look to take out tomorrow.

Here are the other trades from last week until now (some of which I have reported): CAT and IBM, which I'm still holding for a bump. PH 36% gain, RIMM 12% and 4% gain on two trades, ADBE 43.5% gain, (HES 3.4% loss), (SLB 13.5% loss but I am still holding the position and I expect it to be a gain since SLB is in a confirmed bounce today), SWN 30% gain, ANR 21% gain, CHK 41% gain, MS breakeven, GS breakeven, CNX 69% gain locked down so far, with 1/2 the position left, and DVN 25% gain so far, still holding the entire position with DVN in a confirmed bounce.

In addition, I picked up EXM and AGU for a couple of Short Swing plays today, and I picked up another trade on SLB and DVN for Short Swings after the confirmed bounce today. I picked up SII for the same trade as well, (and also the RIG Day Swing mentioned above). One thing I haven't mentioned, which should be obvious from the charts, and the Saturday Watchlist, these are all call trades.

To say that I was whaling away on the Energy stocks would be an understatement. At this point I am continuing the process of scaling out and locking down most of the Energy and Commodity trades, although some of the bouncers today might have a couple more days in their upswing, we shall see.....

If the stocks, or the market crack down hard tomorrow, I am ready to lock and walk. I'm keeping the rest of my Energy and Commodity stock trades on a short leash right now to preserve the huge gains from the past several trading days. If we have an orderly pullback on the markets and start to bounce, I will assess the catalyst for the bounce and which sectors are going up or down, and play it accordingly.

By the way, the Klingons, Ferengi, Jar Jar Binks and the Gungans, along with all people who's last name starts with the 27th letter of the alphabet are now trying to get into AAPL because they just heard the stock was going up. When the Romulans, Dacta Eels, Jabba and the Hutts, along with all the people who stamp the m's on m&m's for a living finally get in, then AAPL may actually roll over. Until then, long live the cult.....and don't drink the Kool-Aid.

We'll see what tomorrow brings.....