Market Bounces into the Close

It's too early to tell what we're going to get out of the market for the morning, but I wanted to open a post while I'm briefly conscious. I at least want you to be able to "tawk amungst yourselfs" while I finish recovering from my creeping gomboo. I should be doing better today, but I'm going to be smart and rest for a few more hours so I recover on schedule.

The CPI report just came out with a reading of 0.6% vs. the 0.5% expected. Core CPI (excluding Food and Energy) was in-line with expectations. So we are inflationary, who knew? Surprise, surprise.....The reading holds up, and maybe even increases the likelihood of a Fed rate hike later this year. Traders won't be thrilled by the number. The Dollar is set to have its biggest weekly gain against the Euro in three years, and the CPI report will probably only add a little to the Dollar's gains, so I don't think Energy and Commodity stocks will be quite ready this morning. Pre-market futures dipped on the announcement, however, inflation is not new enough news that it should change traders approach to this morning much. I suspect that the day will still play out much like the rest of the week, with caution early in the trading day, and then a better idea of direction later in the morning.

12:15 pm MT: The market is bouncing on exactly what I anticipated and posted yesterday. We are oversold short-term in a lot of areas, especially Financials, so it's not surprising to see Brokers as the leading bouncer today. Oil also dropped a bit, as I anticipated, which is giving a lift to Transports and the overall market. The stocks that I highlighted yesterday (CMI, ETN, and QCOM) all bounced nicely, although ETN is getting a little squishy right now (I want it to close strong). So there you have it, a nice little Nostradwightus moment. Not bad considering I feel like an eye booger. As it is, I'm not looking for this moment to last for too long, so I'm not loading up to my eye boogers in calls. I just want a few, and I want to scale in.

Here are the afternoon trades I entered in the papermoney account (when I came back to life). I scaled in to calls on QCOM, STLD, CNX, FWLT, and JOYG. That's about all that I want for now, given that I don't believe the bounce will last beyond Monday or Tuesday.

Here are some additional notable bouncers:

Steel (STLD, NUE, CLF), Coal (WLT, CNX), Machinery/Construction (JOYG, BUCY, CMI, FWLT), Tech (ADBE, CTSH, QCOM, RIMM, IBM, WDC), Chemicals (PX). there's more in each area, and some more stuff out there, but those are the ones that caught my attention.

12:45 pm MT: I really want that Bull Flag on the 60m charts for all three major indexes (SPX, Naz, and Dow) to bounce into the close today. I want this day finishing stronger and putting the shorts on the run for another day or two. If we get the moves today and Monday, I'll be scaling out and probably locking some nice profits.

I nibbled on some CMI calls. I would have liked to hit the first entry right out of the gate, but I missed it while I was recovering. If I get a run towards the high of the day, I'll scale out of a little.

1:05 pm MT: So far so good on the 60m Flag bounce. If the indexes can hold up for the next 25m then we'll get a pure Morning Star Reversal at a higher low on the 60m charts for the Dow and SPX, and a Hammer/Engulfing combo on the Naz. Very nice if it finishes that way.

Market Wrap: we did get the bounce into the close, which increases the likelihood of a continuation of the relief bounce on Monday. Broker earnings, especially Monday before the open and Tuesday before the open will help set the tone for any potential bounce continuation. In addition, Tuesday is the heaviest economic reports day of the week.