Mixed Day on Wall Street

The market is set for a quiet, slightly positive open. Steel is in the news with X getting an upgrade from GS, so watch for X to break it's Rectangle trading range. I may stop out of CLF first thing this morning if it moves up too much.

7:32 am MT: I stopped out of the last portion of my CLF puts. The final trade was a .48 cent profit, or 5.5% gain. GS did a nice job of blowing up the put. But I'm not convinced that GS is right, so I'm not buying X calls. I think some old fashioned manipulation was going on here, but it's a long day so we'll see how it goes, I'm still open to the possibility that I might buy calls on X.

7:45 am MT: I'm still assessing this, but I think the little wiggle up this morning actually increases the likelihood of more selling today. I think that some institutions are either hoping or manipulating. Either way, I would be very cautious of buying calls just yet. It may be ok later, but I'm just watching right now, and wondering if this is going to sell down some more.

8:00 am MT: It's worth it to take a moment and read my response to Krystal's comment from yesterday's post in the Comments section.

8:05 am MT: The SPX broke a 2-Day Channel and may be headed towards Friday's low. I took a little more profit on the Q's puts. I will take a little more profit at Friday's low on the SPY puts. I'm also doing a little day trade with X calls on the Morning Star off the gap at 186. I'm not throwing this trade out there in general, it's just a little thing I'm doing because of a pattern signal. I will probably be out in under 30 minutes.

8:15 am MT: The SPX is holding Friday's lows for now, so I sold the rest of my SPY and Q's puts, and I'll watch the price action intra-day for awhile to decide what my next trade will be. The Q's put was a .20 cent profit, or 8% gain. The SPY put was a .22 cent profit, or 5% gain.

8:20 am MT: I sold half the X calls for a profit.

8:30 am MT: I sold the second half of the X calls and locked in my profits. The X day swing was a .60 cent profit, or 5% gain in 20 minutes. It looks like Steel really has come to life, so I may buy calls on X, CLF, or SCHN on the next intra-day pullback. It may seem a little weird to you that I traded the X calls just now, but I was actually throwing a test trade at Steel to see if it was a real move or not today. So far it looks pretty good, and now I'm willing to go back in and swing trade calls on the sector.

8:52 am MT: With the Nasdaq breaking down to new lows, and sitting right at the June 12th lows, I bought back in to some Q's puts. I'm speculating that the June 12th lows won't hold. As always, we shall see.....

One quick Fed note for Wednesday's rate announcement. Fed Funds Future's traders are pricing in a non-event, or in other words traders don't expect a rate cut or a rate hike. However, what traders are looking for is a "language" change, which is trader lingo for: "will the Fed start hinting at future rate hikes?" Most traders are expecting just that, a shift in sentiment by the Fed as they focus more on fighting inflation (I'm not going to say it, I'm not going to say it, I'm not going to say it......ok, I did my "serenity now" exercises and I'm not going to say it). It is interesting to note that FFF traders have really spiked the odds of a rate hike recently. Now the FFF are forecasting a .25 bp hike at either the August 5 or September 16 FOMC meeting. In addition, the FFF are predicting .50 bp of hikes by the October 28/29 FOMC meeting. And if that wasn't enough, FFF traders are actually predicting as much as .75 bp in hikes by the December 16 meeting. That's NOT what the market wants to see, but stock traders have been staring down the barrel of that gun since June 6th, which is exactly when the SPX reversed down and blasted through the 50dma. I still think the market may bounce in the next day or so, but any short term bounce is going to have a tough time making a lot of headway in our current market environment.

9:15 am MT: I picked up a small call position on DNR. I might do the same with HK. I am still watching X, CLF, and SCHN for small call positions.

Here is my Analyst of the Day: Goldman Sachs downgraded both the Financial sector and the Consumer Discretionary sector to Underweight this morning, stating that those sectors will "lag in the current economic environment." Really?.....really Goldman, you think?!!?......So what you're saying is that you've finally figured out that Financials and Consumer Leisure/Entertainment/Frivolous spending will underperform? Really?.....excellent recognition skills! Meanwhile the rest of us have been playing puts on those sectors for most of the year.....There you have it, Goldman Sachs wins my Analyst of the Day award.

Here are some interesting bullish movers today: CLF, FSLR, HK, NOV, SWN, WLT, FLR, UPL, FTI, X, PCU, PTEN, DNR, TRMB. There's more, but those were some of the most interesting to me. Note that Energy and Steel are two of the strongest sectors, and Gold appears to be coming to life, probably as an inflation hedge.

Here are some interesting bearish movers today: WDC, DRYS, EXM, COH, JPM, ADSK, VRSN, ANF, ICE, KSS, KLAC, TGT, RTH, BBY, PH. There's more, but I'm mostly focused on the Index ETF's like the Q's. Note that Retail, Consumer Discretionary, Financials, Oil Shipping, and Tech are some of the worst performing sectors.

11:15 am MT: I picked up partial call positions on X, CLF, and HK. I'm looking to carry the positions for a couple of days.

11:30 am MT: I had to sell a little of the CLF for a profit, it's just so red hot so fast. I'm holding part of the position, and I will add to the position if it pulls back a little intra-day, but the stock is so hot right now that I have to lock down those profits. The CLF trade is a .65 cent profit, or 8% gain in a few minutes (so far). I sold half the position, but I will be looking to buy right back in before the close.

12:00 pm MT: I bought back a couple of the calls on CLF cheaper than the original entry a few minutes ago. CLF basically gave me a cookie, so I took it a couple minutes ago. I'll look for another cookie tomorrow.

12:20 pm MT: I sold the CLF calls again for another profit. The stock is just so screaming hot intra-day that I really think I have a good chance of getting the calls cheaper before the end of the day, but we shall see.....The final trade was a .44 cent profit or 6% gain intra-day. I'm floating an order to buy the August 110 calls at 11.50 or better before the close. I'm just fine with the other call trades for now, and I will even look to add to those positions before the close.

12:37 pm MT: With the Naz holding support and the Q's starting to form a Hammer late in the day, I stopped out of the Q's puts for a .27 cent loss, or 9%. I will now wait for a more significant breakdown of the 2,390 area to buy puts. The market gave a little headfake through that area this morning, but it reversed and has created a little uncertainty for Q's puts now, at least until I see more confirmation.

1:35 pm MT: I nibbled back in to a CLF call, there has been no pullback on this stock today. I'm still looking for any pullback to add to the position, but this may hold and gap up tomorrow.

1:50 pm MT: I nibbled a little more on CLF on this little wiggle back just before the close. I'm playing Steel and Energy for another 1-2 days in this swing. If we get a big gap up in the morning on any of the stocks I bought calls on (CLF, X, DNR, HK) then I will immediately sell half the position.

Market Wrap: The Dow and SPX finished with Dojis today, and had a very narrow trading range. The Naz faded in the last hour right to support. I am currently holding calls on CLF, X, DNR, and HK (Energy and Steel), and I don't have any puts. If the indexes break today's lows tomorrow morning, I will probably jump back in to puts on the Q's, MDY, and maybe even SPY and DIA. There was a lot of gyrating around in the news, but most of it was pretty typical to our current environment. Oil was up, Financials were down, and Tech continues to weaken. Traders may be approaching Wednesday as a catalyst day for the next move. I thought we might get a technical bounce by Tuesday, but so far Traders are not acting like they are in the mood to speculate ahead of the Fed. The FOMC meeting is a two-day affair this go around, so it officially kicks off tomorrow, although the probability is that nothing significant will happen until Wednesday.