Mixed Monday Market

Oil hit a new high record high (hey.....that's new......), so off we go with the Energy stocks this morning. The Chicago PMI comes out 15m after the open, so look for that report to move the market a bit. I am being selective and small as I nibble around this mixed open.

7:32 am MT: I nibbled a small call position on MUR, I also picked up small call positions on CLF, CNX, AGU, and MOS. Basically, between about 7:30 am and 7:45 am I was nibbling on calls. I want 1-2 more Energy stocks and maybe one more Coal stock and I should be set. If we get a nice little pullback intra-day, I will probably add to the positions.

8:20 am MT: Analysts are so focused on oil prices this morning - and the selling from last week, that they haven't even reported (or analyzed) the Chicago PMI, which came out over 30m ago. The number was 49.6 vs 48.0 estimated, which is a very good number that has a decent chance of bouncing the market a little on at least some short-covering. On the previous post I talked about "elevator analysis" in the comments section. Watch today, you may see a living, real-time example of exactly what I mean. Since the analysts (and educators) are fixated on the past, there is almost NO NEWS on the Chicago PMI in real-time. Now, if we do get a bounce, you just watch, every headline or lead-in will have something about "the market went up today because of a better than expected Chicago PMI report." The market hasn't bounced yet, so all the backward thinkers haven't got the guts yet to put out their headlines or analysis. They're waiting for it to happen, then they'll write up a very intelligent-looking report all about what happened earlier in the day. It will look like pure genius because they can tell you all about why the market went up in the past.

I just checked and here is a smattering of current morning headlines: CBS Marketwatch - "Bears Regain the Upper Hand", Yahoo Finance - "Oil Passes 143 a Barrel", MSN Money - "Crude Tops 143 a Barrel", etc. etc. CNBC is focused on how bad the first half of the year was in their headline article, etc. etc. If the market bounces, every one of those headlines will have new elevator analysis by the end of the day which will include something about Manufacturing in the Midwest, or the Chicago PMI. Now, I don't think the Chicago PMI is all that huge, especially with the ISM out tomorrow. But the point is, 99.9% of the "analysis" you see out there is really just elevator analysis, it doesn't help you as a trader.

8:45 am MT: I missed the perfect entry on adding to AUG and MUR because Papermoney went down for about 30 minutes. It is what it is.....I managed to pick up a little more CLF and CNX on that pullback, and then I tried to get the other two trades in and by then the software was down. I also picked up a little call position on DO. I'm loaded about exactly how I want to be right now. If MUR and CLF keep running on a frozen rope today then I will lock down most of those profits before the end of the day.

9:10 am MT: I sold the small position on MUR for a .35 cent profit, or 7% gain intra-day. Normally I would keep half the position since my target is 100 and the stock is not quite there yet, but I didn't get a chance to add to my position earlier because of the software issue with Papermoney.

9:30 am MT: Traders are taking a "selling in Energy and Basic Materials means buy everything else" approach right now. It's nothing new as far as the rotating and gyrating in the market. It will be interesting to see if the market can bounce, and bounce more or less across the board, without the buying in one area being based on the selling in another. I'm speculating that short-covering and some bargain buying in other areas will be enough to bounce the market and that traders won't completely abandon Energy and Basic Materials. However, I took very small positions in those areas just in case the gyrating is more volatile than I expected.

9:45 am MT: I added to the MOS and AGU positions. I still have half-sized positions or less across the board, so I have plenty of wiggle room to withstand some gyrating.

11:15 am MT: Mixed Monday continues as the market sloshes back and forth. I added a little more to the CNX calls earlier. I may take part of my profits on the CLF calls if the stock jumps back up to 122. All in all, things are just kind of crunching along in a lot of sectors. There isn't much momentum in any one place, so it will be interesting to see how the day closes. It may be that the market stays quiet most of the day. It doesn't appear like it's headed towards a late day sell-off because the internals look ok on the SPX.

1:15 pm MT: I sold half the CLF calls for a 1.30 profit, or 12% intra-day on the trade so far.

7:30 pm MT: Market Wrap: Nothing happened today that changed my mind about the market or the sectors that I'm watching or trading. It was a quiet day and more should not be made of it than it was. The Naz, Small Caps, and Mid Caps underperformed, but it was still a pretty quiet day. Analysts lowered estimates on the ISM report due out tomorrow morning, just as I suspected they would. We have a decent chance of getting a number that comes close to the analyst's estimate of 48.6, which could give the market a bump on short covering alone. I suspect that any number over 49 would do the trick, and a number over 49.6 would most probably do it. If the number comes in below 48.0 then we might see another day of selling, with the SPX possibly dropping to 1,256 and the Naz dropping to 2,266. I have fairly small long call positions right now, which is about right for me considering the market conditions IT and ST, and considering the probability of a bounce (I speculate it's about 60% - 65%). If I thought that a bounce was more like a 70% - 75% probability, I would have about twice the position sizing that I have.

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