Tech and Financials Bounce as Market Fights Resistance

Oil rose to a record price again, and the NY Manufacturing Index came in worse than expected. The market reacted negatively to the news in early trading Monday morning. Interestingly enough, in other news LEH played the earnings game pretty well, as I speculated. LEH managed to be less than catastrophically bad with their report, and the stock was actually up a little early in the day, which helped Financials, and gave the market a little boost.

7:50 am MT: I sold the CMI calls for a tiny gain, but I may buy back in later in the day. I sold the CNX calls for a .70 cent profit, or 9% gain, and I may buy back into those later as well.

7:55 am MT: I bought back in to the CMI calls, and I'll run with those for a few more minutes, squeeze a little more profit out of the play, and finish the CMI trade. The pattern with CMI is to get most of the move done in the first 45 minutes. So I'm targeting about ten more minutes and closing it out.

8:10 am MT: I sold the CMI calls again. I consider the two trades as one, so the final tally is an .80 cent profit, or 14% gain on CMI. I also bought back in to the CNX calls on the bounce of the Bull Flag on the 10m charts.

8:15 am MT: here is a quick note on the overall market this morning. I actually liked that it opened down a little. I think it actually give the bounce a little more time. If we had gapped up at the open I would have been selling like crazy. The wiggle out of the gate gave me a chance to play around a little and go surfing for plays. There are times when a little wiggle can be good for the continuation of a bounce, and I'm speculating that this morning is one of those times. I could be wrong, but I like what I see so far.

8:25 am MT: I sold the CNX calls again, and like CMI I'm treating it as one trade, so the final tally was a 1.05 profit, or a 14% gain on CNX.

8:40 am MT: I like the bounces on CLR, HK, and WDC. I like the breakouts on RIMM and SPWR. I nibbled on calls for RIMM and WDC, and I may look at CLR or the others as well.

8:45 am MT: I sold half the FWLT calls for a .60 cent profit, or 18% gain so far. A few minutes later, with STLD battling at a short-term resistance, I sold part of those calls for an .80 cent profit, or 16% gain so far.

You can probably see this by now, but I'll state it anyway. I'm moving more towards Tech (QCOM, RIMM, WDC) and moving gradually away from some of the other areas. I'm still working the other areas, but Tech is looking better than anything else in the near-term.

9:10 am MT: I nibbled on some IBM calls. I like the Reverse Head and Shoulders on the 120m charts. You can see it on the 60m charts as well, with a mini Double Bottom inside the Head. I have partial positions on three Techs, and a full position on a fourth. So I'm good with what I have for now.

Market Update: If the Dow can push through resistance along the 10dma, it will probably make a run to 12,350 (horizontal resistance), or perhaps 12,450 (projecting the 20dma as resistance). So a push through the highs of the day would possible lead to a run of about another 100 points. The Naz is trying to decide if it can push through resistance at 2,475 (I noted that area yesterday and the Naz hit 2,472.65 before consolidating this morning). If the Naz can push through, then it will reach for 2,500 (which means some smarty pants will sell at 2,497.86593411). I don't know if the markets can push through or not, and I don't know if they can do it today. But if we do push through, I'll be locking down profits all the way up. If we don't, and we roll over, then I'll stop all the calls and start buying puts.

9:35 am MT: I locked and walked on the STLD calls for a total trade of .62 cents profit, or 13% gain. I may trade it again on a breakout of the days high, but I'm fine with the quick profits for now. I also sold the JOYG calls at breakeven. You can see that, as usual, I'm not especially tolerant in the market climate we continue to grind through. I may pick up the JOYG calls again, but it may be after the market decides what it's going to do with its short-term resistance.

10:00 am MT: I locked and walked on FWLT for a total trade of .63 cents profit, or 18% gain. FWLT took a dump just after I sold it, so that was nice timing. I still like it, but I can obviously get back in cheaper if I want to. I also sold the RIMM calls for a 1.00 profit, or a 9% gain for a 1 hour and 20 minute trade. I love RIMM right now, but it got pretty white hot intra-day, so I'd rather take my money, watch for an intra-day pullback, and lather rinse repeat.....

10:10 am MT: I stopped out of QCOM for a small .18 cent loss. It's the same story as JOYG, I have very little tolerance for "fussy" in our current market conditions. When stuff gets a little to loosey goosey I dump it, whether I'm right or wrong I don't care, I just move on to other stuff that has some teeth behind it (or horns I guess, since I've been trading calls today). The only things I'm holding right now are partial call positions on WDC and IBM. I want back into RIMM on a pullback, and I may look at some other stuff as well, but I've got one BIG EYE (Popeye?) on what the overall market wants to do at these levels - because that's what all the other traders are doing right now. I think there are a whole lot of BIGEYES out there in trading land musing over our market at this moment. It's like a huge Marty Feldman convention in Tradersylvania and Igor and Dr. Frankenstein want to know if the Monster is really alive.

If you didn't quite get that metaphor, watch the first minute and 22 seconds of the following and you'll get an idea of what traders are wondering right now:

http://www.youtube.com/watch?v=CfKccGP3TeM

10:50 am MT: I bought back in to the FWLT calls because I like how the stock is holding up intra-day. I want to have enough trades on the table in case the market does try to make another leg up today or tomorrow.

1:00 pm MT: about an hour ago I bought back some RIMM calls and picked up some calls on ECA and HK. This was my first chance to post the trades.

3:00 pm MT: Market Wrap: Tech and Financials led the way today, with some Tech still trending up and bouncing, while Financials were simply continuing to bounce up from oversold conditions. As of the close today the market is at a key short term tipping point, so watch the price action closely tomorrow. Remember, Tuesday is the newsiest day this week with several economic reports and the GS earnings before the open. So if the market starts selling off tomorrow, I will be exiting the remainder of my calls and buying puts. If the market can't blast through the highs of today with some vinegar and baking soda behind it, then I will continue to scale out of my calls and start scaling into puts. If the market can make some bullish noise tomorrow, then I will run with my calls and add a few more throughout the day, and target Wednesday (or even Thursday morning) for the end of the upswing. I could be wrong, but my senses are telling me that the upswing could be done tomorrow. But the market has a lot of news to digest and gyrate over tomorrow morning, so I'm not trying to get to "Nostradwightus" right now, I want to see this play out early in the day tomorrow.

I am probably going to sell some of my calls early in the day if the market gaps up. I will sell all of RIMM on a gap up at the open. If the market holds up, and I see some nice intra-day pullbacks then I will get back in, and maybe even add positions. I think trading activity will be be heavier tomorrow morning, and it will probably feel pretty newsy, so really focus on price action in the morning. One final note: ADBE must have missed expectations with earnings because the stock is down over $1.30 after-hours, we'll see how it plays out tomorrow morning.