Economic Reports Drop the Market

Second Quarter GDP grew at 1.9% versus the 2.3% growth rate expected. In addition, Weekly Jobless Claims came in at 448k versus the 393k expected. The data put the whammy on the market this morning. The Jobless Claims number flies in the face of the ADP Employment Data from yesterday, and underscores to me that the ADP Report is often not in synch with the government employment data.

Such as it is, traders didn't like the news and sold stocks first thing this morning. The key area now becomes 1,265 on the SPX. If the market doesn't hold that line and rally, the current upswing could be over. Now, more than ever because of the Weekly Jobless Claims number, traders will be straining all eyes and thought like a laser on the big Employment Report tomorrow morning. I don't think the indexes will be able to make a huge move again, like the last two days, until we get past the important data tomorrow morning. The market has a chance to move to the upside a bit if traders take the view that the GDP number is old news (which it is since it represents last quarter). But the Weekly Jobless Claims trends the past several weeks has to make them nervous, and nervous doesn't usually equal big move.....

7:45 am MT: I stopped the SPY calls for a .24 cent loss on a 2/3 - size position. I stopped the DIA calls for a .32 cent loss on a 1/3 - size position. I sold the CSX calls at breakeven. And I'm looking at a graceful exit on the last position, which is CMI. I'm not doing anything drastic there yet because the CMI position is only about a 1/4 - size position, and I may play around with it a little longer.

I've been saying this all year long.....Choppy Market.....You can see exactly why I have been keeping a lot of trades on a short leash and not carrying full positions overnight. Every new day is like a box of chocolates this year.....

We still have a chance to make a little noise in the current upswing, but I think it will be tough for the market to make a third big-move day in a row. Not impossible, but improbable. So I'm going to sit back for quite a bit and see if anything emerges bullish or bearish before I do anything else. I may do something in Energy, and Defense looks interesting, but I want to see this sort itself out a bit before jumping back in.

7:55 am MT: The Naz is making a nice effort right now, and it may still run to its 50dma at 2,369-2,370. That's a good battle going on over there at the very least. We probably won't see a big day out of the markets, but the Naz is at least trying.....

7:56 am MT: I nibbled on some LMT calls. The stock is fighting its way back towards 106, and perhaps it will try to bounce again today.

8:00 am MT: I decided to stop CMI for a 2.73 loss on a 1/4 - size position. It was a small enough position that it didn't do much damage, and CMI looks like a big headfake after earnings. Traders are too volatile on the stock right now.

1:20 pm MT: I sold the LMT calls for a .40 cent profit on one trade and a .10 cent profit on another. All told I made $170.00 on LMT on a small position, which equates to about a 12% gain.

9:00 pm MT: Market Wrap: I had $1,395 in total losses today. It was important for me to preserve as much of the $6,386 I made from last Friday through yesterday. So I’m still up close to $5,000 on the week with one more day to go. I had the kind of day I thought as far as volume of trading. I was pecking pretty lightly and not doing very much. We may have reversed the markets yet again…..up down up down up down….. Tomorrow is all about the Jobs Report and to an extent the ISM. The Dow actually closed below the low of yesterday, so any kind of bearish continuation in the morning means that puts on the DIA are probably in play. The next short term support on the Dow is at 11,125. The SPX held yesterday’s low, but any move below 1,263 opens the way for some possible puts on the SPY. There is support in the 1,245 – 1,250 area with stronger support at 1,235. I thought about putting a bullish/bearish movers list together again today like the past several days but I think that everything could change in the morning depending on how the big economic reports play out. If we get good numbers then the market may shake off today and continue the up down up down up theme. If we get bad numbers we could continue the roll down from today and there could be some good short swing puts on the DIA, SPY, and some stocks. If I do (paper) trade tomorrow I will be doing the usual…..out of most of the position and not holding too much over the weekend, if I hold anything at all.