Market Goes Bang Bang

Stock market futures are quiet on the most recent earnings reports. Traders are awaiting the ADP Employment Data due out in 5 minutes. The report is not as important as the big Employment Report due out Friday, but traders are anxious about job trends in our economic slowing environment. If everything holds together, then the market might make another push sometime today, and perhaps into tomorrow.

Here is the journal recap of my trading day:

Stock Futures got a boost from a surprising ADP Employment Report showing an increase of 9k jobs for July versus an expected decline of 60k jobs. In addition the Fed is extending its Term Securities Lending Facility program. Traders will be watching for the next little catalyst, which will probably be the Oil Inventory Report due out in a little over an hour.

Morgan Stanley downgraded FDX for me, so thanks Morgan, I’m glad they didn’t do it yesterday before I bought calls on the confirmed bounce.....I sure wouldn't have wanted that.....no sir.....oh well, I will look to exit FDX this morning. Nothing quite as exciting as some Financial institution yappity yapping when they have enough of their own problems.....

7:40 am MT: I was busy selling my calls into the nice jumps in the Railroads: NSC and UNP. I also sold the two Steels on the gap up: X and AKS. I sold the FDX calls at breakeven because I had to, not because I wanted to.....thank-you Morgan. That’s how it goes, when risk goes up you have to make a choice, right or wrong. I always err on the safer side of things.

8:00 am MT: Here are the final tallies from yesterday’s calls: FDX was breakeven. AKS was a .73 cent profit or 10% gain. WHR was a 1.07 profit or 22% gain. X was a 2.27 profit or 15% gain. UNP was a .50 cent profit or 10% gain. And NSC was a 1.16 profit or 22% gain.

8:10 am MT: I jumped on LMT on the breakout of the channel on the 60m charts. The stock moved too much too quickly so I sold for a .30 cent profit or 7% gain in about 15 minutes. I think I will be able to buy the calls back in a little while for the same price.

Remember I told you (on yesterday’s post) that yesterday was about staying in the green, turning on a dime with a critical short term change in the market, and positioning for today? I call it "holding the line and turning on a dime." Well, I’ve made $3,021 so far on all the closed trades from this morning because of how I repositioned myself yesterday.....

8:50 am MT: The market is at a critical tipping point intra-day after the Oil Inventory Report. Traders are selling it off a bit. If the selling goes too much further we may get a round trip and then the follow through from yesterday is gone, poof! I’m all out of my calls and watching to see how this goes. I’m also keeping an eye on some oil stocks. We’ll see how this plays out.

11:30 am MT: I nibbled back into WHR calls. I also picked up BNI, CSX, and CMI calls. BNI took off immediately, so I sold the calls for a quick .80 cent profit, or 12% gain, which all the people on VC watched from beginning to end. Because I still want a little BNI, I bought another set of calls slightly OTM on a little pullback. I am looking to run the BNI, CSX, CMI, and WHR calls into the end of the day, and if we get a late-day rally, sell half. If we get a push out of the gate tomorrow morning, I will be aggressively selling the rest of the calls.

12:00 pm MT: The market is at a key point again intra-day. If 11,400 holds on the Dow, and the Bull Flag on the 60m charts holds up and bounces, then we could see an end-of-day push that will make the second wave of calls profitable.

1:20 pm MT: The Bull Flag played out perfectly so I picked up calls on DIA and SPY. I also went back into the Railroads a little more. I ended up selling everything on the late day bump. I then came back in the last 10 minutes on the pullback and bought back into DIA, SPY, and CSX. If we get a push out of the gate tomorrow morning then I will liquidate everything. So I’m holding small call positions on DIA, SPY, CSX, and CMI. I will keep an eye on BNI tomorrow morning as well.

Here is a recap of the last trades: CSX was a .46 cent profit or 8% gain. BNI was a .54 cent profit or 10.5% gain on one trade and a .28 cent profit or 4.5% gain on a second late day trade. I sold WHR at breakeven. DIA was a .29 cent profit or 7.5% gain. And SPY was a .31 cent profit or 7% gain. The final profits on the day for all closed positions was $4,719.

4:00 pm MT: Market Wrap: The market carried through on the bounce from yesterday (I posted yesterday that I was looking for 1-2 more days, and possibly the indexes reaching as far as their 50dma’s). I don’t think traders will push the indexes through their 50dma’s until they see if they like the Employment Report on Friday morning. The ISM will also be a big deal Friday morning. Speaking of employment data, it was the surprisingly strong ADP Private Employment report this morning that sparked the continuation. Positive news from the Fed about extending its liquidity programs also bolstered the market. Now, here is where it gets interesting…..The Oil Inventory Report this morning showed a large drop in gasoline inventories (despite a smaller than expected drop in crude oil stockpiles). So Energy stocks took off today. But the market didn’t sell off too much intra-day, and then pushed to close right at the highs of the day (on the Dow and SPX). We won’t do this forever, if oil prices keep rallying and Energy stocks run up, then the market will cave in eventually under the same weight that pushed the market down most of the summer - high gas prices. I’m playing this swing to run out tomorrow anyway, but the rise in oil prices is something I’m keeping one big eye on.

If the market makes a pretty good push early in the morning tomorrow, I'm all out of everything and probably only doing little nippers here and there into the end of the day - if I do anything at all. If the SPX gets in between 1,290 - 1,300 then I'm done for the early part of the day. The more I look at it the more I think that the market only gets to the 50dma on a good Jobs Report and probably not before. That means I'm not looking for the 50dma until Friday.

Here are some interesting Bullish Movers from today, or stocks that could be going Bullish:

Energy: SUN, HES, NOV, SLB, BHI

Manufacturing/Machinery: CMI, AG, JOYG, BUCY

Steel: CLF, (X, AKS)

Financials: MS, GS

Coals: WLT, ANR, MEE, ACI, PCX

Railroads: UNP, NSC, CSX, BNI

Chemicals: CF, TRA, MON

Also Note: BAX, AMT, ESRX, DD, AET, ACN, BDX, BIIB, MMM, IBM

I am especially interested in BHI and SLB, but the Coal stocks are coming back to life, and it looks like some Steel and Chemical stocks as well. Financials, Tech, and some Cyclicals continue to look pretty good. I still think something will give eventually.....either Energy and Commodity stocks.....or Finacials, Tech, Retail, and Leisure/Consumer Discretionary. I don't think we can have it both ways for very long in our current global environment.....