Mixed Day Fades Away

Futures are up pre-market on the news from two major European banks that several large U.S. Financial institutions won't need to raise additional capital in order to weather credit market losses.

The ADP Employment Report came in at -79k versus -20k expected, which was four times worse than expected. The ADP report is volatile, and often not correlated with the big government Employment Report due out tomorrow, but that is a pretty big miss. It may be enough to make traders nervous ahead of the Employment Report tomorrow.

Factory Orders comes out in at 8:00 am MT. If the report meets or beats expectations it will probably be the tipping point for the shorts this morning and send them scurrying to cover. So the bounce is basically coming down to Factory Orders. All the other stuff is in place, and traders are edging the market higher off of the speculation for a technical bounce, the Financial news this morning, APOL's earnings, and a smattering of other news. It looks like Factory Orders will be the tipping point, we shall see in about 15m.....

7:45 am MT: AAPL took another leg up this morning, so I am starting the scaling out process.

7:50 am MT: I locked down about 1/3 of the AAPL calls. I've made a 1.65 profit, or 15% gain so far. I'm basically watching the other call trades and just hanging around. I'm waiting for Factory Orders to come out and see if it helps the potential short term bounce or if it puts the whammy on the market. I did add a little to the DO calls.

8:05 am MT: Factory Orders came in at 0.6% versus 0.5% expected, so this economic report did its job. We will continue to have nervousness over the Employment Report tomorrow because of the ADP report, but the market has a little better chance of bouncing a bit today based on all the news and data from this morning. I think that any strong bounce mid-day will be met with fits of nervous selling ahead of the Jobs Report tomorrow, so don't be shy about taking some partial profits today if you get them (like I have so far with AAPL).

By the way, I noted to you yesterday that the SPX had the best looking pattern and you can see that carry through this morning as the SPX leads the other two indexes in percent gain. The SPX is probably headed for resistance at 1,300 (round number, mid point of the long candle, and 10dma). I think it's going to be pretty hard for the SPX to get through 1,304 without a decent Employment Report tomorrow. If the market gets really good news over the next few days (perhaps next week), then the SPX might reach for the next resistance levels at 1,313 - 1,315 (minor), and possibly 1,324 - 1,325 (major).

12:00 pm MT: The market is experiencing another mixed day. Energy and Basic Materials stocks sold off hard early in the day and are now rallying a bit later in the day. The SPX is in a Doji pattern so far. I stopped out of most of my calls (APD, DO, and CF) and I sold the rest of the AAPL calls for a profit. I am still holding the CELG calls, and I picked up small put positions on EXM, GNK, and CNX. The market continues to get increasingly choppier as traders jostle and gyrate ahead of the Employment Report and the Holiday Weekend. I continue to keep my positions small and I'm moving towards Day Swings again as the conditions get sloppier and sloppier. I will probably treat the latest trades as Day Swings and I will probably be in this mode now until the market finally gets through this twitchy stage that it's entering.

1:10 pm MT: I sold the CNX puts for a .75 cent profit, or 10% gain intra-day on a full-size position. As for the earlier trades here are the final numbers: AAPL was a .95 cent profit, or 8.5% gain on a full size position. CF was a 5.64 loss on a half-size position, DO was a 1.35 loss on a 1/4 size position, and APD was a 1.25 loss on a half-size position.

I'm still holding the EXM and GNK puts, and I might look at buying the CNX puts again before the close.

1:20 pm MT: I sold half the EXM puts for a .20 cent gain and I'll look to buy them back on any late day bounce. I picked up half the CNX puts back at a cheaper price then my sell a few minutes ago, and if it bounces a little more I'll add the other half. I'm back to intra-day swing attack mode. I was futzing around with holding directional swing trades too long in this Chop and Slop market, so I've gone back to what has been working most of the year, taking profits sooner on the shorter, intra-day swings. I'm still holding some trades for several days, like CELG, but I'm not looking to hold swing trades longer than 1-3 days, so back to that again.....

1:32 pm MT: I sold the CNX puts I just bought for a .75 cent profit, or 9.5% gain in a few minutes. I am still looking for a bounce to get back some more EXM puts and I will buy the (half-position) CNX puts again on a bounce.

1:45 pm MT: I bought back some of the CNX and EXM puts for a trade into tomorrow.

2:20 pm MT: Market Wrap: Maverick, Goose, and Iceman were dumping all the Commodity Cult stocks today. The music stopped playing and all the Top Gun Hedge Fund Managers were firing missiles at each other over the last chair. It started with big institutions selling the Coal, Chemical/Agriculture, and Steel stocks. By mid-morning it grew into Energy and other Commodity stocks selling, and by later in the day most everything else was selling. Fast Money smelled the smoke from the blazing brush fire and pretty soon everybody was pounding furiously on their keyboards to get out. A common story was a stock like ACI which took 3 1/2 months to trend up and 1 day to give back 40% of the trend. So, when in Rome.....I traded in and out of CNX puts several times profitably, which was a lot better than fighting the tape earlier in the day and losing money. If the Commodity stocks gap down tomorrow, it will be an automatic sell for me on the three put positions. If the Commodity stocks wiggle a little out of the gate, I might play 4-5 of them for another quick intra-day leg down.

If the market was overcooked before on the short-term, it's a crispy, fried neutron star now. But perhaps traders are looking for a climactic supernova that sucks the trading universe into a black hole before they buy again. If we get an ugly Employment Report tomorrow morning, look for a gap down, and perhaps a climactic short term selling day. It doesn't mean the intermediate term trend is sold out yet, we may not see that for another month or two, but if we get a really climactic selling day soon, then look for the same type of price action for the ensuing 3-6 weeks that we had in January.