Market Bounces Anyway

Pre-market futures are down despite the better than expected earnings report from WMT. The culprits are a worse than expected inflation reading from the Consumer Price Index, and a continuing of the worse than expected readings in the Weekly Jobless Claims. The Jobless Claims climbed well over 400k for the fourth week in a row, which is starting to get into the fringes of recession territory. That weekly number needs to stabilize itself under 400k in the next 2-3 weeks in order for traders to not start batting around the "R" word.

Despite the bad economic news, the earnings out of WMT should help Retailers today. We may see a bit of a mixed morning as the bulls and bears fight it out over the numbers. As longs as the bulls hold up the indexes, then the trend will continue.

I will unwind the IWM bear call 75/76 portion of one of the IWM Iron Condors today. I am also looking to sell the KSS and AMZN calls into the bump up today in Retailers.

7:45 am MT: I stopped the BNI puts for a .65 cent loss or 16% loss on a 3/4 sized position. I am watching the IWM 75/76 for a closeout around .15 cents if I can get it, which will preserve the majority of my profits on the trade. All other portions of all the other Iron Condors appear to be safe going into expiration this Friday.

10:15 am MT: I sold half the AMZN calls for a .24 cent profit or 3% gain. I’m looking at easing out of KSS as well. The market is making a little noise to the upside, so I’ll keep riding with this today.

12:00 pm MT: Oil is holding the lows of the past four days and continuing to consolidate short term. The price dropped enough to give the market a bit of a tailwind, but I don’t think the market moves higher short term unless oil breaks below $112.50.

The Naz looks the strongest of all the major indexes and is in an unconfirmed Rising Three Methods right now. The RUT looks bullish as well. The Dow and the SPX are lagging, and probably won’t make much more noise short term unless oil breaks short term support.

1:00 pm MT: The Bull Flag on the 60m chart for AEM looks interesting. Also, EL is powering up after earnings and URBN looks like it’s also making a push after earnings. Here are some other bullish movers on the day: ILMN, GENZ, AMZN, RL, JCP, TGT, RTH, MCD, HOT, QCOM, and VNO. There are others, but I like that lot o’ stocks for now.

1:15 pm MT: I nibbled some calls on ILMN, EL, and HOT. I’m contemplating some more Retail, but I’m still watching for now. I think I’m fine with the amount of Retail that I have been playing this week. That play may be just about done. I don’t think it will carry much past Friday.

1:35 pm MT: I sold the EL calls because Fast Money was doing the Frenetic Thing and I made .35 cents or 15.5% in just a few minutes. This stock will probably not Bang tomorrow, it will probably pull back a bit. I also sold the last of the AMZN calls and settled for a small 1.5% gain.

1:45 pm MT: I added to the HOT calls. Just before the close I picked up a nibbler on some GENZ calls.

2:15 pm MT: Market Wrap: Traders once again proved that they are focused more on the current price of oil than any other factor. The market shook off bad news on the inflation front and an uptrend in unemployment and fixated on oil. Light Sweet Crude dropped to its four-day low at $112.50 before zinging back a little intra-day. Oil is continuing to consolidate short term, which is putting the market in stasis for the past three days. However, the major indexes all finished in the green today because traders are looking forward and not backward. August CPI will likely come down since oil and commodity prices have declined for the past month. So even though we got inflationary numbers, those numbers will probably attenuate back this month. Employment trends are a little more worrisome, and a continuation of Weekly Jobless Claims in the 450k area will signal a possible transition to recessionary conditions.

The Naz bounced today and reached back up to the longer term downtrend line in the 2,455 – 2,460 area. The Naz almost confirmed a Rising Three Methods. The RUT had a similar move to the Naz and is fighting with resistance in the 755 – 765 area. The SPX put in a Bullish Engulfing Pattern, and the Dow is lagging as usual. Both the SPX and the Dow are showing signs of legging up in a short upswing, just like last week, but both are at risk as long as they continue to Wedge and Grind their way up instead of picking up some momentum. A drop below 11,400 on the Dow and 1,270 on the SPX would be bearish, and might send those indexes back down for several weeks.

Tomorrow morning the Industrial Production and Capacity Utilization economic report will garner some interest from traders. In addition, Retail will watch for the reports from KSS and JWN this afternoon and ANF and JCP tomorrow morning. Tech will be affected somewhat by the ADSK earnings this afternoon.

After the close: Earnings Reports: KSS beat earnings and is trading up. JWN missed expectations slightly and is trading down a little. ADSK beat earnings and is trading up sharply. ADSK will be in play early tomorrow as the stock is looking like it will open above the neckline of a Reverse Head and Shoulders at 36.00. ADSK looks like a nice setup for tomorrow morning.

Here are some Bullish Movers from today:

Retail: AMZN, SHLD, KSS (probably bounces after earnings this afternoon), EL, JCP (earnings tomorrow morning), RL

Leisure: HOT, MCD, LVS

Biotechs/Healthcare: ILMN, GENZ, AGN

Tech: ADSK (earnings breakout tomorrow), RIMM, NIHD, QCOM, QQQQ

Financials: MCO, PRU, STT

Note: Defense is interesting: LMT, RTN, NOC, GD, GR, and COL