Mixed Nuts Chop the Market for a Day

Financials.....remember them? UBS reported its fourth straight loss and JPM is losing more money on mortgage-backed securities.....Financials are putting a damper on pre-market futures. However, oil is down a little in the mid $113 area, which is boosting futures right back. The net result is a flat to soft looking open.

Keep an eye on oil, as usual, because if it takes a quick run to the $110 area today then the market could make one more reach in the upswing. If oil stalemates here, then the Financial news could be enough to cause a deliberation in the current upswing.

7:45 am MT: I picked up a little more AMZN and I nibbled in to some KSS calls. Retail is consolidating a little, which is to be expected from yesterday’s huge moves. I’m not looking for a higher high, especially with oil starting to hold a bit right in the middle of my short term target zone of $110 - $115. In addition, Financials are really getting thumped early on with the negative news out of UBS, JPM, and MS. Oppenheimer piled on the fun with an earnings estimate cut on GS, which has Goldman trading down sharply this morning.

MON reported a positive outlook in gross corn profits, which is putting a tailwind under some Commodity based stocks. I’m keeping one eye over there now.

7:55 am MT: I added a little more to the KSS calls.

10:20 am MT: The market continues to Flag off the move from yesterday. We have a better than 50% chance of taking another thrust to the upside either today or tomorrow. But I’m not looking for the market to exceed the highs of yesterday on the current swing, or if it does, I don’t think it will exceed by much. So I’m playing a few “squeezers” where I’m taking what I think is the last move up in a swing.

I nibbled on MON calls. If Energy and Commodities come to life, I want to be part of something that has good news. Technically it’s a counter-trend trade, so this isn’t going to be a multi-day swing. But the stock is in a Rising/Straight Flag intra-day, which may lead to more momentum later in the day. If the stock can get back to the 20dma then I will sell half the position. If it goes through the 20dma then it could reach to 115 and I would sell the rest. It’s a small position, so I’m only risking a few hundred dollars to make a few hundred dollars with a better than 50% probability base on my chart analysis.

10:40 am MT: The market has gone very quiet. I’m continuing to speculate that the greatest momentum in the current swing is over. Any further thrusting will probably tap out near the swing highs. I’m not sure which side of the swing highs it taps out, but I’ll start scaling out of my calls in the 1,305 – 1,306 area on the SPX.

11:55 am MT: I sold part of the MON calls for a .30 cent profit or 5% gain.

1:30 pm MT: I picked up a little more AMZN and KSS calls, and I added back the MON calls I sold at a cheaper price. I’m willing to hold a little bit overnight, although I have smaller positions right now.

3:30 pm MT: Market Wrap: The market is following a typical pattern of running up for a couple of days and pulling back for a day or two before running up again. The Dow and the SPX officially confirmed a rollover, but that doesn't mean much in our current price action. Financials were the main catalyst to the downside since oil slid down just a little more today. The drop in oil would normally have helped the market but Financials were too much of a drag. Oil is holding the low to mid $112 area for the past two days and is right in the middle of my short term support zone of $110 - $115. I’m getting a little concerned about the Wedging price action on the Dow and SPX. The Naz and the RUT are both established nicely in an intermediate term uptrend. The RUT looks like a candidate for a momentum pullback or Rising Three Methods type of consolidation, and may decide to test 735 – 740 in the next day or two. We’ll see what Retail Sales and earnings do to the market tomorrow.....

6:00 pm MT: AMAT beat their number by a penny and the stock is trading up over 4% after hours. They are the biggest chip equipment maker, so that will give the bulls a boost in the morning, especially in Tech. NVDA also beat their estimates and the stock is trading up almost 10% after hours. NVDA looks like it will open above 12.00, which clears the way for the stock to test its Bearish gap at 13.00. It looks like Tech and Chips will be up in the early part of the day tomorrow, especially if Retail Sales doesn't get in the way.

I like the bullish gap on LDK after earnings. Other than that, I wasn't too excited about any bullish moves today. Other than Railroads and Financials and a smattering here and there, I'm still ok with most of my bullish list from Saturday. But the market may decide to consolidate another day, especially if oil bounces a little and Retail Sales comes in poorly.

Here is a list of interesting Bearish movers today that might be put opportunities Wednesday or Thursday for a quick swing:

Railroads: BNI, CSX, UNP

Financials: GS (variation of a Kicking Pattern)

Utilities: FPL, XLU (in a possible Bear Flag)

Note: EWW (breaking a Triangle)

Here is the daily chart of BNI showing the breakdown of the Broadening channel with volume. The stock is probably headed towards the 200dma and horizontal support in the 92.00 - 92.50 area:
(click on image to enlarge)


Here is BNI on the Weekly charts showing a possible confirmed rollover (it would have to finish below 98.00 at the end of the week). The pattern is an Evening Star Reversal. The first target is the 91.00 - 93.00 area:
(click on image to enlarge)

If the market gives me any bullish wiggle out of the gate on Tech earnings or Retail Sales, I will probably sell all my calls. I'll also be looking at BNI, GS and perhaps some other stocks for puts. But I'm not bearish on my bullish Watchlist, or the market right now. An orderly pullback is probably going to be another opportunity to buy calls.