The Naz Dreams Green as the Market Shrugs of Freddie

Earnings are still pushing the market around a bit as CSCO beat expectations and is trading up over 4% pre-market and FRE missed expectations and is down 10% pre-market. The Naz and SPX futures are down just a little before the open. It looks like the Naz won't be gapping through resistance at 2,350 at the open, but will have to fight its way through during the day. I speculate that the indexes will push up again today, but I want to see if the wiggle out of the gate holds up in the morning.

The big question for the day is this: will traders be more focused on the fear of Freddie and the Nightmare on Wall Street or the substance of Cisco and What Dreams May Come?

We've had a lot of up and down price action at times this year, so we'll see if that cleans up a bit on the current swing and we get 1-2 more days of follow through off the move yesterday.

Here is a recap of my trading day:

7:20 am MT: It looks like Financials just can’t keep themselves out of the news as usual. FRE, ABK, MS, and MER all poked their heads in there and stirred things up (or down). The biggest deal was FRE missing even catastrophic expectations, which isn’t easy to do, so congratulations to FRE.....We’ll see if the bulls climb a wall of worry or if we drop back into chop and slop. I’m playing for bullish resilience, but as always, we shall see.....

7:40 am MT: I sold the last SHLD call, which closes the trade as a 1.71 profit or 22% gain. I sold the last WHR call, which closes the trade as a 1.07 profit, or 18% gain. I sold the NSC calls for a small .18 cent profit, and I sold the UNP calls at breakeven. I am still interested in getting back in to WHR and NSC later in the day. I’m also looking at DIA, SPY, and QQQQ calls if they show themselves.

7:50 am MT: I sold the ADBE calls for a small .08 cent profit mainly because I think I can get them later in the day at a cheaper price. The market is a little fussy out of the gate because of fear. We’ll see if the bulls can keep their breakfast down and show some steel today or not. I sold the DHR calls for a small .08 cent loss. The price action over there is pretty wild, and I want it to settle down a bit. I wouldn’t mind the wiggle and figgle on some of these stocks this morning if the market wasn’t swooning just a little bit. Traders are more focused on the fear of Freddie and the Nightmare on Wall Street than they are the substance of Cisco and What Dreams May Come so far this morning. If the bulls take back over, then I will get back in to a few of these trades that I exited this morning.

8:10 am MT: I sold part of the ABT calls for a .21 cent profit or 8% gain so far. I’ve culled back to three partial positions from what I carried over from yesterday. I will go back in again when the mud clears off the windshield a bit.

8:15 am MT: Energy and Commodity stocks are bouncing, which should not come as a surprise since they sold down pretty sharply on the most recent downswing. Fast Money was itchy like it had the rash of a thousand acres of poison ivy in its pants because all it took was a little bump in oil prices from $118 to $119 (which is nothing in context of the recent $30 dollar drop) to set their collective rash on fire and get them jumping up and down and screaming to cover their shorts.

8:40 am MT: I sold the rest of the ABT calls for a total trade of .21 cents profit or 8% gain. I’m down to two positions and still watching the “Financials Down and Oil Up” double whammy on the bulls. Still watching.....

8:55 am MT: I started nibbling back in on WHR calls at a cheaper price.

11:20 am MT: In the previous hour I picked up calls on DIA, SPY, and ADBE. I also picked up more WHR calls. The market continues to consolidate from yesterday’s big move.

1:45 pm MT: The market pushed up through the highs of yesterday during the day and looks like it will finish in the green. I will hold a few call positions overnight for another move up tomorrow. I sold some of the DIA, SPY, ADBE, and WHR calls, but I’m also keeping some for tomorrow.

I finished the day with a $1,642 profit on all closed trades. I’m still holding a partial call positions on DIA, SPY, ADBE, WHR, AMZN, and WHR. If the market takes off again tomorrow or Friday, then I’ll go in heavier with more calls.

3:30 pm MT: Market Wrap: The Dow is battling with resistance at 11,700, the SPX is battling with resistance at 1,300, and the Naz punched through resistance at 2,350 and through resistance at the top end of the channel at 2,370. The Naz may be getting to the end of the short term upswing after moving more than 100 points from the low on Monday. It’s possible that the Naz might go as far as 2,390-2,400 in the next day or two. If the Dow and SPX can take one more leg up tomorrow or Friday then I will sell the rest of my calls. The Naz is IT Bullish now, moving from the designation IT Neutral to Bullish. The overall market is IT Bullish and the Dow and SPX continue to move towards the top end of the long term channel.

Here is a chart of the Dow showing the test of the Triangle today, and then the bounce towards the first resistance at 11,700. If the Dow pushes through 11,700 then a move to 11,900-12,000 would be the most I would expect out of the current swing:
(click on image to enlarge)

Traders were probably wondering if Financials are going to whammy the market anymore. Based on the fact that the bulls climbed a wall of worry in Financials today, it looks like they think that the worst news is over for now.

SINA beat earnings expectations and is trading up after-hours. The stock may confirm a Hammer from today during the day tomorrow. It will be interesting to watch, along with the other Tech stocks on the watchlist.