Early Wiggle Fades to Red

Today is the "winding up" day for the heaviest stage of earnings. Expect earnings volatility to start attenuating next week. Here is a tally of some of the bigger deal reports for the morning (and after the close yesterday):

Bullish: AMZN up 15%, KLAC up 3.5%, ACI up 2.2%, CVX up 2.7%, XOM up 2%

Bearish: BRCM down 5.5%, MXIM down 3.3%, PG down 3.4%

HON is fairly flat after it's earnings announcement. The earnings (and economic reports this morning) tip slightly to the Bulls, which may wiggle the market up a little out of the gate. I gave an assessment for what I thought might happen today (in VC last night) and so far it's playing out exactly. I thought AMZN would give Retail a small tailwind (although I'm still bearish on Retail stocks like WMT and RTH). AMZN is also giving the overall market some bullish wiggle. I also thought that Semiconductors would not help the market much, but there were a huge amount of chip companies that reported last night. So far the chips (SMH) are fairly flat and probably won't help the Bulls very much, although there are some stronger movers in chips both up (KLAC) and down (MXIM, BRCM). I thought that the best chance this morning (besides AMZN) for the market to catch a little bit of a tailwind would come from Energy (XOM and CVX), and those two companies are up strongly after earnings.

Here is a chart of the Dow:
(click on image to enlarge)

Here is a further assessment from VC last night: I speculated that the Dow (market) could catch a tailwing that carries it towards 8,200 if XOM and CVX helped out AMZN (which they are). Remember that Energy has been a strong enough sector to lead the market (regardless of the fact that I think it's insane for Energy to lead the market). So Energy stocks will probably be a leadership group for the Bulls this morning. My focus on bullish calls would mainly be in that area and Healthcare/Biotech related stocks like GILD.

I also speculated that if the Dow runs to the 8,200 - 8,250 area on light volume and starts to roll over intra-day that I may look at puts for other areas like Retail, or even the index ETF's. Remember to reference the 60m chart of the SPX for a lower high, which would be a put buying opportunity. Also remember to stay nimble today, don't be afraid to take partial profits early in a move, even if you only lock down 20% of the trade and bring your stops to break-even.

Here is that 60m chart of the SPX again:
(click on image to enlarge)

If the Dow pushes above 8,250 on heavier volume then I would start the speculating process for the market tipping back to the Bulls despite yesterday's price action. However, the upswing will NOT confirm that it has reacquired itself until the market pushes back above the 8,350 - 8,375 area (and 8,400 would be a solid confirmation). If there is an absence of volume and price strength above 8,250 then I will assume that the market either stays in consolidation or continues the downdraft from yesterday - probably into the close (and weekend).

We'll see what another exciting day brings.....

7:40 am MT: Early Update: The market is bumping up and wiggling a bit out of the gate as expected. Gold stocks actually gapped up with the market, so I would be a seller NOT a buyer of Gold stocks calls right now (for partial profits - and perhaps keep a part of the positions). Gold may bounce again a little later in the morning, but I would be locking a portion of the trade right here. We'll see how the other sectors shape up early in the day.

7:45 am MT: Early Update: The softness out of the gate is indicating to me that it's somewhat unlikely that we see the Dow at 8,250 today. Anything can happen, but it looks more like a softer wiggle bounce or Bear Flag has a better chance of forming than a sharp bounce on the SPX 60m charts. If the market doesn't hold the low of yesterday, the SPX could take a quick jab to 840. If that happens, that's the second exit for Gold calls. We shall see.....

12:00 pm MT: Intra-day Update: The Dow is forming a Double-Bottom on the 15m charts, which may signal the end of the selling for an hour or so. The soft wiggle out of the gates this morning led to a nice drop, so those of you who were ready for puts should have caught a nice run and now you should look to lock about 2/3 of your positions.

The Gap and Fade on Gold stocks played out just as I warned right after the open, so anyone who held Gold calls overnight is probably glad to have locked at least a portion of the position near the gap highs.

The market may fade again into the close, but it appears to be headed towards some intra-day consolidation of the selling right now.

Today should have been a great lesson for a lot of you about things like turning on a dime (from the One-day Wonder 2 days ago), getting mentally prepared for the likely "if-then" scenarios (getting ready to pull the trigger on puts this morning), and trade management (locking and walking on at least part of your call positions on the Gold Gaps). Hopefully the things I am teaching you are keeping you moving forward in the trading game. The speed of your journey may be slower sometimes, but don't wring your hands about it too much, this really has been a tough market for the past year. It will make you a better trader to learn during the tough times.