Watchlist Saturday

Dow: IT Bearish and ST Bullish. The Dow bounced off the top side of the 11,950 - 12,100 support zone. The closest resistance zone is 12,350 - 12,450. If the Dow falls much below 12,200 Monday then I will look at this bounce as possibly over and I will probably play puts.

SPX: IT Bearish and ST Bullish. The SPX bounced off the top side of the 1,325 - 1,340 support zone. The closest resistance is 1,370. The SPX could overshoot it by 5 points or so, but the area is clear to see. If the SPX falls much below 1,350 Monday then I will look at this bounce as possibly over, which would confirm on a drop below 1,340. I would probably start nibbling on puts on a drop below 1,345.

Naz: IT Neutral to Bearish and ST Bullish. The Naz bounced off the 2,400 support area (38.2% retracement of the previous IT Bullish Trend). The next resistance is 2,460, which is minor, and the next resistance after that is 2,475. If the Naz falls much below 2,430 Monday then I will look at this bounce as possibly over, which would confirm on a drop below 2,415.

I am still focused on these particular stocks for short term bullish bounces:

Steel (STLD, NUE, CLF), Coal (WLT, CNX), Machinery/Construction (JOYG, BUCY, CMI, FWLT), Tech (ADBE - earnings Monday, CTSH, QCOM, RIMM, IBM, WDC), and Chemicals (PX).

I may add to the list on Monday, as I see things develop. I am also starting to put together a list of stocks I would like to play puts on when this short-term upswing is over.

The bounce from Friday has a chance to continue on Monday, and perhaps even Tuesday. I'm not targeting the move to last beyond Wednesday morning to mid-day at the latest. Brokers will set the early tone in Financials, and thus the market. LEH has earnings on Monday before the open, which will set part of the tone for the continuation of the bounce. Brokers know how to play the earnings game as well as any companies out there, so I expect LEH to at least be "less-than-catastrophically-bad" with their report, which will keep the shorts in Financials on the run for another day. GS has earnings Tuesday morning, and I expect a decent report there as well. And finally, MS will report earnings on Wednesday morning, although by then, most of the cake will be baked. Tuesday also gives us the heaviest day of economic reports. So if the market survives Tuesday, then I think the bounce can go to Wednesday mid-day. I will look to get in more call trades on Monday, barring a meltdown from LEH. I will probably be pretty active Monday and Tuesday, scaling out of current trades and looking for new trades. Depending on how things shape up with the Brokers and Tuesday's economic reports, I'll probably start scaling into puts Wednesday. However, it could be as early as Monday - but I would prefer Wednesday because the puts will have a higher probability of working if the market continues bouncing on Monday and starts running out of gas later in the day on Tuesday.

One other note: I have been recording some videos to get the hang of things. I'm still learning the best formatting, size, resolution, audio, etc. I was set back by about 5 days because of my illness. But I'm getting back on track now.

Market Bounces into the Close

It's too early to tell what we're going to get out of the market for the morning, but I wanted to open a post while I'm briefly conscious. I at least want you to be able to "tawk amungst yourselfs" while I finish recovering from my creeping gomboo. I should be doing better today, but I'm going to be smart and rest for a few more hours so I recover on schedule.

The CPI report just came out with a reading of 0.6% vs. the 0.5% expected. Core CPI (excluding Food and Energy) was in-line with expectations. So we are inflationary, who knew? Surprise, surprise.....The reading holds up, and maybe even increases the likelihood of a Fed rate hike later this year. Traders won't be thrilled by the number. The Dollar is set to have its biggest weekly gain against the Euro in three years, and the CPI report will probably only add a little to the Dollar's gains, so I don't think Energy and Commodity stocks will be quite ready this morning. Pre-market futures dipped on the announcement, however, inflation is not new enough news that it should change traders approach to this morning much. I suspect that the day will still play out much like the rest of the week, with caution early in the trading day, and then a better idea of direction later in the morning.

12:15 pm MT: The market is bouncing on exactly what I anticipated and posted yesterday. We are oversold short-term in a lot of areas, especially Financials, so it's not surprising to see Brokers as the leading bouncer today. Oil also dropped a bit, as I anticipated, which is giving a lift to Transports and the overall market. The stocks that I highlighted yesterday (CMI, ETN, and QCOM) all bounced nicely, although ETN is getting a little squishy right now (I want it to close strong). So there you have it, a nice little Nostradwightus moment. Not bad considering I feel like an eye booger. As it is, I'm not looking for this moment to last for too long, so I'm not loading up to my eye boogers in calls. I just want a few, and I want to scale in.

Here are the afternoon trades I entered in the papermoney account (when I came back to life). I scaled in to calls on QCOM, STLD, CNX, FWLT, and JOYG. That's about all that I want for now, given that I don't believe the bounce will last beyond Monday or Tuesday.

Here are some additional notable bouncers:

Steel (STLD, NUE, CLF), Coal (WLT, CNX), Machinery/Construction (JOYG, BUCY, CMI, FWLT), Tech (ADBE, CTSH, QCOM, RIMM, IBM, WDC), Chemicals (PX). there's more in each area, and some more stuff out there, but those are the ones that caught my attention.

12:45 pm MT: I really want that Bull Flag on the 60m charts for all three major indexes (SPX, Naz, and Dow) to bounce into the close today. I want this day finishing stronger and putting the shorts on the run for another day or two. If we get the moves today and Monday, I'll be scaling out and probably locking some nice profits.

I nibbled on some CMI calls. I would have liked to hit the first entry right out of the gate, but I missed it while I was recovering. If I get a run towards the high of the day, I'll scale out of a little.

1:05 pm MT: So far so good on the 60m Flag bounce. If the indexes can hold up for the next 25m then we'll get a pure Morning Star Reversal at a higher low on the 60m charts for the Dow and SPX, and a Hammer/Engulfing combo on the Naz. Very nice if it finishes that way.

Market Wrap: we did get the bounce into the close, which increases the likelihood of a continuation of the relief bounce on Monday. Broker earnings, especially Monday before the open and Tuesday before the open will help set the tone for any potential bounce continuation. In addition, Tuesday is the heaviest economic reports day of the week.

Market Fades Back into Inverted Hammer

Retail Sales came in better than expected for May indicating that consumer spending continues to hold up in spite of higher Energy and Goods prices. The economic numbers once again underscore my theme for the year, that we are not in a recession. However, we are not rip-roaring bullish either. In fact the market posture is IT Bearish, but today's price action may give us a short-term bullish bounce. I'm not expecting a huge move, so I'm not ready to get loaded up to my eyeballs in calls And I'm not expecting a change in the intermediate term (IT) posture because all the concerns that were bothering the market yesterday are still concerns. So look for a possible short term upswing for a couple of days, although we may just get a Harami today. I think the market probably won't gap and fade this morning, I think the bears are a little nervous about the short-term swing being a little too done. We may see some short-covering push the SPX back through 1,350, at least for the morning.

7:30 am MT: I sold the last of my DIA, SPY, and Q's puts at the market, at the open. Retail stocks like WMT, BIG, DLTR, ROST, and TIF may bounce a little today. In addition, Chemical stocks like AGU and TRA, and Coal stocks like CNX and ACI may be worth watching today or tomorrow. Some Tech stocks like RIMM and AAPL may be worth watching a little as well. I don't have a huge bullish list right now because of the market conditions.

Here are the final numbers on the DIA, SPY, and Q's put trades: the DIA was a gain of 7.5%, the SPY was a gain of 7%, and the QQQQ was a gain of 5%

I am still working through the cold that I caught two days ago, so I am posting this link and then resting for a little bit. You will be able to comment to each other as usual. I will be posting again in several hours.

11:30 am MT: The market has been pulling back for a couple of hours. If the SPX holds the low 1,340's and bounces intra-day, then the market may be signaling that the short-term downswing is over and a short-term bounce is in play. I want the Bull Flag on the 60m charts to confirm. I don't know if the market has enough strength to give us an Engulfing Day or not, we shall see.....

For now I'm still not playing anything. Retail, Financials, Transports, and Housing are leading the way. The Financials move is more of an "oversold" bounce. I think there are so many oversold areas that this bounce in the market may have legs for another couple of days. The problem is that all the most bullish sectors (Energy and Commodity related stocks) are bearish short term. So there's not a whole lot to play just yet. I'll run up and down my watchlist a few more times to see if anything shakes out.

A good stock to keep on your front screen today is AAPL, which is right on its 50dma, and close to horizontal support. It's hard to imagine a rally starting without Hot Money piling into AAPL. So it may be a good litmus test for the rest of the day. Right now, I'm skeptical.

1:55 pm MT: The market faded back to the lows of the day before bouncing towards the close. The result was an Inverted Hammer on the Dow and SPX, and no confirmation of a swing bounce yet. The Naz is a little more precarious as it battles on the wrong side of the 50dma. If we do get a bounce tomorrow then I have a very short list of stocks I'm looking at: CMI, ETN, QCOM, PX, MA, and maybe WMT. I may add to the list later today if I see some things I like after going up and down my watchlist a few more times.

8:45 pm MT: Market Wrap: The market pushed up on the Retail Sales report and some short-covering/bargain nibbling on Financials. An early drop in oil prices helped the bulls as well. Later in the day, oil rallied, which is sort of the "Anti-Market" or in other words, it's the anti-consumer spending/anti-retail effect. So back down the market went. My thought for tomorrow is that Financials are getting pretty overbaked on the short-term, and maybe we saw the first volley shot of a relief bounce today. If the CPI reports modest inflation numbers, oil prices drop a little, and Financials catch some more short-covering, then the market may bounce, and I will look at CMI, ETN, and QCOM (and perhaps a few others) for 1-2 day call trades. If the market fades again, I may play puts on index ETF's.

Here is a list of interesting bullish stocks (if we get a short term bounce):

CMI, ETN, JOYG, QCOM, ADBE, WDC, RIMM, PX, AGU, MA, CLF, STLD, WMT, DLTR, and ROST

If the market collapses then I will look at DIA, SPY, IWM, QQQQ, and perhaps some other stocks for puts.

I'm not entirely sure if we get the short term bounce tomorrow, but I'm leaning that way. However, remember that the intermediate term trend is down, so I won't be playing calls for more than 1-2 day swings. And I will keep an eye on any downtrending stocks that swing up for potential put plays, perhaps by late Monday or Tuesday of next week. We shall see.....

Market Dumps on Inflation and Financials

The market will open very quietly this morning. There are no catalysts until the Oil Inventory Report, which comes out an hour after the open. If the market stays quiet most of the day, look for the Fed's Beige Book to garner some interest. The report is an anecdotal view of current economic conditions. Traders may be sitting on price action until they get another catalyst, but I will keep watching for the 2-Day range break throughout the day. Until the market signals a direction, there is no point in getting too jumpy with your trading.

7:55 am MT: The Dow dropped right to the 3-Day low. I'm watching closely for a break. I decided to stop out of RIMM. The total loss was 7% on a 1/3 sized position. I don't want to be long (calls) anything until we get a confirmed bounce on the market. I may not want to be short (puts) anything either, except maybe some DIA puts initially. But I still want to see if there is going to be some Fast Money Manipulation around the 12,190 area.

8:10 am MT: I picked up some puts on DIA and SPY. I will add to them later, perhaps if the market continues to sell after the Fed's Beige Book. If the market takes a quick, sharp drop this morning, then I may just lock profits as we go along.

8:15 am MT: The Dow has treated the breakdown area correctly, it's unlikely that Fast Money can manipulate this. The market will probably stay down today, especially if we don't get a substantial catalyst from either economic report.

I also picked up puts on QQQQ. I am willing to double the DIA, SPY, and Q's positions on an intra-day upswing, as long as it doesn't run too far.

11:30 am MT: The market continues to consolidate at its lows ahead of the Beige Book. The report comes out in 30 minutes, so I'm not expecting anything dramatic until then. If the numbers come in positive and the market starts spiking, I'll sell all 3 puts immediately. If the numbers are so so, or poor, and the market drops, I'll sell half into a drop and hold the rest for a little while.

12:10 pm MT: At first glance the Beige Book doesn't look like it's revealing anything breathtaking one way or the other. The Fed sees general softness in the majority of its districts, but some stability in the others. It doesn't look strong enough to put a big tailwind under the market. I am going to stay with my puts for now.

1:50 pm MT: I started scaling out of a few of the put contracts on the DIA, SPY, and QQQQ trades. The DIA puts are a 13% gain so far, the SPY puts are a 10% gain so far, and the Q's puts are a 13% gain so far. I'm holding about half the positions and watching for the swing to complete tomorrow morning.

3:30 pm MT: Market Wrap: The market broke down through the 3-Day lows on the Dow and gave a nice put entry just as I outlined in the charts yesterday. The catalyst was a combination of rising oil prices, inflation concerns, and analyst Meredith Whitney over at Oppenheimer banging the drum for more Financial sector write-downs. She has been pretty accurate so far with her forecasting, and it makes me believe the Financials continue to be a gigantic mess. The unbelievable over-speculation on loans, especially subprime loans, is just killing this sector. Talk about paying the price for greed.....

An interesting divergence was the rise in oil prices and the muted response in Energy stocks. There really aren't any significant catalysts in any key sectors right now. Even the key economic reports tomorrow and Friday don't look like they will help. Retail Sales is tomorrow and the CPI (Consumer Price Index - a key measure of inflation) is Friday, and neither one is probably going to be good enough to give the market a significant tailwind. The market indexes look like they could drop again tomorrow. Probably the only thing that will bounce the market in the next two days is either a less-than-catastrophic Retail Sales/CPI, or a technical support trigger. My guess is that it will probably be a technical trigger because the economic reports have not been surprising anyone lately.

So for now it's business as usual with the puts. If we get a short term bullish bounce then I'll be looking at Coal stocks, Chemical stocks, some Energy stocks, and some Agriculture stocks. I might look at Tech, but that's not certain yet. I will also continue to play ETF's more and more. And I will expand out the number of sector and index ETF's I play if the "spaghetti market" doesn't untwist itself a little more.

Benny's Nutty Day in the Market

Attention, attention, alert, Benny says he sees inflation in commodity prices.....ok, everyone got that?

I'm not sure what's goofier about this morning, that Benny sees inflation (which, I suppose, is better than seeing dead people.....), or that traders are surprised that the Fed might hike interest rates. The Fed Funds Futures have been predicting a 25bp rate hike at the December 16 FOMC meeting for about, oh, 3-4 weeks. I know I've said this before, but is there anyone in the known universe that doesn't know that we have energy and commodity inflation?

Well, like I also said, it's not my job to question it, but to trade it. I'm going to see how the market plays this for the next little while, and see if there is a good trade. The pre-market futures are down more than I would have expected, so watch yesterday's lows, if the market starts blasting through those, it may be put city.

7:35 am MT: I sold the JNJ puts for a 10% gain from yesterday. I sold the UPS puts for an 8% gain since yesterday. I also stopped out of the GG calls for a 12% loss, and I stopped out of AEM calls for a 12% loss. Both stops were on a half-sized position, so pretty minimal losses.

7:55 am MT: I took a little profit on part of the AA call position. I sold a couple contracts for .51 cent profit, or 17% gain so far.

8:05 am MT: I am demonstrating an Iron Condor on SPY in my papermoney today. I don't normally do Iron Condors, but I need to demo this. So here it is: I sold the July 127 puts and bought the July 126 puts. I also sold the July 143 calls and bought the July 144 calls. The net credit on the IC was .35 cents, with .65 cents of risk. That translates to a 54% return on risk for 38 days of time.

8:20 am MT: I picked up a very small call position on RIMM. I also scaled out of just a little more of the AA calls, which is looking very strong.

8:35 am MT: I stopped out of ECA for a 5% loss, and I stopped out of SU for a 6% loss. Both positions were half-sizers, so once again, minimal losses. For whatever reason, it just doesn't smell right in Gold, Energy, or Commodities. I'm not liking a lot of the charts over there. I think that being heavily loaded up on calls is too risky right now. I only have two small positions left. I'm in account preservation mode this morning, and not in aggressive risk-taking mode. When Benny started yapping he put the whammy on things. Nothing he said is even remotely close to news, but traders are way too twitchy and jumpy about everything they see. It's like watching a quarterback who's been getting pounded all day in the pocket, and getting pummeled with sack after sack. When they drop back for a pass, they're thinking "oh no, here we go again", and they get that wide-eyed look in their eyes with those nervous and twitchy feet. In football they call it happy feet. To me it's like strapping on clown shoes and trying to cross the freeway during rush hour, it gets pretty goofy.

9:00 am MT: I nibbled a little on FCX calls. I think I'm ok with what I have now. I am looking up and down my watchlist for calls or puts, but I don't see a lot of exciting stuff. It may be that some of our selling today comes in the Energy and Commodity areas, but AA and FCX are rowing their own boats today, which I'm willing to play.

10:00 am MT: The market is quiet. If it stays quiet and doesn't sell off into the close, then the odds increase for a small bounce tomorrow. I will probably stay pretty light on the positions going into the close for that very reason. The market has a sense about it like it's clinging to the edge of a cliff by it's toenail. And if we get any more toenail fungus in the news then that thing is going to pop right off and the market is going to do a Wile E Coyote right into the canyon. If the market can overcome its frayed nerves, then maybe it will bounce a little.

10:10 am MT: I stopped out of FCX for a 14% loss on a 1/3 size position. I just don't see anything in Energy or Commodities catching any traction out there. I also locked and walked on the rest of AA, so the total trade was a 10.5% profit.

10:20 am MT: This is an alert that Energy and Commodity stocks may be done for a little while, perhaps several more days at the least. Traders are treating those sectors like hot potatoes today, so I'm all out of those areas, and I'm standing back and watching for now.

11:00 am MT: I sold the RIMM calls at breakeven. I really want to do this trade, but the nagging voice in my head is repeating over and over again the old saying amongst stock traders: "never trade a dull market." I can't shake it off, I think the risk is just not worth the reward right now. RIMM is a beautiful setup, but I think I will wait for the market to come to life before I take it again. For now, I'm flat the market on a flat market day.

12:00 pm MT: I picked up some half-sized put positions on DIA and SPY. I think that the market may decide to do a little Wile E Coyote right here. This is probably our intra-day tipping point on the market, we may sell down a bit from here.

1:45 pm MT: Now that RIMM will confirm a Bullish Engulfing after a Hammer yesterday, I went ahead and nibbled back in to a small call position. The overall action on the markets is mixed, just like it ended yesterday. I'm only keeping a few small positions because when the market gets dull, there's no sense in trying to make something out of nothing.

The Dow is hanging in space right now. The 3-day low is clearly defined at 12,190 - 12,200. So there's not much sense in ganging up on puts until we see a clear breach of those levels. Therefore, I decided to sell my DIA and SPY puts at breakeven just before the close. I may be premature, especially if we drop through the 12,190 area tomorrow, but I can always get back in if it looks good.

6:30 pm MT: Market Wrap: Benny came, he saw inflation, and he kicked bull tail. I really am trying to lay off a bit here, but his comment that policy makers will "strongly resist" any surge in inflation expectations really wants to get me jabbering away with some "critiquing." I think I will somehow resist saying anything about soaring Energy and Commodity prices and at the same time cutting rates by 225 bp from January through April. I'll also resist saying anything about lending to the long end of the yield curve 3-4 months too late, which is what the Fed should have been targeting all along, which is what I kept pounding the table for all throughout the past Winter. I'll also resist saying anything about traders being silly because today's news is about as non-news as news can get since the Fed Fund Futures have been predicting a rate hike towards the end of this year for about 3-4 weeks. And I'll resists saying.....oh....have I been typing out loud? Oopsy.....

The Dollar jumped pretty good off of Benny's comments, so "Rising Dollar Risk" will probably keep Energy, Gold, Steel, and other Commodity-based stocks under pressure for a couple of days. As a result, I'm not looking for anything over there for several more days at least, maybe longer.

The net net, at the end of all the gyrating, is that we had another Mixed Nuts day in the market. We are right at a key point on all the index charts. The Naz is clinging to horizontal support (2,930), and diagonal support (the 50dma). The SPX is holding a two-day low (1,350), and has tested short-term resistance (near the mid-point of the long candle three days ago, which was also the reaction low from the middle of last week around 1,370). The 1,350 - 1,370 range on the SPX is also the 50% and 38.2% (or 1/3 as I like to say) retracement levels of the previous IT Trend. The Dow is holding a three-day low (12,190 - 12,200), and has also tested short-term resistance (near the mid-point of the long candle three days ago, which was also the reaction low from the middle of last week around 12,340 - 12,370). If/when we get a clear break of the short term range, I will look to play the DIA, SPY, and the QQQQ's. That's the easiest setup I can see right now because of the many crosscurrents in other sectors that might need another day or two (or longer) to clear up. Watch for that range break, that's probably going to be your next trade cue. Whichever way the market breaks, look for a good run in that direction for 1-2 days, maybe even 3 days.

Here is the chart of the Naz with the 50dma
(click on image to enlarge)


Here is the chart of the SPX with the Fibs showing the 2-Day Range
(click on image to enlarge)


Here is the chart of the Dow showing the 3-Day Low
(click on image to enlarge)

One final note: I managed to catch a nice sore throat today, so I'm not doing any video or talking for a couple of days, especially so I can get through tomorrow. I'm hoping, like everyone does, that it blows over really quickly. If any of you are like me, you hate being sick.....

Pops, Drops, and Mixed Nuts

The futures are up slightly in pre-market trading on a lot of little yipping bits (a yip is not quite as big as a yap, in case you were wondering.....) which are floating in here and there from Saudi Arabia to New York City. As usual, LEH is at the center of the news.....

I'm not going to get into all the little news bites. Suffice it to say that the market may pop a little out of the gate. I will be looking to scale in to some SPY puts sometime early in the day, but I'll be nibbling at first.

7:35 am MT: I picked up little nibbler put positions on SPY and DIA. I was able to get both positions cheaper than my sell price on Friday. I'm hoping the market pops up a little more in the next hour or two, so I can continue scaling in a little.

7:45 am MT: I scaled in to calls on GG and AEM. I also scaled in to puts on JNJ, UPS, MS, and GS.

7:55 am MT: I picked up a few more puts on the SPY and DIA positions. I'm set the way I want to be now, so I'll sit tight and watch how this plays out for the next couple of hours.

9:30 am MT: I nibbled in a few calls on ECA and SU because I want some exposure to Energy stocks. The market may churn for the next few hours. The SPX is not acting like it wants to dump down to 1,350 just yet, and traders look a little indecisive this morning.

9:40 am MT: The SPX is acting nice and soft on the 60m charts. This is an unusual pattern, but it's a variation of a Bear Flag, which looks like it's going to roll down sooner than I thought. We shall see.....

11:10 am MT: I sold part of the GS puts as the stock got close to minor support at 167 - 168. I have realized a 1.81 profit, or 20% so far (for about 90 minutes).

11:15 am MT: This is probably our tipping point on the morning. The market may be starting to dump a little, we shall see.....

11:30 am MT: I entered a shorter intra-day swing on some GS puts on a separate trade about 11:00 am, and sold them for a quick .62 cent profit, or 6% gain in 30 minutes.

12:00 pm MT: I locked a little more of the GS puts down. The total trade is now a 2.13 profit, or 23% gain so far. I'm going to sit on the last half of the trade and target 162.

12:20 pm MT: I started scaling out of MS puts for a .55 cent profit, or 16% gain so far intra-day. I also started scaling out of the DIA puts. The DIA put is a .64 profit, or 15% gain so far intra-day.

1:15 pm MT: I sold all the rest of the DIA, SPY, MS, and GS puts. Here are the final numbers: For the DIA puts I made a .52 cent profit, or 12% gain on an intra-day swing. For the SPY puts I made an .84 cent profit, or 15% gain on an intra-day swing. For the MS puts I made a .63 cent profit, or 18% gain on an intra-day swing. And for the GS puts I made a 2.84 profit, or 31% gain on an intra-day swing.

Since I got out of the trades the market has bounced pretty good, nothing spectacular, but enough to wipe out part of my profits if I had stayed in. Remember, part of smelling momo is not just about getting in, it's also about getting out. And our market conditions dictate getting out sooner rather than later. If I see some nice setups show up tomorrow, I might lather-rinse-repeat on the same positions. But I think that there are too many twitchy traders out there right now, and when the market is acting like it could pick up a grain of rice with its derriere cheeks, then I lock and walk.

1:50 pm MT: I picked up some calls on AA, which is confirming a bounce.

3:00 pm MT: Market Wrap: The SPX and the Dow popped and dropped, and the Naz underperformed all day. I'm not going to give you all the "elevator analysis" reasons for why. Suffice it to say that Financials were weak (what a surprise), and Energy & Commodities were strong (another shocker). The pop and drop that I was looking for played out very nicely today, a very good day for trading.

Now, don't be fooled by all the barking out there.....the bounce at the end of the day today was all about the Naz, through and through, and to the bone. It was a technical bounce. The Naz has a key horizontal support at 2,429 - 2,430, which I noted for you on the Saturday post. In addition, the 50-Day Moving Average (a key moving average) for the Naz, which is an IT diagonal support, is at 2,429.70. The low on the Naz before it pinged back up late in the day was 2,429.30. You can't draw it up any more precisely than that. So the 50dma on the Naz now is a key tipping point. If the Naz holds, then it will probably bounce, and if it fails, the market will probably continue to sell off. We may get an "oversold" bounce in Financials and Retail, along with a continuation in Energy and Commodities. But the Naz was the driver on the bounce today.

All in all, it was a good day for the papermoney account. I tacked on more than $3,600 in profit to the overall year to date profit, or a 5.5% gain for a day's work.

Watchlist Saturday

Dow: IT Bearish and ST Bearish to Neutral. The Dow dropped into a support zone between 12,200 - 12,300, but it's possible that the index may punch through that area and test the 12,000 - 12,100 area. ST resistance is in the 12,340 area.

SPX: IT Bearish and ST Bearish to Neutral. The SPX broke through ST support around 1,370 - 1,373 and dropped to a minor support at 1,360. The 1,350 area is a stronger support zone, and could be where the SPX is headed. 1,370 - 1,373 is now resistance.

Naz: IT Neutral and ST Bearish. That was a pretty nasty Kicking Pattern (candlestick pattern) on the Naz Friday. It looks like the Naz has a pretty good probability of heading towards support at 2,429 - 2,430

In my estimation, the easiest play by far tomorrow is going to be puts on the SPY if the market wiggles up a little out of the gate. We might get someone yapping something about "oversold" or "upgrade this or that" and get the wiggle. I would look at puts on the DIA as well, and I would target the 1,350 area on the SPX as my exit point.

I'm going to do a concentrated Watchlist, mainly because I'm only going to focus on a few Bullish stocks in a small area. As for puts, I'm mostly focused on the SPY and DIA because a lot of the selling is coming from either overcooked areas, or bullish stocks seeing profit-taking. However, there are a few interesting puts that could still have 1-2 days of selling in them. I'm only putting the most interesting stocks on the list for tomorrow. After tomorrow, I will re-assess, and add to the watchlist.

BULLISH SECTORS/GROUPS AND STOCKS:

Short Index ETF's: SKF, SDS, DXD
Energy: USO, KWK, CHK, CNQ, ECA, XTO, OXY, SU, HES, ESV
Gold: GG, AEM, ABX, NEM
Coal: ACI, BTU
Steel: AKS, STLD, GGB
Note: ABT

BEARISH SECTORS/GROUPS AND STOCKS:

Drugs: JNJ
Transports: UPS, FDX
Defense: LMT, NOC
Financials: GS, PRU, STT, MET, ICE, COF, MS
Retail: JCP, KSS
Leisure/Discretionary Spending: HOT, WYNN
Note: HRS, PH, CMI, RIG, SUN, VLO, CELG (pure Evening Star), KLAC, AMX, ERTS

I answered the rest of your questions from Friday. Sorry it took so long, but I can't always predict how busy I will be on the phones. In fact, the random nature of my work probably keeps me at about 1/3 the trading capacity that I'm really capable of, so I am going to make a comment about that in a moment. For now, all of you should check the last comment to Keith about how you might read Stocks & Commodities, the magazine, if you do. By the way, I do have a subscription, but for a long time I would just go down to the bookstore and flip through it to see if there was any useful info. So don't think that you have to go get a subscription to this or that magazine. Over the years however, I have found the Investor's Business Daily to be, by far, the most useful newspaper. And I have found Technical Analysis of Stocks & Commodities to be the most useful magazine for interviews and technical analysis info. There are many other periodicals or internet sites that can also be useful, but make sure you keep it under control. Remember that all of these "educational" or "informational" resources are selling a product, and it's not always designed to make you a better trader. However, if you manage the inflow of information to your brain so that you don't blow a fuse, then you can always learn a thing or two, here or there, as you do a little research.

For the next little while I am working on the first video for the other site. I am going to get to the Watchlist and Posture later on. I want to get the video tutorials rolling today. I am also going to give you a heads up on how it's going to work. The site will be free, the education will be free. But I am going to password protect it. The way for you to get in to the site is through a referral program, and I'm going to make it very easy for you. Anyone that refers the Dwight Anderson Family Trading Page to either 3 fellow traders, or 5 other people can get in. I have set up a special (temporary) email address to handle your emails (which I will reveal later). I'm going on the honor system, so if you tell me you did it, then I believe you, and I will email you the password. As far as you emailing me, I really don't have an interest in collecting email addresses, that's NOT what this is all about. So I don't care if you set up a temporary email address just to send or receive an email to me or from me, and then you delete that temporary email service when you're done. I really don't want a bunch of email addresses. I also don't care if you use your full name (for that matter, I suppose you could even use a fake name). You can use just your first name and last initial when you email me, if you choose. In addition, if you have already referred the site to 3 fellow traders, or 5 other people previously, that's fine, I can make this retroactive.

The spirit of the concept is this: what I want to do is to get an idea how many of you out there are still interested in getting more education from me, and I want to expand how many people are following this site. I don't want to do any of this through my own marketing. I don't want any issues with any other organizations. Remember, any of you who found this site, found it on your own, because I have never given out the URL publicly. I want to get an idea of how many people want to continue following along with me, and perhaps expand that a little. I want to get in to a position where I can trade with maximum focus, and I can get you information on trading with maximum efficiency.

Update: I was really overwhelmed by the number of you who gave me such positive comments from the post above, thank-you. Therefore, I decided that I'm going to release the first (practice) video on this site for everyone to check out and give me technical feedback on, rather than on the new site. I was just going to do a simple practice video to test this out, but because of the positive responses, I'm going to put together a nice tutorial on using the TRIN (some of you have been asking about it anyway). Thank-you again for all that you said, and for referring the site to your friends.