The Sword Goes Back in the Stone.....

Pre-market futures are down sharply as traders run away from the Financial sector this morning. The combination of BAC, government interference (oops, I meant "intervention"), and C are keeping pressure on banks and the financial sector. In addition, traders are taking profits in the Energy sector after HAL and WFT announced earnings this morning. That's two of the key sectors that drove the one-month rally in the stock market.

Use the numbers from the 8:35 am MT posting on Friday for the SPY (market). I will update those in a few minutes.

There's so much I can say about all the news and some of the fund managers this morning, but I'm going to bite my tongue a bit and just glide through this.

Here's the recap: BAC announced in their earnings that they made a bunch of hay on refinancing and trading. The mini refi boom should not be a surprise to you, I've been hammering on the development on and off for the past six months and what the real impact on the economy is, both the good and the bad. The trading profits are also not surprising because financial companies (specifically brokers, and BAC owns MER now) make money trading or from trading during bull rallies. In this case it's a bit of a chicken and egg scenario where you could ask if the money made trading was feeding itself and helping the rally when the fundamentals really weren't there. It also shows a pattern, because GS also announced recently that they made money "trading", which means that other banks and financial companies made money trading, which again begs the chicken and egg question about the true health of the financial sector and the real economic fundamentals of the banks. Speaking of which.....the reason the market is down so much this morning is that BAC increased its first quarter credit loss provisions to $13.4b from $8.5b in the fourth quarter.....so they're still writing down losses, and the losses don't look like they are shrinking dramatically.....

Speaking of losses part deux.....GS stated that C's losses are growing at a rapid rate.....so GS decided to throw their own update on the C earnings from last Friday. "The bank, once the world’s largest financial-services company by market value, now ranks as No. 70, Bloomberg data shows."

"Citigroup had $4.69 billion of bond trading revenue in the quarter, as it benefited along with Goldman Sachs and JPMorgan Chase & Co. from the failure of Wall Street competitors and the government-led rescue of the financial system. Sales of U.S. corporate bonds surged to $438 billion this year, up more than 50 percent from a year earlier, according to Bloomberg data."

"The fixed-income bonanza, along with wider net interest margins and gains from accounting changes, masked declines in credit-card and consumer banking revenue, and soaring costs to cover bad loans at its credit card unit."

So C made a bunch of money on the flight to bonds, wider net interest margins (as the Fed and the Treasury played games to lower both the short end and the long end of the yield curve), refis, and accounting rule changes (I wrote about the rule change applications on Friday). But the gains couldn't overcome declines in credit card and banking revenue and ongoing bad loans at the credit card unit (which are all very good clues for current consumer buying habits.....and remember, consumer spending is 2/3 of GDP). So the biggest deal of all, consumer spending, which should be the key driver of any assumption by fund managers in a stock market rally, really isn't on the mend, and doesn't look like it will be on the mend for a long time - especially with the jobless rate continuing to climb, not "stabilize." I might add another tidbit to the pile. I went driving around yesterday to see how the home sales were going in my region, and I still saw the same amount of for sale signs and foreclosures as I have the past six months. I continue to believe the banks are in the business of bad real estate whether they like it or not.

The final bit of "big news" in the financial sector this morning is that government "leaders" want to focus on "fixing" credit card abuses. Translated what this really means is that politicians want to score votes from people who use credit cards and then don't like it when the credit card companies raise the rates "at any time for any reason." I could go on all day about this one but I'm going to do a quick recap instead......I like the concept of regulating against fraud as much as anyone, but this isn't fraud. Think about this for a moment. First of all, people don't have to use credit cards (I know that will come as a shock to some Americans). No one is breaking peoples arms to force them to use credit cards.....Second of all, credit card companies know that people don't have to use their credit cards, or if they don't like a credit card company they can simply pay off the debt, close the card, and never do business with that company again.....Third of all, the only reason a person couldn't simply pay off a card, close it out, and tell all their friends to never do business with that credit card company again would be because they made purchases that were so huge that their income won't allow them to pay off the debt for a long time.....and I'm going to just take a deep breath and not say anything else about that one.....

So credit card companies know how competitive they must be, they know that they must keep a good reputation or lose business. They know they must stay competitive with rates to keep long-term, loyal customers. I understand fraud as well as the next person, but this whole Chris Dodd bill smacks of cheap vote harvesting and not actual consumer protection. And the vote harvesting is aimed at people who were irresponsible with their money for reasons.....well.....I'm sure you can figure out why some people are irresponsible with their money.....

Anyhow, the net net is that credit card companies like COF are getting hammered this morning. I find the irony and incompetence of certain government "leaders" who started the stock market rally with "news" and now are potentially ending the rally with "news" to be amazing, even if it is predictable. That's the problem with pandering to special interest, victim groups, and the media for votes.....they can't have it all ways no matter how hard they try.....eventually they end up contradicting themselves.....

I know that I've spent a lot of time dissecting the news, once again, but the news the past 15 months has been intense, and sometimes very, very messy. The market has been roiled and boiled by the news to the point of burnout. And many fund managers, especially the Googly-Eyes, are in a news cycle (and economic cycle) the likes of which they have never seen or experienced before. Remember, many news organizations are going under right now. The mainstream media has never seen such bad times. So the urgency to market news while pushing their own playbook for the "reshaping" of America has put the media in a frenzy that is unprecedented in our lifetimes, and I include the early to mid 1970's when I make that bold statement. I can easily make a case for the manipulation of the news being worse than it has ever been by a wide margin, and the amount of news being vended is, by far, much much larger than it has ever been. And if that wasn't intense enough, the methods of communicating the news have expanded in size and increased in speed far, far, far beyond any other time in history. And it's critically important to know, for your own trading, that Big Money is not always going to see through the barrage of news and news manipulation, which will continue to create volatility in the market as the country works through this economic recession.

8:35 am MT: The SPY opened just below 85.75, which was my first short term support level from Friday and blasted straight down through 85.00. As a result, the SPY (market) is headed towards my next level in the 83.75 - 84.00 area. I speculate that right in this 84.50 area will be an intra-day bouncing point and that the market will wiggle a bit before attempting the next leg down into the 83.75 - 84.00 area either later today or tomorrow.

Here is a 30m chart of the SPY showing the current price action:
(click on image to enlarge)

It's possible that the market just sells straight down from here, but if you are playing puts this morning, you will want to take 1/3 to 1/2 your profits right in this area because you will probably be able to add back any positions in a little while at a cheaper price. Keep at least half the position just in case we get the statistical frenzy and the market just drops like a flaming meteor.

8:47 pm MT: It looks like Fast Money is taking the flaming meteor approach. The closer the SPY gets to 83.75 - 84.00, the more likely you will want to lock and walk on the first stage of puts in this trend rollover - if you decided to play a short swing this morning.

If the SPY stops short of 84.00 or so on this intra-day downswing, then any intra-day bounce back to test the 85.00 - 85.25 area (old support from Friday becomes new resistance today) is a possible opportunity for another put short-swing into the end of the day.

This is the sharpest selling since March 20, and unlike that day, this bear gap and selling is already approaching the previous low in less than 90 minutes. Like I said on Friday, a significant drop below 83.50 and the trend is technically over and Excalibur's sword goes back in the stone.....

11:55 am MT: If you still have some puts from this morning, you will probably want to lock down the last of them right now.

The SPY made it all the way to 83.75, pretty much on the nose. It was a flaming meteor, which is why I said to keep half or two-thirds of your position back in the 84.25 - 84.50 area. At this point, price action is starting to slow down and round around. There may be one more good put opportunity before the close, but the market needs to rally back into the 84.50 area before that happens.

Here is a 10m chart of the SPY showing the huge sell-off intra-day, but the slowing price action:
(click on image to enlarge)

The SPY (market) may make new intra-day lows right now, but I speculate that the 83.75 zone will be the rounding around area as the selling slows and the market has a little counter-move off the huge drop.

The flaming meteor is another way of saying momentum day, and today has seen plenty of selling momentum. These fundies are nothing if not frenetic. So fast to pile in, and so fast to pile out. Nothing like the speed of modern communications to dramatically magnify the emotional reactions of human beings.

Normally I don't carry a position overnight during the heart of earnings season, so if you do hold some puts overnight, keep the position fairly small. Today after the close, IBM and TXN report earnings, so the Naz and tech will get a workout tomorrow morning, whatever direction the volatility takes the markets.

12:15 pm MT: The 83.50 area on the SPY becomes the next critical tipping point today and tomorrow. A drop down to the low 83.00 area signals a lower low on the charts and the technical end of the frenetic uptrend.

I speculated last week (to myself) that the Dow overshot its fundamentals by about 1,000 points in this frenetic "once in a lifetime" uptrend that I nicknamed Excalibur's sword (which may still become Scooby-Doo's sword as I pointed out last Tuesday). The Dow is right at it's previous low and still selling (7,870 area). In my experience, this kind of Rounding Tops usually end with a sharp selling day that starts the market down the right side of the slowing price action (as I stated in the comments on Friday). It is also fairly normal in a rounding roll-over that starts this way for the sharp selling to take it through the previous 1-2 lows, which means the Dow will probably pop down through 7,750 in the near term, especially if earnings are not so good today and tomorrow. My speculation for the consolidation of Excalibur's sword (soon to be Scooby-Doo's sword) is down to the 7,250 - 7,300 area over the next several weeks if earnings put more fear into traders like they did today. There are still a huge quantity of earnings to be reported in the next two weeks, so we'll see what happens, but so far, the trend is just on the verge of breaking.

Here is a daily chart of the Dow showing the rounding over price action of the uptrend. The Dow is exactly at the previous low, and is at risk for dropping to the next low in the 7,750 area:
(click on image to enlarge)

The next set of key earnings comes after the bell today, this time in tech. We shall see.....

1:25 pm MT: The SPY made it to 83.50. Price action is getting a little sloppy on the SPY so I switched over to the 5m charts of the DIA to get a feel for when the intra-day selling may be over. Like I stated a few hours ago, this is a momentum day, so even if we get a wiggle back there will probably be more selling. If the DIA pops above 78.80 then it will be warning that late-day short-covering by Fast Money is probably hitting. If it breaks above 79.20 then the DIA (market) might push all the way to 79.50 - 79.70. If the shorts do cover to those areas, and there weren't a couple of big tech earnings today after the bell, I would be picking up more puts in a heartbeat. As it is, you should tread lightly if you keep or add more put positions into the close.

Here is a 5m chart of the DIA showing the price points I mentioned above:
(click on image to enlarge)

1:32 pm MT: And just like that we get the strongest short-covering (and bargain buying by the Googly-Eyes) of the day.

I don't know how far this will go because any wiggles are probably going to be met with more selling, but a move to 79.10 - 79.20 would be pretty easy.

2:00 pm MT: Market Wrap: The market finished at the lows of the day, completing a momentum day in true fashion - with momentum right into the close. The SPY is sitting precariously right in the 83.50 key support area and barely clinging to the previous low in the uptrend. If traders get a plethora of bad news from the major earnings today after the close (IBM and TXN), or tomorrow before the open (AKS, CAT, COH, KO, DAL, DD, LMT, MRK, NTRS, SGP, UAUA, UTX, USB, and UNH), then expect the trend to be officially broken. If the selling gets fierce, then expect the Googly-Eyes to stare like deer in the headlights and wonder just how they got Scooby-Dood on so badly.....

If the market does sell, I don't think we will see a news bogey from political "leaders" for a few more days. I think their "handlers" are telling them that a little "profit-taking" is normal and that all their "good news" announcements and "market bailout" actions will keep traders happy from now on. I don't think the "leaders" or the "handlers" will panic and knee-jerk into "secret emergency lock-up brainstorming meetings" until the Dow reaches the 7,250 - 7,300 area. At that point, I will be keeping a sharp eye out for news bogeys.

There will be a bucket-load and a half of earnings between now and tomorrow morning, so don't even bother trying to pick a direction until about 20m - 30m before the open tomorrow. Rest your brain, rest your eyes, and enjoy the profits from some nice puts today.

Bulls Push to Complete Excalibur's Sword

Pre-market futures are drifting around, dipping slightly into negative territory on earnings reports this morning. GE and C came out with better than expected bottom line numbers, but GOOG failed to inspire the Naz with it's results and traders are probably sitting on the fence this morning trying to decide if they will complete Excalibur's sword or not.

If they had their choice, the fundies would love to go ding 88.00 on the SPY this morning and call it a trend, then lock a bunch of profits and sell and take off early for the weekend. They may have to settle for yesterday's high as the top of the sword.....

7:36 am MT: The fundies tried to gap the market a little and see if they could get enough of a rush going to get to 88.00, but so far everyone just wants to hang around and do the push and shove. I think today will be about traders holding their breath a little and watching and wondering when everyone else will get a little spooked and take some profits before the weekend. I don't expect big selling because, well these are the Googly-Eyes we're talking about. But I expect some profit-taking today.

7:43 am MT: Back to the earnings, here are a couple of notes: GOOG gapped down but is ramping back up again this morning. The company beat on the bottom line, but gave cautious forward guidance, which is exactly what I said was probably going to be the usual report this earnings season. GOOG is a part-time cult stock, so the culties are pushing it as usual, but the Naz is not going with it, which means the culties are rowing the boat by themselves and it appears that other fund managers are content to let them do so while they lock some profits in the rest of tech.

GE beat on the bottom line and declined to give forward guidance (which is their policy now). The stock is flailing around a bit as traders try to decipher for themselves what every word of the conference call meant and if the company is really seeing "good times" ahead or not. So far, traders are flat on GE.

C beat on the bottom line thanks to a combination of rule changes in accounting, and some accounting gymnastics. C posted a $2.5b gain from accounting rules that allow companies to profit when their own creditworthiness declines. The rule means C could buy back its own liabilities at a discount, which would result in an "accounting" profit. In addition, it appears that C is taking advantage of the mark-to-market accounting rule change that Congress green-lighted last month. C "shifted" some of their "distressed" trading securities (see definition for worthless credit default swaps, collateralized debt obligations, and other sub-prime mortgage derivates) into "long-term, held-to-maturity" investment status. The move "shelters" them from further write-downs while C bets (hopes) the debt instruments will eventually pay off.....If that was a little convoluted, here's the simple explanation: Citigroup just re-classified a bunch of worthless sub-prime mortage derivates that they can't sell for anything on the open market right now - as actually having their full value if they could hold those debt instruments to maturity and sell them (or collect on them) a long long time from now.....because.....well.....a long long time from now they should be worth what we think they're worth.....right?.....and all this accounting fun brought to courtesy of Congress.

I think mark-to-market, which was a knee-jerk overreaction by those same politicians, was too tight. But is this too loose now? Did the pendulum just swing too far the other way in order for some politicians to save some votes? I think all of us would agree, applying a "reasonable person" approach, that banks should be allowed to value assets based on what the market might bear 1-3 years from now, but just how long is "hold to maturity" that C is claiming? What did our political "leaders" just allow? This will be one of those things that we will all probably find out the hard way in about 6-7 years.....

8:35 am MT: Traders continue to hold their breath and watch each other. It's like all the frogs in a blender at the same time and they're all watching each other and wondering who's going to reach over the lid and press the shrape button. It's weird, but it is what it is.....

Here is a 60m chart of the SPY:
(click on image to enlarge)

The SPY needs to hold the 85.75 - 86.00 area and bounce in order to have a realistic shot at new highs later in the day, which would allow traders to complete Excalibur's sword in the 87.50 - 88.00 area. If the market drops much below 85.75 but holds 85.25, then today will probably be a consolidation day at best, with a bunch of little chops and pops and drops and chops all the way into the close.

If the SPY drops below the 85.25 - 85.00 area, then it's probably headed towards the 83.50 - 84.00 area, which would most likely happen next week. A drop below 83.50 would signal the end of the trend, and Excalibur's sword would go back into the stone.....

12:30 pm MT: The SPY (market) held the low 86's and bounced, which opened the door for the move to the top of Excalibur's sword. The SPY is tagging the 87.50 area now, so if you played the bounce, here is where you want to take half your position and lock in profits. And of course, tighten your stops.

If the SPY can make one more push off the momentum pullback and bounce that just happened on the 15m charts, then the market might have one more frenetic buying panic right to 88.00. If the SPY gets in that area in the next little while, make sure to lock the other half of your profits because the mid-day push is getting more and more susceptible to late-day profit-taking ahead of the weekend.

12:41: The SPY just tagged 87.63 and it's getting more and more short-term parabolic. So we are basically seeing the completion of Excalibur's sword right now.

Here is the 15m chart of the SPY showing the short-term parabolic price action as the fundies panic-buy right into resistance:
(click on image to enlarge)

You will want to get real snug with the stops on what you have left. Stop out of your remaining calls if the SPY drops below 87.15.

Here is a 2hr chart of the SPY showing the completion of Excalibur's sword:
(click on image to enlarge)

Here is a daily chart of the SPY showing the completion of Excalibur's sword:
(click on image to enlarge)

12:53 pm MT: Remember, the Little Bunny FuFu's will all be sitting at their desks with their fingers quivering over the eject button just waiting to get the "jump" on each other. The first little bunnies just jumped off about 10m ago when I first warned about the market getting very short-term parabolic.

12:55 pm MT: It's done.....the market is unlikely to get back to the peak at 87.63. It might happen, but it's less likely now.

You hear me joke about the Little Bunny FuFu's always trying to get the jump on each other, but then when you see it play out in real time, it becomes concrete and you understand exactly what I'm talking about.

The peak on February 9th was 87.74, and the peak on January 28th was 87.95. Those were the tops of the left hand side of the giant V-Bottom (Excalibur's sword). Those were the targets that everyone could see that knows anything about V-Bottoms. Those were the targets I had in mind when I said that resistance was 87.50 - 88.00. Why didn't I just act like some goofy, egotistical technical "guru" and make the number precisely 87.95 so I could really wow you and imprint your brains with how groovy and amazing I am? Because I don't care one bit about all that stuff. I know how the fundies behave, and I knew that some Little Bunny FuFu's would try and outsmart their fellow fundies by jumping off just short of the target. So the little bunnies, thinking to themselves just how clever they are, jumped off at 87.63.

I don't know if this is completely done yet. Perhaps we will get one more push to 88.00 in the last hour, but it's much less likely now. Isn't it nice to know you were locking and walking right before the little bunnies jumped. Congratulations, you just outsmarted the fundies who thought they were so smart.

1:28 pm MT: The Googly-Eyes are making one more push into the close, so this is another opportunity to lock profits on any calls you have left.

1:46 pm MT: Well, we just couldn't finish the week without one last bit of price manipulation by some traders.....The SPY popped to 87.65 for about thirty seconds, sucked some breakout artists into the game, and the bunnies just dumped them right back down. Sometimes this stuff is too funny to even write about.

It looks like the original 87.63 (87.65 for those amateurs unlucky enough to bite on the pump and dump) is going to be the high, just as I speculated earlier.

2:02 pm MT: Market Wrap: Another day, another Spinning Top on the SPY. The DIA was more of a Doji, and the Q's also threw a Spinning Top. Price action on the right side of Excalibur's sword (the V-Bottom) is continuing to slow a bit and round over.

You get a better feel for the slowing price action on the DIA over the SPY because there is less financial sector hysteria on the DIA.

Here is a daily chart of the DIA showing the V-Bottom with slowing price action:
(click on image to enlarge)

The economic calendar is pretty light next week, but earnings season has it's first extremely heavy week. Next week will be a day to day trading opportunity because of the huge surge in earnings reports. It will be very interesting to me, and to a lot of fund managers, to see if the aggrigate data shows an economy recovering in a V-Bottom manner, or if there is more uncertainty over the next 1-2 quarters. We shall see.....

Jobs and JPM Boost the Bulls

JPM beat earnings estimates and said all the right things, and Initial Jobless Claims came in lower than expectations at 610k vs. 663k. Both reports boosted the pre-market futures and have set a bullish tone to the morning. The Naz is set to outperform at the open, and the SPY will gap up and then probably test the highs of Tuesday early in the day.

If the SPY (and the market) are going to make another reach to new highs, today is probably the best opportunity. The trend is so far beyond extreme that I'm not going to even comment about sanity anymore. Nor am I going to say anything about the upward revision to last weeks Initial Jobless Claims to 663k. And I'm going to leave alone any comments about Housing Starts (510k vs. 540k), and Building Permits (513k vs. 549k). I'm just going to say, look for a surge this morning on the market, look for the SPY to test the 86.50 area, look for the possibility of the 87.50 area later in the day if the gap from this morning holds in an orderly fashion, and have a nice day.

I mentioned yesterday that the other earnings reports, in aggregate, would also be a mover and shaker today. HOG, ITW, NOK, and FCS are all trading in the green right out of the gate (CY and LUV are not). So the tone could not be any better for the bulls today. Eventually the old "take the profits after the news hits" game will probably come back, but the fundies may still be playing the "buy ever bit of news that even sounds remotely good" game. So, once again, if the gap from this morning holds in an orderly fashion, look for another attempt at least for new highs. Early in the day we are getting a bit of a gap and wiggle.

7:40 am MT: The SPY is wiggling a bit after the gap. It looks like it wants to test the bottom of the gap, which was yesterday's close:
(click on image to enlarge)

You can see the resistance zone is 86.50 - 88.00, which means the market could reach into the 87.00 - 87.50 area fairly easily.

I have two things to say about the market today, and it centers around what I mentioned above. Eventually the bulls will start playing the "buy the rumor and sell the news" game again, which is usually reserved for bull markets. However, many fundies are probably on cloud 9 and have been dancing in their offices for the past three weeks, so perhaps, in their minds, everything is bullish again, the economy is healed, government policy decisions are perfect, and the whole world is going to flow with rivers of gold. So it's possible, because they are thinking like bulls again, that they are going to play the "sell the good news" game today.

7:52 am MT: The wiggle and gap test right out of the gate has gone from orderly to more serious profit-taking. Traders are starting to act like they want to play the "sell the news" game. If the SPY doesn't hold the 84.75 - 84.90 area this morning, then the possibility of a rally to 86.50 or beyond diminishes severely.

7:57 am MT: The SPY just put in a Hammer on the 5m charts. If the Hammer fails and the SPY falls down through 84.75, then the market will probably see consolidation and profit-taking on and off throughout the rest of the day.

Continuing the comment from above, here are my two thoughts: The first is that the bulls got everything they could possibly want today. JPM said what they wanted, Initial Jobless Claims came out with the right number, especially if you put on blinders for the revision, a number of other companies reported good earnings, and the Bull Flag on the SPY broke to the upside. So the bulls have their absolutely perfect scenario for new highs, and a reach for the 87 - 88 area, which would complete Excalibur's sword, and bring harmony to universe.

If the bulls decide not to take this absolute gift, then they are sending a key signal to technical traders. Remember, they've been buying earnings and economic numbers a lot worse than this for over a month. They've strapped on the rose-colored glasses, zoomed the microscope on any rays of sunshine on the bottom of the glass, and bought every bit of news with a freneticism like it was 1999 (or 1938). So now, here's the big gift, JPM announces that the banks are healed, they can walk again, it's a miracle! If the market can't buy today, then the uptrend will be sending some key signals that it may be about to end for awhile.

The second thought needs some charts to give us numbers to watch for clues on the first thought.

Here is a current 15m chart of the SPY:
(click on image to enlarge)

Here is a current daily chart of the SPY:
(click on image to enlarge)

On the 15m chart you can see the first short term support area is the 84.75 - 84.90 zone I mentioned earlier. A breach of that support zone would open the door for a drop to the 83.75 area. A break of that area and you will want to switch to the daily charts to note two things. The first is that the next support down would be the 81.50 - 82.50 area, and the second is that it would be the first lower low since the uptrend started, and the trend would be over and headed towards consolidation.

If the SPY (market) can bounce off the 85.00 area intra-day, then the first target would be the 86.25 - 86.50 area, and if the market can push through that resistance, then it opens the door to 87.50 - 88.00. We shall see how this all plays out.....

12:20 pm MT: The SPY held and bounced right off 84.75, which opened the door for the move into the low to mid 86's. It took several hours, but the SPY finally made it to new highs. The intra-day rally is getting a little gassed out, so if you played the bounce off 84.75 earlier, you should take partial profits right here in the 86.00 - 86.10 area, which is just above this morning's gap.

Here is a current 15m chart of the SPY:
(click on image to enlarge)

The 86.25 - 86.50 area is still a possibility, so you can keep part of the position to see if the market will run a little more today before locking and walking on the rest.

12:37 pm MT: The SPY is pushing right into the 86.50 area, so get ready to lock down another 1/3 or so of your profits from the bounce this morning, and pull up your stops some more.

12:42 pm MT: You can get a feel for how close fund managers are to completing Excalibur's sword by viewing the 2hr charts.

Here is a current 2hr chart of the SPY:
(click on image to enlarge)

The bulls may try to push through to the 87.50 - 88.00 area in the last hour today or try again tomorrow. Like I said this morning, today was the absolute perfect scenario for the fundies to make the move, so if they were going to get close to completing Excalibur's sword, today was the ideal day.

12:45 pm MT: The SPY (market) hit 86.50, so you should have taken another 1/3 of your profits and be sitting on the final third (with tight stops) for any possible push to get close to or complete Excalibur's sword.

12:51 pm MT: Traders are attempting to push into the final resistance right now. The last profit target area on the day is anything in the 87.50 - 88.00 area. There's almost a buying panic going on right now with the bulls, like a climactic surge, so this could get a little interesting.....

Here is a current 2hr chart of the SPY:
(click on image to enlarge)

We'll see if Excalibur's sword gets done today.....

Tomorrow morning, GE and C report earnings, so I speculate that some of the Fast Money and Googly-Eye fund managers are almost desperate to get to resistance today, ahead of what might be some fairly somber earnings reports tomorrow morning. Perhaps GE and C will surprise us all by reporting something that at least isn't horrific and crazy-catastrophic, in which case the Googly-Eyes will have the fuel to finish Excalibur's sword tomorrow. But I can understand the buying panic going on right now, like I said above, it's pretty interesting to watch, and fun to trade.

1:24 pm MT: I want to give you a good visual on what I mean when I sense almost a state of panic to the buying right now.

Here is the 10m chart of the SPY:
(click on image to enlarge)

The move is just not sustainable at that angle and that length, at least not on the 10m charts. It's a very extreme, short-term climactic move. Traders are in a mini-buying panic right now, and hysteria is always, always a great time to sell and scale out. Perhaps we will see one more consolidation and one more push just before the close, but this is getting late enough in the day that traders may simply run out of time to try and consolidate and push once more.

1:28 pm MT: There is the first consolidation candle on the 10m charts, so the market may have topped out at 87.11 on the day. Maybe there will be a quick momentum pullback and one more attempt at new highs, but if I'm playing the odds, I'm locking just about everything now.

1:33 pm MT: In know these updates are coming fast and furious right now, but it's a fast and furious market. The pullback on the 10m charts is staying fairly orderly, so there's a decent chance that if the SPY (market) can hang around the 86.70 - 86.90 area for the next 10m - 15m or so, then traders may try one last climactic gasp in the final 10 minutes - buying into the close.

1:44 pm MT: It's done.....traders reached a little early, which means the bulls had very little gas in the tank to push beyond 87.11. The SPY pushed to 87.15 and it was done. There might be another push just before the close, but I doubt it goes above 87.15. What all this is telling me is that the low 87 area is the gas-out area on the day. It was a big run this afternoon, almost a panic run, which made for some decent call trades today.

2:01 pm MT: Market Wrap: If I was a savvy fund manager I would have done the exact same thing, lock some profits ahead of the GE and C earnings tomorrow morning. Why take the risk that those two companies will surprise us to the upside? There's not much to say about the day that the title of the post doesn't already tell us. And there's not much to say about the bit of profit-taking before the close other than these four words: resistance zone, GE, C.

The DIA and SPY both finished with Spinning Top candles, but the Naz performed a little better, as I speculated early in the day.

We'll see what the earnings tomorrow morning do to the market. Will it be a continuation of the Bull Flags bounces or a roll over on some Spinning Tops? Another day, another trading opportunity.

Traders Mull the Data

Pre-market futures are down slightly on the SPX, and down sharper on the Naz. Tech will see some selling pressure this morning after the INTC earnings guidance (or lack thereof) yesterday. There was nothing inspiring about this morning's economic reports, but "nothing inspiring" means "maybe the economy is taking off" in Googly-Eye trader-ish. So the SPX futures are just hanging around waiting for more "evidence."

There was so much data to sift through and put together this morning, but here's a good look at what's going on. The CPI grabbed the headlines, just like I thought it would, and just like I thought yesterday, it's a fairly meaningless and even misleading report. The CPI reported a number of -0.1% vs. 0.1% expected. The "spin" on the number (see Googly-Eye trader-ish) is that the cost of living in the U.S. actually fell last month.....yayyy..... In addition, the Core CPI (excluding food and energy) reported 0.2% vs. 0.1%, which is being spun as good news because the economy is not "deflating" (which way do they want this, lower cost of living or not deflating, they can't have it both ways.....). Here's the really big red flag in this report for me. The biggest drop in the main CPI number, by far, is the motor fuel component at -4.3%. The next closest component drop is transportation at -1.1%. So what this report is telling us is that energy, by far (and it's not even close) was the biggest deflator in the CPI report. In addition, the report is telling us that when you strip out food and energy (the Core CPI) the average American actually experienced an increase in cost of living last month.

Now, I'm not done with this one.....raise your hand if you actually paid less per gallon for gas last month than you did in February.....uh huh, I thought so.....I know I didn't.....I actually paid as much or more per gallon of gas in March than in February. And if you have trouble remembering, look at the chart of the SPX, which had the biggest V-Bottom "recovery" in over 70 years (see yesterday's Excalibur' Sword chart). Now, go look at the price of oil all through the stock market rally, what did it do? If you smooth out the /CLK9 (May Oil Futures) to account for a little lag time for prices to reach the gas pump, you will see that the price of oil was about $45 per gallon early in March and then hung around the $50 - $53 area late in March. Now, I'm no math genius but.....isn't a higher number after a lower number an increase in prices? Honest to goodness, there are some days I just don't even know what to say anymore when it comes to the amount of misinformation that is pushed on the American public all the time. So this whole CPI and Core CPI showing a lower cost of living, hinging mainly on the motor fuel component is very smelly to me.....I won't be surprised at all if we see a "revision" to this report next month.

On to the other data.....The NY Empire Manufacturing index, which is a tier 3 level report at best, showed a much better than expected result of -14.65 vs. -35.00 expected. This regional manufacturing report gets way too much press, but then again, it's New York. Anyhoooo, the survey fluctuates wildly from month to month, and I don't pay much attention to it, but the Googly-Eyes will.

Finally, the number that should really matter, and is the best indicator of current economic activity is Industrial Production/Capacity Utilization. Industrial Production was -1.5% vs. -0.9%, and Capacity Utilization was 69.3% vs. 69.6%. This shows national manufacturing (not regional thank-you very much NY Empire State index) is still declining and grinding along, and the national manufacturing industry is not snapping back in some kind of exciting V-Bottom recovery.

I am working at not coming across as a bear when it comes to the news. I really do think that the min-refi boom in March will help the banks just like it did in January. And I think that as long as rates stay in the 4 5/8% - 4 7/8% area, the housing glut has a chance to get worked off a bit, which is great news. But I still don't think the U.S. and global economy is set up for a V-Bottom recovery. I think the continued slump in manufacturing, the lack of energy policy which is leading to gas spikes every time the market ramps up, and the fact that I see tons and tons of houses for sale all over the place that aren't being sold, are all indications that the economy is grinding and not recovering. UBS bank, one of the largest banks in Europe, gave another indication of the grind this morning when they announced another 7,500 job cuts, which was evidently shocking to many investors. "We are almost two years into the crisis and they still have seven-and-a-half thousand jobs to cut, I'm very surprised about that," said Dirk Becker, an analyst at Kepler Capital Markets in Frankfurt......I just can't even comment about this stuff anymore, it never ceases to amaze me that these industry "professionals" get surprised at this stuff, what do they do for a living?

8:30 am MT: Back to the market. The SPY (market) rallied right out of the gate, so the fundies "bought the dip" immediately after the open, just as I speculated last night. And just like I speculated, the market is rolling over and we are probably going to see some profit-taking amidst the pop and grind of the day.

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

Here is a 15m chart of the SPY:
(click on image to enlarge)

I really think the NY Empire State index, the CPI, and the fact that INTC beat last quarter's expectations (despite the lack of forward guidance), will give traders a reason to hang around the middle to upper gap on the SPY (the gap between 83 and 84). So I won't be surprised if there is some profit-taking followed by dip buying, and it cycles like this all day as traders continue to hang around and hope for more "good" news. As long as the SPY (market) stays in a Bull Flag on the daily charts, and has a fairly orderly consolidation, then traders will hope they get a catalyst to break out of the Flag and push the SPY to resistance at 88, which would complete Excalibur's Sword.

You can see the price action on the daily charts of the market, like the SPY, is starting to slow down and round over a bit. I speculate that the only way the Googly-Eyes let go of the V-Bottom is after a slow rounding over of the right side of the sword. And it will take a preponderance of uninspiring, cautious, and even bad news from corporate earnings and economic reports in April to do the job. So I will keep playing calls because the trend is up. And I will look more at individual momentum stocks each day and not so much the index ETF's for the majority of those calls. The market will consolidate and grind today, so the SPY for instance, doesn't look like a good momentum play. But if the SPY Bull Flags on the 15m charts right now and starts to pop, then I would look at calls on individual momentum stocks for a short swing.

Here are some bullish momentum stocks this morning: CSX (and the Railroads UNP, NSC etc.), DE, WLP, UTX, KMB, and MMM

In additon, WHR, HPQ, CLX, and HON are in Ascending Triangles or at least ok bullish consolidations.

Also: JPM, and PNC are in bullish short term consolidations.

I'm not ready to throw a parade for calls this morning, but CSX and some of the others may have decent short swings if the SPY holds the 83.75 - 84.00 area and tries to rally a little. Any drop below the lows of this morning (83.60 area) and you should just lay off the calls for the day. So be patient with your trades today and look for only the best signals.

9:05 am MT: The market is getting close to an important tipping point. If the SPY doesn't hold the 83.60 -83.75 area in the next hour, then don't even bother with the calls, and look for the market to roll down to the lower side of the gap in the 83.00 area. CSX continues to hang tough, it's one of the better looking opportunities if the market holds support. We shall see.....

I must work on the new service for a while now.

12:18 pm MT: Any bullish calls are done on the market right now, exit and walk away.

The last bounce on the 10m charts about 20m ago is a failed signal, so any calls you have left, if you played any, you should lock any profits and walk away.

I didn't like much in the way of call setups today anyway, but I wanted to throw that warning out to anyone who was playing calls. The SPY (market) formed a Head and Shoulders variant on the 15m charts across the gap, that just confirmed with the failed signal on the 10m charts.

Here is the 15m chart of the SPY showing the Head and Shoulders at this morning's Bear Gap:
(click on image to enlarge)

Traders are tossing in the towel a little bit right now. It doesn't mean they won't keep trying to bring the market back on dips, but today wasn't a very good day for bullish momentum. We got the obligatory Googly-Eye buying after the Bear Gap for the third day in a row, but the overall market is still stuck in consolidation mode.

Here is the 15m chart of the SPY showing the buying after every Bear Gap for three days in a row:
(click on image to enlarge)

The market is consolidating within the consolidation, which means that I definitely don't want to play index ETF's like the SPY, and any momentum stocks I might have played during daily consolidation have become fairly unplayable because of the intra-day consolidation (consolidation within the consolidation). When the market goes to two levels of consolidation, it usually doesn't leave much in the way of options.

Here is the 15m chart of the SPY showing the intra-day consolidation, which is inside the consolidation between the major gaps on the daily charts:
(click on image to enlarge)

You can see the clear resistance area in the 84.75 - 85.00 zone. At this point, because of the forming price action, and because of earnings season, you should just sit out any further call plays until the SPY can break out of the intra-day consolidation pattern (resistance in the 85.00 area).

The daily chart consolidation, which is still a Bull Flag, trumps the intra-day consolidation, so the bias on the daily chart intermediate term trend and the daily chart short term consolidation is still bullish. Traders still expect "good" news to propel the SPY up to the 88.00 area, otherwise they wouldn't keep hanging around, they would sell off the market. And remember, it doesn't matter whether the news is truly good or not, what matters is where all the fundies are going to push the market with all their money.

1:10 pm MT: The bottom of the intra-day Rectangle held and the market is bouncing on the 15m charts. The consolidation within the consolidation is still holding.

Here is the 15m chart of the SPY showing the latest move inside the consolidation:
(click on image to enlarge)

We'll see how long this goes, probably at least through the rest of today.

1:42 pm MT: It's too late in the day to play this attempted breakout of 85.00, especially knowing that tomorrow morning will probably bring us another gap, and it's a toss of the coin as to whether the gap is bullish or bearish. So it's been fun to watch the Little Bunny FuFu's play their little game right here, but no thanks.....

4:15 pm MT: Market Wrap: There was a late bullish burst into the close. Buying was focused on banks as traders positioned and speculated ahead of JPM's earnings tomorrow morning. The hope, obviously, is that JPM blows us all away with their earnings report. There are several other earnings reports in the morning that might move the market: HOG and ITW will give traders a small feel for cyclicals/manufacturing, CY and FCS will give traders a small feel for Chips as a follow-up to INTC, NOK will give traders a feel for wireless, and LUV will give traders a small sense for the airlines. In aggrigate, there's enough other earnings, taken together, to be as important as the JPM earnings by itself.

I speculate that part of the burst of buying also had to do with some traders trying to position ahead of the Housing Starts/Building Permits report tomorrow morning. Last month the numbers surprised to the upside due to a combination of the low mortgage rates and the ramp up in apartments and condos - as people walked away from their bank-owned houses and migrated to rentals and cheaper housing. The Housing Starts/Building Permits report was the one economic number that I thought had a chance to surprise to the upside this week (just like last month) due to the recent low mortgage rates part deux. So far, my speculation has been correct, and no other meaningful economic reports this week have given bullish readings.

The real focus tomorrow should be on Initial Jobless Claims, but traders will focus on JPM, Housing Start/Building Permits, and perhaps the Philly Fed if it surprises to the upside like the NY Empire State index. So no matter what the numbers portray, go with the flow of the fundies, because they're going to take the market wherever they decide to take it.

Earnings Season Stage One Starts

April earnings season begins in earnest today. Last week was sort of the earnings preseason with AA and MOS reporting, along with a smattering of others. Today we pick up the earnings reports momentum with stage one, and finally, next week we hit earnings season stage two, which is the full bore, all out reporting season.

Pre-market futures came down slightly after GS reported good earnings but decided to cut its quarterly dividend and also issue a $5b public offering to raise capital.

The futures held steady in slightly negative territory through a roughly in-line PPI (Core PPI). However, the report was not good news for producer prices, especially on the non core level, which missed by -1.2% vs. 0.0% expected. I mentioned yesterday that the PPI is a tier one report that is not market-moving currently because traders are focused elsewhere. You can see the muted response to the report confirms what I stated.

Now, the Retail Sales report, that's a different story this morning. Retail Sales came out with a number of -1.1% vs. 0.3% expected. Consumer spending is 2/3 of GDP, and the Retail Sales number most certainly will catch traders attention during a bear market, especially a miss this big. The decrease in spending means the recession is probably not quite as over as the Googly-Eyes hoped. Especially troubling is that gasoline sales fell off 1.6%, which is exactly what I chirped about when I said the pop in the market causing a pop in oil prices would only put a lid on the economy. Government "leaders" who were hoping that the U.S. consumer would sustain an almost immediate .50 cent jump in gas prices last month, just like they sustained up to $4.00 per gallon in 2007, are getting their answer.....This isn't 2006 and 2007 when the average American was using their house as an ATM machine. This is 2009 when the average American is actually thinking about their spending habits.

Perhaps a better way to put this is to point out that the market made a sharp, historically huge V-Bottom recovery that has been the steepest one-month uptrend since 1938 - because fund managers were so excited about the "potential turnaround" in the banks and the economy. As soon as the word "stabilize" hit the news wires, the fundies knee-jerked into the sharpest V-Bottom in the stock market in over 70 years.

Here is a chart of the SPX showing a V-Bottom so sharp and so vertical that it looks like Excalibur's Sword:
(click on image to enlarge)

Trader's put a sharp V-Bottom on the charts, but will we also get a sharp V-Bottom in the economy? Perhaps fund managers believe the economy has stabilized enough that the stock market is unlikely to ever visit the lows of March again, so the V-Bottom represents the first stage of economic recovery. However, as I have been stating here for many months, the most likely scenario for the economy is not a V-Bottom recovery, but rather a long, protracted, and sometimes painful recovery with artificial ceilings, especially with the types of spending and policy decision we have seen in the past six months.

Fund managers may dream that the recovery will be like the Chosen One pulling the V-Bottom sword from the stock market stone and marching to an exciting, rousing economic victory.....

.....But I wonder if this whole enchanting story will turn out more like this:

Well, after all that market commentary, I always come back and say trade what is and not what seems sensible. I won't fight the overwhelming tide of bullishness. I've been playing calls almost exclusively for the past month and I have encouraged you to do the same, which has led to many nice profits. It doesn't matter what I think, it only matters that I trade in the direction of the trend. If the fundies all prove to be right, and the economy is in the midst of a sharp, V-Bottom recovery then fantastic! None of the data supports that thesis, but if it's really happening, then we can all throw a celebration and enjoy the good times again.

7:45 am MT: The net result of the first wave of earnings and economic reports was an identical gap down on the SPY this morning as yesterday morning. The big difference in the two, however, is that this one comes after the earnings and economic reports.

Didn't I mention something about all those gaps on the market yesterday?..........

The SPY is already in the 84.50 support area, which is the top side of the gap from Thursday. So this morning is very similar to yesterday. And it looks like the same fundies that bought the 84.50 support area yesterday are going to try and do it again today.....I guess they want to see more evidence that the economy is not in a full blown recovery.....

7:53 am MT: Here is a current 15m chart of the SPY showing the almost identical early price action as yesterday:
(click on image to enlarge)

8:52 am MT: The SPY is back in a resistance area, testing the gap from yesterday's close (gaps, gaps, everywhere are gaps.....it should be a song.....). Price action continues to look very similar to yesterday, although the market may run out of gas sooner today than the highs of yesterday.

Here is a current 15m chart of the SPY:
(click on image to enlarge)

9:06 am MT: The SPY (market) did roll over early, just as I speculated. Well, this looks like another range-bound day. I think traders are going to hang around between the gaps and hope for a great earnings report from INTC and some better economic data the rest of the week. I suspect that the only key economic data this week that has a chance to surprise to the upside (substantially anyway) will be the Housing Starts/Building Permits number on Thursday.

Here are some stocks outperforming to the upside this morning: WYNN, NE, ESV, CNX, DVN, and DO. Energy is leading the market so far.

Here are some stocks underperforming to the downside this morning: MCD, SO, PEP

Now, I must go work on new service stuff again for awhile.....enjoy the cartoons.....

12:45 pm MT: The market has been range bound between the gaps today. The tussle that traders just had with the low end of the range on the SPY around 84.10 are the first cracks in the bullish armor. The SPY overshot the 84.35 - 85.50 support zone a little, which means there is a little more apprehension today than yesterday. The apprehension is not all that surprising, I noted early in the day that the one difference between the two similar price action days (yesterday and today) is that today is coming after earnings and economic reports.

The slight overshoot of support a little while ago means we may see another drop to new lows before the end of the day. We shall see.....

1:57 pm MT: The market did roll down and test the lows again, which the overshoot was portending. The SPY didn't make it to new lows, but the three-day crunch and grind will close near the lows of the consolidation range.

2:02 pm MT: Market Wrap: The market price action was down, although the SPY, for example, did stay in the 84 - 86 range that it has played in the past couple of days. The SPY did hang around between the gaps, as I speculated. The next big catalyst is INTC, which will be reporting earnings shortly. Tomorrow morning will also see a plethora of economic reports, with Industrial Production/Capacity Utilization being the most important, although the CPI will probably grab more of the headlines.

Now we all await INTC.....Don't wait around breathlessly, check back in four hours or so after all the news, guidance, and corporate speak is over. By then traders will have parsed, diced, danced, snipped, quipped, analyzed, examined, surveyed, sifted, salted, botanized, and dissected the news to their utmosed pleasure, and we will get an idea where tech will probably open tomorrow.

2:18 pm MT: It looks like the initial reaction to the INTC report is bearish. The stock is trading down about 4% just after the release. Like I said above, give this a while to get analyzed to death, and then we'll see what the expectations are for tomorrow.

6:35 pm MT: So get used to this.....I expect a lot of earnings reports like this during the current season. INTC beat expectations .11 cents vs. .03 cents, but declined to provide future guidance. I think this will be the norm. I think a lot of companies, especially banks, will say they had some decent things happen in the past quarter, but the future is still very uncertain. This dovetails right along with what I have been stating over and over again, which is that the economy will have pops and positives here and there, but the trends in employment, energy, and even to an extent real estate (although lower mortgage rates are helping), are not indicative of a V-Bottom economic recovery, even if fundies are trying to put a V-Bottom in the market. INTC is trading down over 5% after hours.

There are still some economic reports to get through in the morning, but tomorrow is shaping up as a gap down and some selling early in the day. However, the Googly-Eyes will refuse to see anything other than sunshine with a few clouds because their livelihood and perceived happiness is at stake, so they will probably be emotional and irrational tomorrow. That means they will probably try to "buy the dip" again, just like they did on the Bear Gap yesterday and this morning. Nevertheless, if we don't see good economic data in the morning we are probably headed for a profit-taking type of day at the very least. It may not be a sell-off, because too many Googly-Eyes will still be looking for more "proof" next week, but the fundies are probably a bit nervous tonight and really, really, really hoping for "good news" from the economic reports tomorrow morning.....

The Consolidation Before the Storm

Pre-market futures are down a little this morning, but nothing fierce. Traders are focused on a "bad" warning from CVX, which predicted lower earnings. However, today is really the consolidation before the storm. Traders will posture, position, and throw a few elbows today, but the major whipsaws and market-roiling will probably hit about Wednesday and last for about a week and a half. That's when earnings season picks up some steam, and a bunch of economic reports hit at the same time.

There are a lot of tier 2 economic reports this week, along with several tier 1 level reports. All the tier 1 reports (PPI, CPI, and Retail Sales) are not as critical as usual because of where traders are focused economically. The tier 2 reports (Industrial Production/Capacitiy Utilization, Fed's Beige Book, Housing Starts/Building Permits, and Initial Jobless Claims) were market drivers last month (except for the Beige Book), and there will be residual emotion over those reports this week whether it's deserved or not. There are also two tier 3 level regional manufacturing reports this week (NY Empire, Philly Fed).

In addition to the heavy economic calendar, earnings season picks up momentum with GS before the open on Tuesday and INTC after the close on Tuesday. INTC usually reports after the close on Tuesday of the first heavy week of earnings season, and traditionally it's the report that really kicks off the volatility, but then again, these ain't traditional times.....Next week will be the first extremely heavy week of earnings this season. Just like last quarter, company reports are spread out more on the front end, which I don't like at all. I know why it's being done (to ease traders into earnings season in a historically bad bear market) but all it does is ramp up volatility early, and then prolong the "consensus" that the market has to come to before everyone can move on with their lives. I think it's a mistake, but then again, I hate manipulation with a passion.....

Be all the above as it may, the general idea today is a total lack of news followed by Niagra Falls, with the guy turning on the spigot for Niagra Falls banging and twisting the valve a little bit until he gets his arm loose enough to really let it fly. It means a lot of day to day market trading for the next two weeks. So as exciting as the news media might try to make today's trading for you, don't buy the marketing. The big backs and forths haven't even started yet.

The SPY (market) is set to open down around 84.90, near the gap from Friday, which is funny (or not) for traders who just had to buy hard into the close on Thursday because of all their freneticism over positioning for today.....I watch this stuff every day, and there are so many times I just shake my head and mutter over the complete lack of awareness on the part of so many fund managers that I wonder if people around me must think I'm either weird or I hear voices from outer space. I guess it's worth a good chuckle at the very least.

Here is a chart of the SPY just after the open:
(click on the image to enlarge)

It's just amazing to me to look at that chart because it doesn't even seem like I'm looking at the SPY. It looks like a Chinese internet stock or an Australian mining stock or some other gappy, weird looking foreign ADR type of stock. It's a bit unsettling that the market is doing this after all the volatility from last September - November. Price action should be settling down, not unsettling me with all its loose, gappy, goofy action, including this morning.

7:50 am MT: The 84.35 - 84.75 area on the SPY is a short term support. I expect the lower end of the zone, which is the top of the gap from Friday, to get tested fairly soon.

I also expect the same Googly-Eyes that just have to buy hard on the close on a Thursday before a three-day weekend during earnings warning season, just ahead of a heavy earnings and economic week, in the middle of a volatile trend during a bear market - because they were frantic about missing out on the big move just on the horizon.....I also expect those same Googly-Eyes to come in and ping the SPY off support a couple of times today as they position and elbow and scrape around for what they hope is another great dip-buying opportunity.

7:57 am MT: There's the next leg down as the SPY (market) heads right for the support area I mentioned above. Expect a ping or two, and some back and forth. I'm not all that hyper for puts, but if you caught some right out of the gate, then look to lock a few in around the 84.50 area. We will probably see a gap test back up around 85.00 on the SPY after the gap test down at the 84.35 - 84.50 area. Sheesh, so many gaps, I really must be looking at an ADR and not the SPY. I may start muttering to myself again.....

8:05 am MT: That didn't take long, from one gap to the next in a couple of minutes. I think we need some more gaps on the market.....

On thing about the next two weeks. There will be lots and lots of earnings momentum calls or puts, even as the market goes through its expected volatility. Don't get hung up trying to decipher the index charts too much, stand back and wait for a general consensus to appear in about two weeks. We may see some key signals before then, but whatever the volatility, there will be plenty of day to day trading opportunities, especially from earnings stocks and earnings sectors. So don't get twisted up trying to over-analyze the news, or the market whipsaws, just go in with precision and laser on some specific momo trades and then get out for another opportunity the next day.

8:21 am MT: The market looks like it will range back and forth today, so there may be some intra-day pushing and shoving, but the daily bar will probably be a consolidation candle, something like the consolidation before the storm. I going to work on the new service for awhile, but will report on the market from time to time later on.

11:55 am MT: The market was grinding back and forth in choppy intra-day action all the way up until about 30 minutes ago. Some fundies must be getting excited about all the good news they expect this week and are pushing the SPY to the highs of last Thursday.

Much of the bullish push today is happening over in banks, where the BKX is following through on the Ascending Triangle breakout of a mid to long term Reverse Head and Shoulders that I wrote about Thursday. Most of the other sectors, and all the major indeces are underperforming the banks.

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

The financial sector is huge enough that it's dragging the rest of the market into the green, and even some areas, like the SPY, to the highs of last week.