Sell USO

Sell the rest at 78.40. Got a spike and it doesn't look very sustainable. Profit takers are coming in and it just doesn't have enough upside from here in the short term.

Sell COST

Sell COST at 65.60 for an easy 5 % gain. I think it has limited upside in the very near term and could easily come back down to test the 200 sma again.

Boone Pickens' Big Mouth

Boone Pickens got on CNBC this morning and let everyone know that he was shorting oil and natural gas. Considering that he's been one of the leading energy bulls for a long time now, I'm inclined to believe him (especially when he puts his money where his mouth is).

Oil isn't reacting all that horribly considering its been up so strongly the past few days. The action so far looks more like profit taking than a complete change in attitude. Right now its off just about a dollar (USO at 78.30ish). I'm waiting for more of a signal before recommending selling the second half of USO.

Bad News, Decent Action; COST

Even after a weak open off of negative CPI data, the market rebounded and was able to close higher on the day. Financials paused and even flourished a bit, but I wouldn't expect too much more to come. Relative to what we have been seeing in the past few days though, this action's pretty decent. As long as we don't get any terrible news in the morning, an up day is a good possibility tomorrow.


COST bounced off its 200 sma by more than a dollar today. It's looking like the moving average will hold and provide good support from here on. Keep a stop around 1 % below the 200.

Weak Financials Lead to Fading Market

Just as I suspected! Weak financials (especially the brokers) led the market to fade after a gap open that just couldn't go anywhere. The market's in a choppy trading range. You have to pick your spots and find the strength. That means oil (needs to consolidate a bit after such a strong gain), nat gas, commodities, and some select tech.


Look at the COV triangle. Watch for a breakout/breakdown. Right now it's really a toss up as to which one will occur. On one hand you have up days occuring on big volume and down days on shrinking volume. But, you have to still be aware that any adverse event in the broad market could really take down the entire market. It's best just to wait until the break occurs and take a position accordingly. It should be coming very soon.

HPQ's up after hours and should lead tech to a decent open tomorrow. We'll have to see if it can hold.

Oil's Flying

Oil is flying higher this morning, with the USO up about 2.5% now. I would sell half of the position here at 77.90ish for a quick 5 % gain.

Also, watch the financials! The XLF is only up around .3% while the S&P is up a full percent. Retail is struggling as well. I'm not calling a reverse (just yet) but I continue to think that this isn't the type action that will lead to a real sustainable gain. I'd much rather see the financials leading than flat.

I'm going to be watching intraday for fades between these sectors and watching the close for strength and weakness. I'll keep the blog updated.

Financials Hold Everything Down

Financials failed to participate in Tuesday and Wednesday's rallies and participated greatly in today's decline. As long as this continues no sizable rally will occur. Continue to watch for the retest (1275ish on the S&P). Once we get there, look to buy at support and stop out below.


One trade idea: VAR looks shortable again. That stock has a small channel it's running in from 54 to 51. Look to get in on the open or close to it tomorrow.

Make sure you check out Dr. Steenbarger's post highlighting today's negative TICK reading over at traderfeed. Here's the link: http://traderfeed.blogspot.com/. His blog is always contains excellent information.

Don't Take a Position in KR

KR busted right through the 50 sma pretty easily. Don't take any position.

Cover DLM

Cover DLM at 8.86 (got short at 9.30 or higher). This stock is dead money here.

End of the Day is Very Telling

After watching the market since my last post, I have become less enthusiastic about the action I'm seeing. There have been some pretty violent downswings (including one now) in the broad market and a lot of stocks have disinflated (ie AAPL, the RTH, and GS) harshly. I don't like to see gains fade like this in to the afternoon. It leads me to think that this action is the result of a bout of short covering and is not ultimately sustainable.


On a side note, USO lost some of its momentum today, but is still above its 50 sma. Helene Meisler posted a free article on thestreet.com that looks at the move in crude and where it's headed from here. I tend to agree with her, as I pointed out in my last post. The jump in the past few days really looks quite different than previous action. That could point to higher oil and a breakout to the upside. Here's the link to the article: http://www.thestreet.com/story/10403029/1/where-are-the-cries-for-100-oil.html

Today's Open Looks Positive

Today's action looks very solid. I didn't feel that the market opened up too strongly and thought buying off the open was very attractive. Turns out it was. The S&P is now up almost 2 % on the day with almost no stocks on my watchlist in the red. Everything from healthcare (SGP is flying) to tech (RACK, a stock that Cramer just totally threw out as terrible the other day is flying after a double bottom) to financials are rallying hard. As long as this rally holds into the close, I think you're probably going to get some follow through tomorrow. It looks like today could even mark a lower high that could propell the market up to test the 1390 level.

Sell STJ Into Strength

STJ is currently at 43.59. I would sell right here up 1.63% on the day and up 4 % on the trade.

Aggressive Buying in USO

I previously mentioned that I was looking for a range or top in USO and therefore oil. However, after the past two days I'm having to reconsider that stance. As you can see in the chart, USO came strongly off support and has flown right through its 50 sma on big volume. None of the recent moves in USO have been nearly this aggressive.

I think that USO has upside to 77.50 here and could fly right through that resistance if the news flow is right. If you're looking for a short term trade, you could get long here but where you'd put a stop loss is a bit of a question mark. If it does get to the 77.50 level or a bit above, watch how it reacts. If it's soft, take profits. If it's still strong, take a half off and hold on to the rest.

STJ is Interesting

STJ broke out of its triangle consolidation pattern Friday, something that was pretty amazing given the weak market. I think it has more to go here, I'd look to buy Monday.

Cautious Look at COST

COST has been in a steady uptrend since early/mid 2007. When the stock has pulled back to its 200 sma during that period, it has been bought every time. That's very bullish action.

Right now I'm very cautious about taking long positions in the market. I think the market is destined to retest the lows and before then, it seems like a fool's game to go long for more than a quick trade. But since COST is more of a defensive position and the 200 sma looks like pretty rock solid support, I'm recommending looking a long position in COST at the 200 sma.

Before taking any position, look for some strong action off or around that level. You don't want to buy if it just flies through!

If it does firm up and hold, I'd take a position that is less than normal size given the volatile nature of the market and questionable upside at this point. Stop out about 1 percent below the 200 sma.

Bearish Action in the S&P; BIIB

Everything's going to open lower tomorrow after Cisco disappointed. I'll be watching to see if the market can gain traction after the open. If it rallies into the close tomorrow, it might be worth buying a bit of the SPY in anticipation of some follow through.

With this type action, you really can't buy anything correlated to the market for more than a quick trade. Support doesn't hold well and everything just keeps rolling over. However, I would start watching a few stocks/ETFs and be prepared to buy when they get to an attractive level.


BIIB was up for most of the day today but ended unchanged. If it comes down to 57.50-55, you should seriously consider buying. This stock has held up well during recent market weakness and has held strong during rallies as well. Stop out below 55.

Cover VAR at 52 or Lower

I'm going to be gone for most of the day so I can't call a point to cover VAR. But I think you should be looking to cover today if it gets below 52.

Cut CPHD, Sell SUNH

CPHD's a loser. It broke down earlier this morning and doesn't seem to be going anywhere.

SUNH is rallying strongly. I would look to sell the stock here at 17.07. A quick 4% is nothing to complain about.

SE's Not Working, Stop Out

Stop out at 23.11 or lower. This trade is not going anywhere.

SUNH Coming Down to Trendline

19.25ish is the buy point in this stock. There's a clear trendline this stock has been bouncing off of. I would expect it to continue. Stop out a few percent below.

CPHD is a Buy Off its 20 sma

CPHD has been bouncing off its 20 sma very steadily. It could touch again today or in the coming days. I would look to buy right off the average and sell into any rally. Stop out a percent below the 20 sma.

KR

Look to short KR at its 50 sma. Stop out above 27.