Current Long Positions (stop-losses in parentheses):
Current Short Positions (stop-losses in parentheses): SPY (113.30), DELL (13.26),
FL (13.81), URBN (36.60)
BIAS: 44% Short
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Empire State Manufacturing Survey (8:30am), Import and Export Prices (8:30am), Industrial Production (9:15am), EIA Petroleum Status Report (10:30am)
My Observations and What to Expect:
- Futures are slightly down.
- Today is extremely important for the market, as the market is right below the all-important 1130 level on the S&P.
- Yesterday it came close to challenging it (1130), but as soon as it did a wave of selling hit the markets.
- A perfectly formed doji candle was formed on the S&P yesterday. This typically signifies a huge warning sign to trend followers, that a reversal is imminent. Last time we had a similar shaped doji was on 7/6 which later resulted in a 12% market rally.
- If I had long positions here, I would start tightening my stop-losses and locking in gains.
- Market is still extremely overbought.
- Inverse head and shoulders pattern still not confirmed - must break through 1130 first.
- Bear's goal should be to drive this market below 1100 again. It would be a break of resistance and a shift in market behavior.
Actions I Will Be Taking:
- Depending on the early morning action, I will look to add an additional 1-2 new short positions to the portfolio today.
- A push above 1130 and I'll close out all of my short positions.
- Gap this morning is definitely fade-worthy.
- Will try to push my portfolio commitment up to 60-70% short.
- Added URBN yesterday to the portfolio at 34.79. Stopped out of FL at 13.81.