Current Long Positions (stop-losses in parentheses): TICC (8.51), QQQQ (Hedge)

Current Short Positions (stop-losses in parentheses): SPY (113.30), DGX (50.09), FCN (36.75), URBN (34.91), OMI (29.31), HSY (49.93)

BIAS: 0% Neutral (52% Short w/o QQQQ)

Economic Reports Due Out (Times are EST): No reports due out.

My Observations and What to Expect:

  • Futures currently trading down about 0.6%.
  • Yesterday’s sell-off was a good start for the bears to begin the next leg down in this market.
  • Expect the bulls to strongly defend the Monday lows. If the price level breaks, look for a run to 1056 on the S&P.
  • Early morning futures action indicates the bears are looking to add to yesterday’s losses and push this market even lower. Fridays have been great days recently for panic sells. 

Actions I Will Be Taking:

  • To get out of my QQQQ position as quickly as possible, should the negative sentiment continue into the open.
  • It is unlikely I will be adding any additional short positions to the portfolio this morning.
  • The gap down that we are seeing so far this morning looks to be very fade-able at the open. No news, low volume, reasonable gap.
  • Continue to scalp using SDS/SSO, TNA/TZA, QID/QLD where the setups exist.