Current Long Positions (stop-losses in parentheses): TICC (8.51), EUO – UltraShort Euro (22.25)
Current Short Positions (stop-losses in parentheses): SPY (108.68), DGX (47.10), FCN (35.01), URBN (33.94), OMI (27.76), HSY (48.02), ADBE (29.78), DDS (22.78)
BIAS: 60% Short
Economic Reports Due Out (Times are EST): GDP (8:30am), Corporate Profits (8:30am), Consumer Sentiment (9:55am), Ben Bernanke Speaks (10am)
My Observations and What to Expect:
- Futures are slightly positive prior to the GDP report.
- 1040 on the S&P is in play for today. A bad GDP report, or comments not well-received from Ben Bernanke, will slice right through this level.
- The markets are oversold on a number of indicators, so there does exist the possibility that the market bounces today. If so, you’ll want to make sure that you are not overly exposed to the short side, and hedge your portfolio where it is necessary.
- In an extreme case, where everything is received negatively today, we could see a sell-off that even challenges the 1010 level on the S&P. Especially if the GDP report misses as badly as the Home Sales Reports from earlier this week.
- Yesterday’s candle pattern formed a bearish engulfing pattern, which typically signifies further selling in the near-term.
- A bounce at these levels is a possibility, but one I don’t see moving beyond 1070 on the S&P.
- If you are going to trade these markets, it is probably best to wait until the dust settles from the morning news – it will likely be chaotic throughout the early morning.
Actions I Will Be Taking:
- No hedge position this morning.
- There will be no new swing-trades that I will enter into today.
- If we see a nice swing down in the markets, I will likely be taking profits in my positions.
- I don’t expect to fade the gap this morning, too much volatility in the markets with GDP and Bernanke speaking.
- I will use ETF’s, in particular 3x ultras to fade market extremes today.
