Current Long Positions (stop-losses in parentheses): None

Current Short Positions (stop-losses in parentheses): ESV (42.84), MR (32.34)WTFC (37.71), SLAB (44.80), CERN (82.08), ALB (43.59), HIBB (26.65),  WRC (40.95), QQQQ (45.83), SCHN (44.33)

BIAS: 106% Short

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Housing Starts (8:30am), Redbook (8:55am)

My Observations and What to Expect:

  • Futures down strong heading into the open
  • Housing Starts will likely have minimal impact on the market – focus is on earnings.
  • IBM and TXN reported numbers that the Street clearly was displeased with.
  • Bad numbers from Goldman Sachs (GS) will undoubtedly trigger some major selling – probably the reason right now that the market hasn’t reacted more to the IBM and TXN earnings than what they already have.
  • So far this earnings season has been more about selling the earnings regardless of the numbers.
  • Bear’s flood gates haven’t been completely opened…yet.
  • Gap down worries me somewhat – definitely won’t see another flat-line market like we did yesterday.
  • Will be watching the morning highs to see if the bulls attempt to fill the gap.
  • Overall this market has everything it needs to sell-off in a big, big way today.
  • [Update] – Goldman reported treacherous numbers, and I’d fully expect this market to get real ugly today.

Actions I Will Be Taking:

  • At a point now where benefits from hedging from potential moves against the portfolio is of low benefit, due to risk of missing the downward opportunity this market presents at any time. This is where I have to let the short positions play themselves out.
  • Portfolio is where it needs to be right now.
  • Closed MR for a 10% gain. Won’t replace it with anything else.
  • May scalp to short side if glaring opportunity presents itself.
  • Tightened Stop-Loss in CERN to $82.08.