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

Current Short Positions (stop-losses in parentheses): ESV (42.84), MR (33.39), SPY (109.07)

BIAS: Neutral

Economic Reports Due Out (Times are EST): Jobless Claims (8:30am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am), Consumer Credit (3pm), Fed Balance Sheet (4:30pm), Money Supply (4:30pm)

My Observations and What to Expect:

  • Futures are currently trading slightly negative.
  • Yesterday’s rally was marked by a pathetic volume showing, further clarifying the rally as nothing more than a dead cat bounce. 
  • Futures overnight have been trading within a tight 7 point range on the S&P e-mini’s. Today’s outcome at this point is a wild guess.
  • We are still oversold, but are quickly coming off those conditions with yesterday’s rally. A little follow through would further help the cause.
  • At this point, with us treading slightly in the negative, a gap of 2 or 3 points can easily be filled.
  • Jobs Report could rock the markets either way. If the number exceeds expectations, we could experience the last gasp of the bulls before this market starts selling-off again.
  • Be on the lookout for the European problems to begin resurfacing in the news – It’ll be interesting how much of a a role it takes in the markets as most people will be focused on earnings for inspiration.

Actions I Will Be Taking:

  • Will stay in all of my short positions and look to get out of the QQQQ long position if there is no urgency by the bulls to move this market again today.
  • How much of the oversold conditions we can work off today, will determine how aggressive I get today with adding new short positions to the portfolio. Very possible I add another 10% to the shortside, with 30% of new positions being my max.
  • Sell-off after a bad jobs report, will cause me to look for a quick exit out of the Q’s, once the first 30 minutes of trading has passed.
  • A good report and I will hold my Q’s until there is an obvious technical breakdown on the intraday charts.