Current Long Positions (stop-losses in parentheses): MGI (3.59), MHLD (9.18), SONE (7.25), SPY July 132 Calls

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

BIAS: 16% Long

Economic Reports Due Out (Times are EST): International Trade (8:30am), Jobless Claims (8:30am), Bloomberg Consumer Comfort Index (9:45am), Wholesale Trade (10am), EIA Natural Gas Report (10:30am)

My Observations and What to Expect:

  • Futures are up moderately, despite a miss yet again on the jobless claims. 
  • Asia was flat, and Europe is showing a small amount of strength. 
  • I can only find one time in the last 10 years where we declined for more than 6 consecutive days (Oct. ’08), and that was in the middle of a financial meltdown. 
  • Prior to yesterday, the last time we sold off six consecutive days was February ’09. 
  • To put it mildly, a bounce is in the cards for today, and would be shocked if we don’t get it. 
  • To date, the bears have shown no willingness to cover their short positions, which could make the bounce a very nasty one. 
  • The S&P has some mild support at 1275 off of the 1/28 lows.

  • Yesterday saw a strong uptick in volume despite being range-bound for most of the day. 
  • Ideal objective for bulls on any bounce is to reclaim 1294 on the S&P. 
  • 1250 is definitely in the sights of bears, but I don’t think it happens until this market bounces. Markets don’t move straight down with no reprieve.
  • We are only 22 points away from trading in the negative on the year.
  • We haven’t had six straight weeks of declines since July ’08. In order for that not to come to fruition, we’ll have to see a bounce between today and tomorrow that takes us back above 1300.
  • My conclusion: Near-term bounce in the markets is imminent, bears are too hot and heavy and will likely see a massive squeeze to flush them out before resuming the downward trend.

Here Are The Actions I Will Be Taking:

  • Traded MHLD, SONE, and MGI on breakouts yesterday and held all 3 positions overnight. 
  • Added SPY July 132 Calls, which I will likely sell either today or tomorrow, regardless.
  • Will continue to day-trade the market with my focus being on small cap stocks.
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).

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