Current Long Positions (stop-losses in parentheses): TICC (9.62), BRKR (13.49), CVX (77.93), DAL (11.12), ELY (6.39), ITW (45.47), SSO (38.03), QQQQ (48.06), FRG (6.78) PCX (11.40), ENER (4.86), SDS (Hedge)

Current Short Positions (stop-losses in parentheses): LMT (71.56)

BIAS: 35% Long (84% Long, not factoring in the hedge position)

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), ISM Non-Manufacturing Index (10am)

My Observations and What to Expect:

  • Futures slightly positive.
  • Asian were positive while European markets are barely trading up. 
  • Market trend-line has flattened somewhat, and no longer trending at such a steep angle. Further selling would obviously reduce the angle of the trend-line. 
  • Good sign so far that the bulls have managed to keep overnight selling from kicking in. No signs of panic yet from the bulls. Good sign that the bulls are still willing to buy this market. 
  • THREE KEY S&P SUPPORT LEVELS TO WATCH TODAY: 1132 (Support from recent consolidation), 1128 (20-day moving average), 1118 (200-day moving average).
  • Close above 1150 would reinvigorate the bulls. 
  • 1160 is a key long-term resistance level that needs to be watched.
  • Despite yesterday’s sell-off, we’re still stuck in a consolidated range. 
  • ISM Report today could play a large role in market direction. 
  • Still wedged up against the upper line of the rising channel. For October to be a success, will need to breakout and close above the upper-line.

Actions I Will Be Taking:

  • Added ENER yesterday at $5.19 – small position. 
  • Tightened my stop-loss in LMT to $71.56
  • Hardest part of any hedge position is when to get rid of it. If the market opens flat-to-positive, will likely rid myself of it. Main purpose was to keep me from any dramatic overnight sell-off. 
  • Any gap this morning would probably be a good trade setup.