Current Long Positions (stop-losses in parentheses): TICC (9.62), BRKR (13.92), CVX (80.67), DAL (11.12), ELY (6.78), ITW (46.40), SSO (38.70), QQQQ (48.19), FRG (6.99) PCX (11.40), ENER (4.86), URS (37.12), TIE (19.52)

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

BIAS: 68% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenger Job-Cut Report (7:30am), ADP Employment Report (8:15am), EIA Petroleum Status Report (10:30am), Treasury STRIPS (3pm)

My Observations and What to Expect:

  • Futures are slightly positive.
  • Big developments for the bulls yesterday – primarily we broke through and decisively closed above the all-important 1150 level on the S&P. 
  • Closed above 1160 level which marked resistance of a very bearish, long-term trend-line.
  • Asian and European markets are having very strong/positive days.
  • Yesterday gave a strong indication this market will look to go much higher this year. 
  • The Trend-line has lessened its ‘steep-ness’ from recent consolidation to make it much more sustainable. The steeper trend-lines are harder for the market to sustain.
  • The best thing that the bears could achieve at this point is to push the markets below the lows of yesterday’s open. In fact, if that actually happened, that would really put this market on its ear.
  • There is a minor resistance level at 1174, which is the only real road block between it and testing the April highs.
  • Just to be clear, we broke out of consolidation – which was what we were in the past 10 days.
  • Employment on Friday will have a large impact on the market.
  • Broke out of the upper line of the rising channel, basically nullifying the pattern.

Actions I Will Be Taking:

  • Stopped out of ENER on an analyst downgrade.
  • Managed to get out of my hedge position early yesterday without much problem to the portfolio.
  • Closed for a small gain, my short position in LMT.
  • Closed out my position in PCX for a 5% gain.
  • Initiated two new positions: URS and TIE.
  • Sold half my position in ELY – will let the other half ride. 
  • Tightened my stop-losses in all my positions except for DAL and TICC.