Current Long Positions (stop-losses in parentheses): COOL (3.76), ONTY (6.56)

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

BIAS: 10% Long

Economic Reports Due Out (Times are EST): None

My Observations and What to Expect:

  • Futures are up slightly heading towards the open. 
  • Asia was mixed ranging between -0.7% and +0.4%. Europe was up on average about 0.2%
  • The market continues to break down, closing in on the S&P price support at the 1250 (3/16 lows) level and the 200-day MA at 1253. 
  • While the S&P still remains slightly positive on the year, the Nasdaq is actually trading negative on the year. 
  • By most standards and indicators, we are as oversold as we were back in mid-March, which was also a pretty heavy sell-off too. 
  • We have options expiration this week, which also adds a little bit of trickery to the week in general. 
  • Building heavy short-biased portfolios at this juncture in the market downturn is high-risk, and subjects you to a strong possibility of a short-squeeze.
  • We have seen the first 6-straight weeks of selling since July ’08 which at that time lasted only six weeks as well. The probability of further decline in the absence of a major news event, is less than likely. 
  • To date, the bears have shown no willingness to cover their short positions, which could make the bounce a very nasty one.
  • My conclusion: Even in the worst of markets, there exists weekly rallies, and I think we get one this week. The selling that the market has seen over the last six weeks is unsustainable.

Here Are The Actions I Will Be Taking:

  • I Will look to get out of both COOL and ONTY at some point today.
  • Will consider possibly adding some SPY July Calls at some point today.
  • 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).