Current Long Positions (stop-losses in parentheses): PEP (70.10), NFLX (237.25), GLD (144.73), ANV (34.25), FDO (53.28), SLB (82.77)

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

BIAS: 10% Long

Economic Reports Due Out (Times are EST): GDP (8:30am), Jobless Claims (8:30am), Corporate Profits (8:30am), EIA Natural Gas Report (10:30am)

My Observations and What to Expect:

  • Futures are slightly higher at the open.
  • Asia was up on average about 1%, while Europe trades in mixed fashion. 
  • We finally managed to get a mild (and mild might be an exaggeration) out of the market yesterday. 
  • The S&P was unable to break through the 50-day moving average after testing it yesterday. 
  • Should we rally off of GDP and Jobless claims today, I see the ceiling on the rally being at 1338. 
  • A move below 1308 would represent a major move below the descending channel, and would represent another leg down in the ongoing sell-off. 
  • Yesterday we completed a morning star (bullish) candle pattern, formed over the last 3 days. A move below the lows yesterday at 1311 would nullify that pattern. 
  • To put recent weakness in perspective – if we finish down on this week (which is how it looks right now), it will mark the fourth consecutive week that we have done so, which would only be the third time that has occurred since March ’09. Even during the 2007-2009 meltdown, we only had 3 such 4-week periods – and only one that went longer.
  • To put it in perspective – we are very oversold at this point, and taking on a heavy short portfolio or suddenly deciding to short this market in general, carries an elevated risk to it.
  • The most important price level on the S&P now becomes 1294, which represents the previous higher-low. Break it, and things will unravel at the seams. Also a break out of or below the descending channel, would go a long way in changing the character of this market.
  • My conclusion: GDP and Jobless Claims at this point are weighing heavily on the markets, and if we manage to break below yesterday’s lows, the bears will be reinvigorated to re-short this market. 

Here Are The Actions I Will Be Taking:

  • Sold NFLX at $255.09 for a 5.3% gain, GLD at $148.72 for a 0.6% gain, ANV at $35.79 for a $1.9% gain, CMI at $105.28 for a 3.2% gain, Pep at $70.46 for a 0.8% gain. 
  • Added SLB to the portfolio – my lone position today at 84.17. 
  • Will look to make 1-2 day-trades today, particularly if the market remains weak today. 
  • No changes to the stop-losses today.
  • If the market can bounce today, or show signs of a recovery, I’ll add 3-4 swing trading positions. 
  • The duration of my last 1-2 days at the most while recent weakness persists.
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).