Look Out

The futures are lower this morning. As we all know, this means nothing because we could see another 1,000 point spread on the Dow today. We could end up 500 points on a crazy short covering rally. Who knows at this point. But...

If the action today is similar to the action of the last couple days -where there is very little volume and the action is lethargic at best- we could slowly slip into dangerous negative territory with the technicals and see another significant leg down.

This morning Home Depot reported a the-world-isn't-ending-but-things-kinda-suck quarter. The market had priced in armageddon, therefore the stock is higher by about 4% in pre-market trading. I said the stock would be higher yesterday and here it is. What this stock is going to run into today is weak overall market movement. This is the big risk with large cap, multiple index stocks like HD. They can be pretty good fundamentally or report good news but the overall market can take them lower no matter what. I think that might happen today. That's why, in yesterday's post, I chose to have nothing to do with this trade. If the market ends higher and HD ends much higher, I have lost nothing. Losing nothing is a huge win in this market.

I stay 2-1 calls to puts on my index ETF's but if I see disturbing market action today, I might adjust that ratio because the trend is changing. Remember, a trend is a trend until it isn't. It sounds silly but it is pretty deep if you thing about it. Until next time, stay low risk.