The market is feeling a lot healthier..

8:30 am EST After the good-sized drop in the markets yesterday, the futures are headed higher today. That is what we need to see in terms of the big picture. Markets do not go straight up. We needed a nice little pullback. In fact, we probably need some more. However, the market is not in a panic buying or panic selling mode. We had the sell off and the market went higher in the last hour. I would have been seriously concerned if the sell off would have accelerated in the afternoon. What we are beginning to see is the mutual fund money beginning to return to the market. The longer-term equity holders who put a floor under stocks, have begun to creep back into the market. It isn't pronounced yet, but it is starting to "feel" better. So far...

There are still a lot of issues out there that need to be resolved. I am not telling anyone anything new here. But I do think that the action in the next couple weeks will tell us if the final bottom is in. There are a couple things I am looking for. The first is the response to the end of the quarter. Will the hedge fund and mutual fund managers, who were doing some window dressing over the last couple of days, hang on or dump positions after the quarter? The other large issue out there is earnings. I am not concerned so much about the actual earnings of the companies. I will be concerned about the overall outlook for future earnings coming from companies. That will be the tell about where this market is going.

On to making some money. I have a hedged trade on for Apollo (APOL) earnings this afternoon. I think the stock will move pretty well when they announce, I just don't know what direction. That is the reason for the hedge.

I am looking at Research in Motion (RIMM) with earnings coming up this Thursday. I will be putting on the same type of trade. There is a lot of hot money in the stock which will enter or exit quickly depending on earnings. Look for that.

One other trade I am keeping my eye on is Lennar (LEN) they reported an awful quarter this morning. I am going to wait to see if we get capitulation-type volume over the next couple of days. It might be a good long trade once all the sellers are exhausted. We will wait and see. Until next time, stay low risk..