What Are We Going to do Today?

8:30 am EST I would like to think that we are going higher today. Most of the recent rallies have been faded by the big money who have short market positions. We have seen a couple of days where the market tries to rally higher but the big money leans on stocks and sends them lower. There simply isn't big money out there getting dramatically long the market. While that is understandable, it is frustrating for the bulls. Even the one-day rally last weak was faded at the end of the day. The big cash just stepped in near the end of the day and sent the market off it's highs. That pattern will probably continue today.

I would throw a thought out there that the market may not be thinking about. Everyone is looking for a capitulation bottom. I think we will look back and say we should have been looking at the reverse. Traditionally, we look for a dramatic sell off to make everyone give up and say "I am never investing in stocks again". That is the capitulation bottom we seem to be looking for. Instead, I think we should be looking for a dramatic short covering rally for one or two days to shake the bears out. We have so much money out there that is short this market. They have every interest to see this market go lower. If they are forced out in a fit of short covering, they will try to get long to make up the losses, thus sending the market higher.

I would certainly like to see my (DIA) trade losing less money right now. I did buy it as an investment and I am willing to hold on to it for a while. That said, I am a trader. The faster I can make the money the better. Longer term trades aren't always my favorite.

A quick word about Oil. It has quietly gone from the $35 range to near $50. If we see a strong break above $50, we can move quickly higher as the big money moves in. I am taying long my (DXO) position here.

The option trading strategy I used on my Urban Outfitters (URBN) position has yielded me a net $0. In my opinion, that is the beauty of the strategy. Of course, when it works, it is amazing. When it doesn't - and I can get myself back to even - it is even better.

Be careful trading today. It can be easy to make some huge mistakes. I would always prefer to be out of a trade wishing I was in rather than in a trade wishing I was out. Until next time, stay low risk..