I must again apologize for my disappearing act last week. I had a family event to attend to and the time to update the blog was never really there. However, I am officially back to daily updates, and more importantly, I am ready to kick off my return with another webinar tomorrow night, on the topic of "The Volatility Playbook."

I know there were some issues with the link not working before, but all links now point to the appropriate location. So join me tomorrow as I attempt to help you understand the volatility structure we will be working with for the upcoming year, and how to take your option trades to the next level by strategizing around this important trading component.

Aside from a discussion around volatility, I will also update you on what we are doing at Trading Addicts, along with an inside look at what we've been doing to take money out of the market.

Hope to see you there!

OA

Register for a session now by clicking a date below:

Tue, Mar 9, 2010 7:00 PM - 8:00 PM EST

Once registered you will receive an email confirming your registration
with information you need to join the Webinar.

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer

A PASSWORD IS NOT REQUIRED

UPDATE: DO NOT DELAY. SIGN UP NOW!

***NOTE*** CLICK HERE to download a copy of our User Guide, for new attendees.

The stocks below are those that I will be focused on to start off the week. With the McClellan as high as it is, I will focus almost exclusively on small caps for long positions, and have a decent sized list of stocks that I will be following from a bearish perspective. We'll talk more about these during TA Live tomorrow. 

Happy Trading!  

OA's Sizzlin Small Caps  

For bullish stocks of interest, CLICK HERE. 

For bearish stocks of interest, CLICK HERE.   

CLICK HERE for the point and figure version of the bullish stocks of interest.  

CLICK HERE for the point and figure version of the bearish stocks of interest.

Going forward, we will not require passwords to attend.

Thanks,

OA

Register for a session now by clicking a date below:

Tue, Mar 9, 2010 7:00 PM - 8:00 PM EST

Once registered you will receive an email confirming your registration
with information you need to join the Webinar.

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer

Copper prices sold off yesterday, while the broad market traded higher early yesterday, then sold off into the close. The leading indicator that Copper has been when compared to equities helped us take down multiple bearish positions in the last few days to prepare for today's drop. The McClellan is still at a relatively high reading, which means that the downside risks are still present.

I want to be careful here, and not try to lose conviction on the head fakes. I still think it is possible that this turn could be a choppy one, which means that if I knock down a few 5-7% declines in the stocks I own puts on, I would happily take those profits and then sit on my hands and wait for better long set-ups.

Throughout the rest of the week, try to pay close attention to sector rotations and relative strength. Try to look for separation in the midst of a highly correlated marketplace.

Note the things that stand out on a day like today, such as retailers/discretionary stocks holding up so well. The significant weakness in the energy patch, despite $80 crude oil.

Those types of things will be important subtle indicators that will help guide you through choppy conditions.

I am now officially balanced, and will look to take off longs into strength, while initiating shorts, and taking profits on shorts into weakness, while initiating new longs.

Most importantly, try not to over trade.

OA

Having kicked off the week with consolidation in stock prices, I still believe we are in the process of a turn. The McClellan hasn't given me a sure signal yet, but with its absolute value elevated, I continue to take profits on my long positions, while initiating new positions. In fact, I am trying to play both sides of the market here while we churn this week.

At the moment, I am seeing high correlations between stocks, and a more defensive positioning in the sectors. Last time this happened, it preceded a turn. Last time it happened, it was near some significant long term trendlines, which deserve another look:

S&P

Dow

Russell

As I mentioned, I took down a few bearish positions, and plan to continue as the market signals a turn, but I am not married to either side at this very moment. In fact, I am going to play both sides until the market says "no more."

According to the McClellan, it seems like there is still another rip left in this market, which is why I haven't stomped on new shorts, or taken a more bearish stance. As of now, I am about 70/30 bullish in terms of positions...but half of my longs are either small caps, or defensive positions like TEVA or UNH.

As you can see, the trend is definitely changing, and I have not debated that. The only debate I have offered is the timing of it all. Here and now, things are starting to look much better if you plan to short stocks. Most bullish percent indicators are still relatively high, and are in statuses such as Bear Alert, Bear Confirmed, or Bear Correction.

I'll continue to update throughout the week of any developments that might produce an edge over the next few days.

Trade on,

OA

In other words, smart money was calling "BS" to the knee-jerk reaction in just about every asset class.

Reaction in the ES:

Reaction in the ZN: 

So the nice little reversal ahead of the open was exactly what the OA ordered. I even bought into early weakness this morning. Not much, but I nibbled, nonetheless.

However, into the close, I let go of a few longs I have been holding over the last few weeks while all of my short put verticals expired OTM, leaving me with a little extra cash in my pocket ahead of the weekend.

To my surprise, the McClellan didn't uptick like I thought it would. However, even though I feel that there is a little upside left in this market, it won't be nearly as easy to catch as these last two weeks have been. Therefore, my advice is to not get greedy here, and start slowly taking off longs into strength.

I like the idea of trying on a few shorts, but gradually and carefully. Spread them out throughout the week next week, into strength, and have short time horizons. After a couple days, take profits, and move to something else. Shorting this market still feels uncomfortable. Like the backseat of a Volkswagen.

This weekend I'll be breaking out another list of picks, and will be putting together a few banners for the next open house. Enjoy yourself.

OA

First, we must start here...

I figured a move to 1110 in the S&P would be the right spot, which would send the McClellan into overbought territory. It looked to me like there wasn't much standing in the way, but the reaction in after hours trading has the Dollar is ripping higher and the Euro melting lower. This, as you know changes things.

I'll be busy at the open trying to manage my way out of gains in my long positions, while trying to chase a few short positions down. I took down some SPY puts yesterday, but that won't be my saving grace here. I think quick actions at the open to take on a more balanced approach will help, especially when the McClellan points to increased downside risk.

I'm hoping that this chart below still means something, and that the reaction will be relatively tame tomorrow morning.

This chart suggests pin risk in the SPY near 110. We are holding on to that level by less than a thread as I type.

I'm going to take the rest of the evening to watch, trade, and scan.

I know this is a quick and short update, but I got a lot to between now and tomorrow morning. Be well.

OA

I decided to record and archive the session for those who missed it. I know there was some confusion surrounding the password that was posted yesterday, so hopefully the recording will help to ease any frustrations.

As always, if you have any questions surrounding the presentation, service, or anything else, you can reach me at tradingaddicts@gmail.com

For those that have signed up this evening, please click on this link to view our user-guide. This will help bring you up to speed with our products, services, and schedules. Make sure you enroll your e-mail address for trade alerts, morning/evening e-mails, and all other updates.

For those that have not signed up and would like a spec sheet on our product offering, click here.

Lastly, if you are on the fence, click here to sign up. 5 days for $5 dollars.

Trust me, you'll love it.

I will post the recording here as soon as it is done rendering and uploading, which will be later tonight.

Again, thanks for your attendance. Another Open House will be scheduled soon.

OA

***UPDATE***

Here is the link to tonight's recording.

https://www2.gotomeeting.com/register/887318323

Most of you have already registered, but if you haven't yet, here are the details for tomorrow nights session. I will leave this post up until then. See you there!

***NOTE*** CLICK HERE to download a copy of our User Guide, for new attendees.

TRADING ADDICTS OPEN HOUSE

Please join us at 7 PM ET on Wednesday, February 17, 2009.

Click below to register for TA Open House.

https://www2.gotomeeting.com/register/887318323

The password for this session is:

option