Will We Hold it Wednesday – Markets Forced Over Strong Bounce Lines, Now What?

If the stocks were really so attractive – what happened to the other 157M shares worth of buyers?

Crazy!

The Dow finished up 547 points yesterday and that was AMAZING – almost as AMAZING as that day we fell 843 points, way back on…. Wednesday of last week.  But hey, 547 points is only 296 points short of catching up to a one-day drop so – RALLY TIME!!!  Right?  No, not right at all – especially when last Wednesday's down volume on the S&P was 275M shares and yesterday's up volume was 118M shares.  If the stocks were really so attractive – what happened to the other 157M shares worth of buyers?

The thing is – those sellers took their money OUT of the market and yesterday's buyers decided to build things up with a MUCH WEAKER foundation than the one that collapsed last week.  So, while a bounce like we had yesterday is good progress on the way to a hopeful correction – it don't mean a thing unless we can spend two full days over the strong bounce lines which are:  Dow 25,700, S&P 2,800, Nasdaq 7,250, AAPL $226 and Russell 1,630.  

We're already having a bit of a pullback in the Futures and the Dow is below, S&P barely holding, Nasdaq way above, AAPL below and Russell way below – not exactly the stellar performance you would think we are having if you listen to the talking heads on CNBC and Bloomberg, who are paid by the investment banks that advertise on their show to tell you what a great idea it is to put your money in the market.

We balanced our Member Portfolios to ride out the storm so we really don't care whether the market goes up or down from here – but we do care that we give it enough time to make a decision – not just based on a one-day move that gets us back to less than 50% of where we started.  As usual, even when we don't like the equity plays, we find something to do and our long play on Gasoline (/RB) Futures above the $1.95 line paid off yesterday to the tune of $1,000 per contract!

Being balanced with plenty of CASH!!! on the sidelines gives you the buying power to make quick plays like this one, which we had been poking at ever since last Wednesday's Live Trading Webinar (and tune in for today's at 1pm, EST).  We took the money and ran on /RB yesterday as we didn't want to risk the inventories but they were pretty bullish with Oil (/CL) drawing 2.1Mb, Gasoline (/RB) down 3.4Mb and Distillates essentially flat.  

Nonetheless, oil and gasoline fell as the Dollar gained strength overnight so we may look to play them again around the EIA Report (10:30) or during our Webinar (1pm).   Contracts roll over on Monday and the NYMEX traders have just 4 sessions left to move all theirfake, Fake, FAKE!November orders (133Mb worth) into FAKE!!! Dec (450Mb), Jan (194Mb), Feb (108Mb) and March (175Mb) orders but, surprisingly, it's "only" 1.06Bn barrels of fake orders so, other than the annual rollover pressure next month – there's room to pump even more fake orders (up to 1.2Bn) before they come under a lot of selling pressure.  

We'll see how low gasoline goes – hopefully back to our $1.95 line but we expect Brent (/BZ) to hold $80 and that's about $70.50 on WTIC (/CL) so those are our watch lines for the day and, oh yeah, we'll see if those bounce lines hold but still, as I predicted on Monday – it's a watch and wait kind of market this week but we do have Fed Minutes at 2pm and that will give the market an excuse to do something – also worth being at our Live Webinar for!  

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