Thursday, February 14, 2008

This Way That Way

The market is back into pelt-mode at moment, ending several less-than-spectacular rally days in a row. Given tomorrow is option-expiration Friday - I would not expect to see any daring advance in stocks before Tuesday, as money is no doubt remembering just how badly last months expiry (and the post-expiry session) went over. Like last month, Monday is an exchange holiday.

There has been progress overall of late, but outside of the leadership groups, the advance was a little too sloppy to get very excited.

The progress includes a weeeaak-volume follow-through rally in the Nasdaq Wednesday, meekly indicating the larger trend is higher in that index.

Present leadership in terms of industry groups:
-Ag (fertilizer, operations, machinery)
-Energy-Other (we saw the solars kick in again and on strong volume, while Coal-related names have been explosive)
-Oil Explor/Prod
-Metals, Ores and Steel.

I'm both long and short at them moment (I went short the Financials at the open today, which allowed me to buy a few stronger stocks pulling back), but I will let go of the shorts on Tuesday if the tape is at all positive. If the tape does not improve again by Tuesday, I would consider increasing short exposure (step outside of Financials) and reduce the longs I am holding (longs here are limited to names within the leading groups mentioned above - nothing dramatic in terms of exposure at present).

Good trading.

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