SPY Read for the Day - February 10, 2011

We are walking into today with a sizable gap down, SPY is down .75, DOW is down -50. Yesterday the market finally started to crack, and now this gap-down if a breath of fresh air. CSCO had earnings after the bell yesterday and is getting clobbered once again down more than 10% – a huge move for a boring, slow-moving stock. Rising wedge on the SPY in anytime frame. We have lost my 132.00 support. First gap area is at 131.43-131.15. Also on the 60 minute chart the 50MA comes in @ 131.21. So filling the gap would be my first downside target today.Theirs a small shelf of support at 131. If it got really nasty , I can't see us losing 130 today. We have option expiration next Fryday, a lot of times we make a low the Thursday prior which would be today. As far as overhead resistance is concerned we have SPX 1338 just overhead. We printed 1325 just about. SPX 1274 is HUGE support. The overall trend remains up, but I’m still not looking to initiate new positions. I am light, only big core short I have on is the OIH which started to breakdown yesterday. So many divergences in this market makes it very difficult to employ much capitol either way. We can not choose the market we trade, just have to make due with what we are handed. Trading is all about your tool-set, and you will need to reach in that tool-box from time to time to change it up. You must adapt to what the market is giving you. We all know this market is due for a breather, but we have never had an environment like this with the quantitative easing. With that being said the bulls are due to get smacked. Keep a very short time-frame in mind, and you will be fine.

"Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money. I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it." Ed Seykota