What I'm Watching Monday Morning

Man, oh, man.


Everyone is on edge in anticipating of tomorrow’s open after the spat between Goldman Sachs and the SEC on Friday. Yeah, it could get ugly for GS and other financial institutions and yes, the timing will help Obama’s financial reform policy plans. And yes, the market reversal may be upon us… or not.


Today, I actually caught myself trying to predict tomorrow’s market direction. I went online and read everything I could find concerning the current environment and possible scenarios. What’s going to push it up or down? Greece? Ash clouds? Goldman Sachs? Earnings? UGG – Too much!! Tell it to stop! A few hours into it, it occurred to me that I was suffering from opinion overload (ironic since I’m now providing my own). No one knows where it will go tomorrow. My guess is that we’ll gap down a bit and the news will likely drive it from there. Since I don’t have a crystal ball, I don’t need to waste my time trying to be an oracle. What I need to do is prepare myself for the open.


Side note: There are other things that concern me more in the long term than Goldman Sachs – employment and consumer confidence. Both are still low. However, earnings are looking pretty good implying that hiring is right around the corner.


Let’s get into my plans for tomorrow morning in my short term trading account.


I will not buy at the open (short or long)… for at least 30 minutes. I need to see what’s going on and what the talking heads from CNBC are saying. The tie between GLD and GS pushed gold down Friday and I’m curious to see if they trade together tomorrow, as well (I’m interested in gold right now). I’m also going to keep an eye on support levels – particularly in regional banks, GS, and the XLF.


Goldman Sachs looks like a possible short below 155 and possible long above 165.

XLF needs to hold $16 and it would be bullish if it can manage to hold SMA20.


Check out the daily charts on some of the popular regional banks and focus, particularly, on what they did Friday. WFC, RF, USB, and FITB all bounced off SMA20. That’s impressive. This is one of the setups I’ll be watching tomorrow – if these 4 stay above SMA20, then I’ll consider that bullish. If they fall below, I’ll look for possible shorts in regionals.


Again, I won’t do anything in the morning other than take profits from overnight positions and get a feel for the market. I want to be heavy cash and relaxed. 


If it gests ugly this week, I’ll focus my short trades in airlines, financials, and maybe in apparel (Liz Claborne, Jones Apparel, etc). I might also look for safer stocks found in consumer staples – K (kellog), HEK (water buniness), BMY on SMA100. etc.


My favorite safetly play Monday is ISRG – love the company and the pullback was unnecessary. I want this stock under 360 whether the market is up or down. 


I also like F if it holds 13.20 for swing.


That’s all for now. To reiterate – I’m looking to stay on the sidelines early and watch how the market reacts after a weekend of absorbing the GS news. From there, I’ll look to short financials or buy long some consumer staples if the market tanks. If it holds up pretty well, then I’ll run mid morning scans for stocks sitting on support and poised for a move back up. 




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