One cannot help but try to draw parallels between today’s action and the nasty reversal that we saw back on June 21st of this year. As you may recall, back in late June we touched 1131, only to immediately tank for the next two weeks to 1010 on the S&P 500. The temptation is to extrapolate that today is yet another reversal, seeing as we are at the top end of our multi-month trading range.

Rather than choosing to become bearish based on emotion, or on a whim,  or because of lagging/flawed economic data, I believe the better approach is to have a sound game plan. Looking at a slightly zoomed out intraday 15 minute chart of the $SPY ETF, all we have seen thus far today is a gap fill from Monday’s 2.20% rally. So long as we stay above that gap fill level, which I have illustrated, the trend of higher highs and higher lows since early July remains in tact. Should we break and stay below that level, the trend becomes in grave danger of being broken, and I will make the necessary adjustments in my portfolio.

NOTE: On the S&P 500 index, this level is right around 1107, which happens to be the low of today. On the $SPY, it is around 110.86.

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I made two trades.

• I added 1/2 more long to $RDWR. I now have a full position.
• I added 1/4 more to $BX. I also have a full position in that name.

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 40%

• LONG: 40% ($GNK $LSCC $RDWR $BX $CMI $SWSI)

CASH: 60%

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“The dater out of Chiner is absolutely beaut-E-ful for the mawkets. Bro! Just look at this chart of $FCX“

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Waiting for the time when I can finally say

That this has all been wonderful but now I’m on my way.

But when I think its’s time to leave it all behind

I try to find a way but there’s nothing I can say to make it stop.

-Phish “Down With Disease”

As the old saying goes, there is nothing terrible about being wrong. Rather, the problem is in staying wrong. With that in mind, I stopped out of my heinous $COCO speculative trade for 7.5% loss. I suppose it will be absurdly hilarious if I bottom tick the stock here, but frankly I knew I was taking on a lot of risk by the nature of how this chart looks, and how the stock trades. From time to time I will make “casino” type of trades like that, and over the years it has worked fine for me so long as I respected my stop loss and kept them fairly infrequent.

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TOTAL PORTFOLIO:

EQUITIES: 34%

• LONG: 34% ($GNK $LSCC $RDWR $BX $CMI $SWSI)

CASH: 66%

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[youtube:http://www.youtube.com/watch?v=FNt1IdNEJ-c 450 300]

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To update my ongoing Euro/Dollar chart, seen below, we can see that the pair climbed above 1.32 yesterday. This 1.32 level marks the gap fill that I highlighted for you back in late June/early July. While the Euro can most certainly overshoot to the upside here, I am switching to a neutral stance. I would expect a pullback to the 1.29/1.30 zone in the interim.

The pertinent issue to me, being a swing trader in equities, is whether we continue to see a direct correlation between the Euro/Dollar and global risk appetite. In other words, is it now too obvious that a pullback in the Euro versus the Dollar will lead to a selloff in equities (if the Euro does, indeed, weaken)?

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I sold out of my 1/2 position in $POWR, in front of their earnings report tomorrow. I also initiated a 1/2 buy in $CMI. The $CMI daily chart is impressive (seen below), and the underlying fundamentals of the firm are very strong as well.

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TOTAL PORTFOLIO:

EQUITIES: 42%

• LONG: 42% ($COCO $GNK $LSCC $RDWR $BX $CMI $SWSI)

CASH: 58%

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