Selling in the morning. Dropping my index longs this morning was the right call because I would have lost close to 3% and 1.5% if I hadn’t. I’m happy about that. I was ” ” this close to actually going short, but didn’t have the strength to do it. Getting a little bit of profit and not taking the hit was a victory for sure.

Dropping the calls in the 4Q’s and CSCO yesterday was a pretty big trade as well as they both would’ve been nailed badly today.

I was close to buying calls in the Q’s as well as the SPY at the close, but I’m waiting till tomorrow morning. I think we open weak and have a good shot at finishing strong. It depends how weak the morning gets.

Sometimes on these high pole closes like we had yesterday you can backfill for a few days usually 2-3 and then pop again. Some people call them flags. However, “flag” would be forming in a bearish posture. I’m making this up as I go.

Seriously the bearish posture is just a reference to overall trend. I want to try to buy tomorrows lows near the morning based on the way the SPX has acted in the past after a big up day. On a 15 minute chart or other shorter term charts two day patterns like this look like bullish flags. In a downtrend though they can be sketchy, but I’ll give it a try anyways. They work great in an uptrend as you can see from September to Mid October.

Moving on, CSCO might be in play for me tomorrow as well. It never got overbought like most other stocks.

As far as new trends nothing looks all that good right now, but the few sectors showing promise are Retail (yes if you can believe that), Healthcare (that one is totally believable), and Commercial REITs (boring).

Karen Finerman mentioned AEO as a trade in the “final trade” segment of the show. I like the call as AEO has massive support in this area and of course as I mentioned retail sector is sparking up. AEO used to trade under symbol AEOS on the Nasdaq and I have complained about selling it way too early before as well. Plus I have a chart that illustrates that complaint.

*I also want to thank Wall Street Fighter for the link love today.

Thanks for reading

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