Gasparino'd..

From the late day action this week, you'd swear that we are making a short term bottom here.    Yes, it seemed that the sellers just did not have enough juice to push this market into a true panic mode on Tuesday.  The Bears were gased out by another Gasparino rally even though it seemed 12032 was already set as the low of the day as the news broke.  12032 might be the new 12000 till Friday if the ISM number does not make the market loopy once again in the meantime.   The bounce was swell and all, but you can tell the apprehension of the market to chase many stocks on our trade watch.  One reason was the ISM/ jobs numbers looming, another was the ABK deal might not happen soon enough again and another was the meltdown in commodity stocks during the day.   If you ask most of the professional traders, they'd all agree that it's probably best for this market to test the January low.    Why is that important?   Well, for one thing, many of us are now programmed to think that we'd test that January low sooner or later.    What this mentality does is that any attempt in rally will be sold hard or shorted heavily sooner than later.    This particular strategy has been proven right in the past month and half.    If you ask, is it still possible to rally back up without ever testing the Jan. low?   Sure, it is possible but facing so many economic woes in this environment, the probability of a major rally isn't good.  Even though 12000 should play a psychological barrier any terrible news headline will melt it away.    Folks, there's one thing we have to keep in mind here, as far as the economic side of things go, it looks like it will get worse before it gets better.  Never forget and load up heavily.   The situation within the financials sector making new lows Tuesday is even harder to gauge because right now we just don't have a sound economy to speed up the recovery.   We shouldn't even be talking about any recovery so soon and just deal with the cards being dealt day to day.

Tuesdays early carnage wasn't just limited to the financial sector.    We had most commodity plays down substantially because of the obvious melt up recently.   We weren't and aren't in a hurry to start buying it because we fear the potential downside of this market in the short term can cause a lot of collateral damage in the other "strong" sectors.   The environment right now is no longer about buying the names with the best growth or earning power.    We have to solely focus on the kind of plays that'll behave the best in a recessionary and inflationary environment.    If you think some of the techs looked attractive Tuesday and seemingly getting a bid, don't get sucked into thinking a major rally is ahead from those companies.    We'd be very picky in choosing any long plays at this moment.

Excluding the ISM #, the week is actually quiet in terms of economic news until this Friday's crucial job report.    Until then, we still have two trading days to deal with before the real trading motion sets in.    Just remember, this market rewards those who fade the extreme move.   It means that you have to be very patient to wait for an opportunity like that.    Also, it's very handy to have both a long play list and short play list in front of you so when the opportunity arrives, you'd be quick to act on it.     One last thing we find to be extremely crucial is that we trade small just in case we are wrong on the initial move.  

So..just like we noted Mondays late move didn't provoke buying in from us, neither did Tuesdays.