A semi-weak open gave way to a strong early morning rally and it looked like this rally was going to carry us through throughout the day. But like usual the market found its highs around 2pm and spent the rest of the day going nowhere and then selling off into the close. The good news is that stocks closed higher on the session but the bad news is that they did not close near their highs. This suggest that the probability of more chop is higher than the probability of any trend developing in the short-term.

There is some hint, however, underneath in my long scans, that stocks and the market wants to move higher. My scans expanded nicely today all around, I saw a lot of stocks break out of long consolidation patterns today in those scans, only a few sell stops were hit this morning in my portfolios, more and more stocks are consolidating in healthy patterns coiling for potential breakouts, and the bank stocks look good with CS DB and WFC looking like they are building out bottoms and MS JPM BAC GS and C breaking out to new short-term highs or nearing breakouts to new short term highs.

Now all of that being said it should be noted that I still have a lot of hedge positions and not only did none of them hit any of my trailing stops today but only one produced an EOD sell signal. And that one was for profits–JDST. So all in all it is still a mixed bag out there and no matter what individual stocks are saying right now they could all easily be proven wrong with one strong move lower in the overall market. If the market was extremely strong here we would be breaking out with many of my hedges producing some kind of profit taking or cut loss signals. That is not the case so let’s not get too excited just yet.

Have a great rest of your evening and I will see you back here tomorrow. Trade smart and always obey your stops! Aloha.