Well, that mid-day rally was short lived. If you were looking at any intra-day chart - like the one I have posted below of the S&P - you would have noticed the huge area of overhead resistance at the gap from Monday morning - in green. Clearly, we rallied up to that area during the day and then a funny thing happened before the close. INVESTORS GOT SCARED. They sold off everything right before the close. Notice how steep the decline was right before the close.

Evidently traders are not willing to take the risk of holding stocks over-night for FEAR that something might go bad tomorrow morning. Of course this has played in our favor with member’s shorts. Granted, the markets closed the day up about 1%, but like I said this morning, it’s very normal to see some sort of retracement. Again, technical analysis and day trading is not rocket science. Once you learn and master some basic patterns, you will profit from these situations time and time again. My target for the S&P is still around 750 before we get another bullish bounce. I’ll be back later this evening for a New Trading Video.

Stocks are in rally mode on the last day of March, with investors snapping up deals in tech and financial stocks as the second quarter comes to a close.

At 2:02 pm ET, the Russell 2000 (NYSE:IWM) is up 12.66, or 3.04%, at 428.63, while the Dow is up 2.03% at 4,674.94, and the S&P 500 is up 2.12% at 804.22.

Lackluster economic data out this morning did little to put a damper on the upbeat mood on Wall Street today, with investors going on a full-fledged buying spree of stocks such as Google (Nasdaq:GOOG), IBM (NYSE:IBM), Bank of America (NYSE:BAC) and Citigroup (NYSE:C).

Small caps on the move this afternoon include TBS International Limited (Nasdaq:TBSI), up 23% on a better-than-expected Q4 profit, and Canadian Solar Inc. (Nasdaq:CSIQ), up 21% on a new study out that shows the small cap is poised to experience dramatic growth.

*****Today is the last day of the second quarter. Mutual funds are no doubt buying the top performers to make their holdings look good. That helps explain today’s rebound. But what about yesterday’s declines?

Obviously, a quick 25% rally is going to have investors taking profits. This was especially apparent in the small-cap sector. It’s well known that small-cap stocks outperform when the stock market is recovering from a deep sell-off. Average gains for small caps digging out of the hole are 24%.

And we saw almost exactly that level of gain with Hovnanian Enterprises (NYSE:HOV).

Unfortunately, small-cap stocks bore the brunt of yesterday’s selling. In some cases, two weeks of gains were wiped out in one day. Hovnanian closed exactly at the price where I recommended it a week ago — $1.52.

It’s up modestly so far today and I have no problem holding it a bit longer.

*****On Friday, March 27, the NY Times ran an article about oil prices. Oil industry analysts are becoming concerned that low oil prices are causing oil companies . . .

Good morning traders! As always, if you didn’t check out last night’s Trading Video I suggest you do that first thing this morning. On another note, the Affiliate Program that I started last week has been a huge hit. I already have 17 people who have earned Free Memberships in less than one week! I’ve tried to make it as profitable as possible and there are people who are absolutely taking advantage of it. Why not try it out right?

Now, getting back to the markets, the US futures are modestly higher this morning. My general feeling is that most of this is short coverings - similar to me closing half of my SPY puts yesterday. Yesterday the market dropped a bunch. It may need to rest, and perhaps it will continue up at a slower rate (shallower trendline). But what most investors don’t recognize is that other traders - including myself - still have some other shorts to ride down a little more. Although, a little upward movement is very healthy and actually gives anyone who missed the big fall a chance to get back into the action at better pricing.

Or of course a top could be in place. Some internals trading indicators suggest we are closer to a tradable top than bottom – or at the very least some overbought readings still need to be worked off before the next leg up can begin. The Put/Call hovered in the 0.70 – 0.75 area. It would have been unlikely to rally from that level, and as of now, more time is needed for it to rally and top out - i.e. we need more fear before the market can rally again.

Having said this, I have updated a couple of my stop levels on member’s shorts given how great yesterday was. I don’t want to give up everything we have gained thus far, but want to give these stocks room to run down. Below are the updated S&P support and resistance targets.

Stocks are continuing their descent Monday afternoon on news that GM CEO Rick Wagoner has been asked to step down by the Obama administration.

At 1:33 pm ET, the Russell 2000 (NYSE:IWM) is down 12.97, or 3.02%, at 416.03, while the Dow is down 3.34% at 7,516.60 and the S&P 500 is down 3.4% at 788.18.

This morning the White House rejected turnaround plans from GM (NYSE:GM) and Chrysler. In response to the rejected proposals, the Obama administration pushed out GM's Wagoner and directed Chrysler to move quickly to forge a partnership with Fiat if it expects to receive additional government assistance. Wagoner was replaced with GM COO Fritz Henderson.

Small-cap Providence Service Corp. (Nasdaq:PRSC) is up over 30% this afternoon after the company guided earnings above estimates. Also climbing higher today is small-cap retailer Shoe Carnival, Inc. (Nasdaq:SCVL), rising 15% on higher-than-average volume, and InterDigital, Inc. (Nasdaq:IDCC), up 16% after cutting 100 jobs and announcing a business realignment.

******I didn’t know former General Motors CEO Rick Wagoner was so popular. The morning headlines in the financial press make it sound as though stocks are selling off because Wagoner and other auto industry executives failed to put forth strong enough turnaround plans to guarantee more government loans.

Never mind that the S&P 500 rallied 167 points, or 25%, over the last two weeks. Ignore the possibility that one of the sharpest rallies in stock market history might have some investors taking profits.

Now, that’s not to say that the hard line taken by the Obama administration toward the automakers isn’t affecting the stock market. It is. But just as the market rallied on news starting March 9, the bad news from the automakers is a catalyst for selling. News tends to catalyze investors’ predispositions.

*****The suggestion by the Obama administration that Wagoner step aside if GM is to get any more government money is certainly interesting. I’m sure that there will be many pundits criticizing the President for this move. After all, do we believe that President Obama knows more about making cars than a Detroit CEO?

Even though Wagoner pinned his company’s future on the Hummer . . .

Stocks are treading lower today, paring some of the recent gains seen in the last two weeks.

At 1:44 pm ET, the Russell 2000 (NYSE:IWM) is down 13.21, or 2.97%, at 432.09, while the Dow is down 2.07% at 7,760.17 and the S&P 500 is down 2.14% at 815.06.

Tech stocks led the decline as did energy stocks, which fell along with the price of oil. Earlier this morning, large-cap benchmark Google Inc. said it is laying off nearly 200 workers, while technology consulting and outsourcing firm Accenture lowered its outlook for the quarter and the year.

Declining oil prices sapped demand for energy stocks. Oil fell below $53 a barrel Friday, a day after hitting a high for the year, as investors worried that crude's recent gains aren't sustainable amid lingering doubts about the economy.

Small caps higher today include China Direct (Nasdaq:CDII), climbing nearly 10% today after announcing they would hold a conference call to discuss financial results for the year ended Dec. 31, 2008. Chinese small cap Agria Corporation (NYSE:GRO) is also up 8% today after the company promoted Raymond Lo to acting CFO after announcing the resignation of former CFO Gary Yeung.

******I’m fond of saying “never underestimate the American consumer.” Retail sales for February came in with a 0.2% rise, even though income fell 0.2%. Stocks look ready to sell off, but it’s not a response to retail sales. The indices have come a long way over the past two weeks, and it’s time for a little profit-taking.

I still believe that “buy the dips” is the appropriate strategy for the current rally. Of course, I’m talking about taking short- to medium-term positions. For . . .

Following reports of more bad news from banks coming soon and the horrible jobs numbers this morning, the markets are starting to slowly show signs of another bear-market rally break down. While there is still much more downside room to run, you can definately see it in charts that we are running out of steam. Now with regard to the member’s portfolio, all of our positions are showing profits today - not amazing 10% moves or anything but 3-4% moves. What’s even more exciting about our shorts is that they all look like slow forming cracks in a window - i.e. we are going to see more downside in the next couple of weeks.

Here is an interesting chart of the NASDAQ. Notice that we have successfully re-tested the underneath of the ascending trend line and pennant formation breakout from mid-Feb. This really just is confirmation for our tech short which is already in the money. Isn’t it amazing how accurate technical analysis can be when you use it correctly! Let’s hope for no suprises throughout the rest of the day. I personally don’t think anyone will be buying into the weekend after the week we just had. Happy Trading!

Good Morning! If you didn’t get a chance to watch last night’s Trading Video I suggest you do that first thing this morning. I went over GOLD, OIL, S&P, and the EUR/USD - which has moved exactly as I said it would - in depth with some very important stuff regarding some up-coming trades. As for the markets, the futures are down modestly this morning - about 1% as of this writing. They are by no means in crash area but still we should start to see the nice pull back I have been expecting. As many of you know I have a SPY put position that I might be looking to close out today if we get a good intra-day sell off. Though I may hold out until we see a correction down to 775 on the S&P.

It’s been a wild week. Lots of gaps and tons of intraday movement and volatility surely knocked the beginning traders out of the market with frustration. This day trader’s paradise is somewhat frustrating for swing traders like us, but if you have the ability to get in and ignore the intraday noise, you can make even more money with less commissions. And without the stress of staring at a screen all day. Below is the updated S&P support and resistance levels. My short term - next couple of days - is 770.

Okay, the bullz are still trying to take over and not give up. I have to hand it to them though, they really only have one person on their side - the government. Because of various indicators, retracement levels, etc. I am buying up puts at these levels for a correction. Members know what we have added to the portfolio…

Stocks are higher Thursday afternoon, bolstered by fresh economic and corporate data.

At 12:21 pm ET, the Russell 2000 (NYSE:IWM) is up 10.18, or 2.39%, at 436.70, while the Dow is up 1.28% at 7,849.37 and the S&P 500 is up 1.34% at 824.76.

Investor sentiment was buoyed after Treasury Secretary Timothy Geithner unveiled a financial system plan before the House Financial Services Committee today to outline the Obama administration's proposal for extensive overhaul of financial regulations.

Small caps climbing higher today include Republic Airways Holdings (Nasdaq:RJET), which is up almost 40% on higher-than-average volume.

******Former Czech Prime Minister and European Union President Topolanek called the U.S. economic stimulus plan “a road to Hell.” He claims the Fed, Treasury and Administration of repeating the mistakes of the 1930s that sent the United States into the Great Depression.

Also attacked were the stimulus bill’s supposedly “protectionist” policies.

Now, as much as we may criticize our government’s plans, I’m a little defensive when we get flak from an E.U. president. Especially one that just lost a no-confidence vote and was removed from power in his own country. You know what they say about people in glass houses.

Topolanek no longer speaks for his own country. And apparently, he doesn’t speak for the E.U., either. European leaders were out in force trying to minimize the damage their Union president’s comments may have caused.

*****Final GDP numbers from Q4 2008 are in, and they’re essentially in line with the preliminary estimates. That’s being taken as good news in the stock market, index futures rallied on the news.

The economy shrank at a 6.3% annualized rate. The preliminary number was 6.2%. Economists are expecting Q1 2009 GDP to be in the range minus 5% to 6%. That’s something of an improvement and should be bad news as long as . . .