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The SPY and QQQQ closed down

on the session 3.09% and 2.89%

respectively. The gap down trig-

gered the daily sell, and with no

attempt by the bulls to buy the

gap, it was all red the entire day.

Last weeks low was pierced and

the markets continued lower. Now

that a lower high has been put in,

the trend will likely be down for

the immediate term as bulls who

wait for obvious and confirmed

trend reversals (re: herd) start to

unwind positions. Do keep in mind

that the SPY is down 7% from the

highs, and bounces will come, how-

ever the 104.00 area looks like a

reality for now. How fast we get

there depends on the urgency of 

fearful bulls, but also the shorts

who are underwater from levels far

below. Those shorts are looking to

minimize their losses.

Bounce fails, heavy selling resumes 

Econ Calendar

08:30 Jan Nonfarm

Payrolls (last -85K)

08:30 Jan Unemployment

Rate (last 10.0%)

08:30 Jan Manufacturing

Payrolls (last -27K)

08:30 Jan Average Hourly

Earnings (last m/m 0.2%,

y/y 2.2%)

15:00 Dec Consumer 

Credit (last -$17.5B) 

Daily Trading Letter Friday, February 5, 2010 

Earnings Calendar 

Before the Open: AET,

AYE, AXL, AIV, BZH,

BPO, BRKS, SUR, LRN,

KELYA, MAG, MD, NNN,

PPL, PBH, SXT, SPG,

SEP, TE, TSN, VVI, WY,

YRCW

LARRY’S CORNER  

Strong trading volume, volatility

spiking, dollar strength, and

fear globally over sovereign

debt, equals one rough trading

day! ! Is it the dollar flexing its

might or…………..worries over the euro et al ?

Forget gold, emerging markets, commodities, in

the face or fear U.S. Treasuries appear to be the

pile with the least amount of flies. Poor debt auc-

tions in Portugal and Spain have spurred concerns

over unhealthy debt levels. The thought here is,

all these events are likely to stop the U.S. labor

market from rebounding in the near-term, and

lets not forget China's attempt to curb its over-

heated growth.

Sector performance

(% change previous day):

Consumer Staples (-

2.33%)

Telecom (-2.37%)

Utilities (-2.64%)

Health Care (-2.64%)

Consumer Discretionary

(-2.86%)

Tech (-2.88%)

Industrials (-3.06%)

Materials (-3.84%)

Energy (-3.90%)

Financials (-4.15%) 

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 Industry Groups

(% change previous day):

Decline

Photographic Products -

11.39%

Steel -6.98%

Industrial REITs -6.46%

Electronic Manufacturing

Services -6.27%

Tires & Rubber -6.12%

Specialized Finance -

6.07%

Human Resource & Em-

ployment Services -5.92%

Independent Power Pro-

ducers & Energy Traders-5.92%

Oil & Gas Drilling -5.91%

Health Care Facilities -

5.80% 

This is a 15min sell setup we took on RIMM yesterday. This play was a high odds trade for a bunch of 

different reasons, but most importantly, was because of its price action. The play itself was a short on a

4 bar rally into a declining 20ma and price resistance at 3pm reversal time in a weak market environ-

ment. It did not follow through to the downside, but the trade gave us a 50cent move to profit from.

The chart itself shows a clean area of support from Wednesday in the 65.60area. Yesterday, a 60min se

(not shown) took this back down to retest that area of support. After a brief pause, in a weak market,

we see a big red bar break through this area. A simple idea to always remember is when price action is

finding support on an area multiple times and then breaks through that area, this very same area then

becomes resistance. We see after a breakdown bar that the next rally into this area leaves a topping

tail, confirming this area now as resistance. This was our primary signal telling us the odds were in our

favor. Keep trading simple. We don’t need hundreds of indicators or lines all over the charts to give us

direction. Just watch the price action and listen to what its telling you.

DYLAN’S DAILY DOSE 

Scanning becomes tough with such

wild swings in the indices. I see

many charts that all looks like the

SPY and Q’s...red break down bars

trying to find support. With this kind of price ac-

tion, almost everything gets swept with the

broader markets, and the daily timeframe becomes

too large. I will be focusing on the SPY Friday and

any individual story stocks moving on their own.

I believe RL hits 72.00 sooner or later. Big gap

down and consolidating near the low. I’ll be look

ing for a break of 76.90 for continued weakness.If it bases at these levels, it will be even better

when it eventually triggers.

GREGG’S

CHART OF

THE DAY  

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