Ouch!

That was one ugly close. The Fed's policy decision was not well received by this market which seems to be losing confidence the Fed can do anything to save the fledgling economy. Even the momo names like Apple (AAPL) that had been doing so well the last few weeks reversed in the last 30 minutes of trading and ended the day lower. Earlier I said that I had a bad feeling and thought we could sell-off, but I didn't think it would be that violent. The S&P closed right on it's uptrend line and when we breakthrough that line tomorrow it could spark even more selling. The next test is 1150 and then 1130 on the S&P. If we test 1120, we're going to breakthrough the lows for the year and the pain will be felt by every stock and every sector. There were two major breakdowns in stocks I own today. Arcos Dorados Holding (ARCO) and New Oriental Education (EDU) were off by 8.8% and 9.3% respectively. These charts have completely broken down and we need to stay away from these names for the time being. My long term prospects for each company have not changed so if you already own the stock don't sell it. I can't find a reason for the selling in either name other than fear of a BRIC slowdown. Gold fell by almost 2% to $1780 and I expect it to fall further over the next few weeks.

This is not a recommendation to buy or sell any securities. DAK was long ARCO, EDU and AAPL at time of publication but positions can change at anytime.

Less than an hour to go....

I'm starting to get a bad feeling about the speech later. There is a lot of pressure on Bernanke to act as savior but the consensus seems to be that the only surprise today would be a surprise. I think there is too much upside risk to get short here but I have raised a bunch of cash and now sit about 25% liquid. I'll be ready to react to any big moves of the speech. The banks initially sold off hard but have stabilized after Moody's downgraded all their debt as the downgrade was no surprise to investors. New Oriental Education (EDU) is getting absolutely crushed today but seems to by finding support at its 50 day MA at $30.07. There is no specific news but lets stay away til we figure out what's going on. Arcos Dorados Holding (ARCO), my favorite play on Brazil is getting whacked today for over 6% for no apparent reason. If (ARCO) closes below $26.60 we have to stay away and revisit it when the chart stabilizes. The semi's, including my two faves Broadcom (BRCM) and ARM Holdings (ARMH) are flying today and I continue to be bullish on the whole sector. Baidu (BIDU) is coming back a bit off yesterdays strange action rising over 1.5%. Apple (AAPL) is back in the $420 area and the story today continues to be growth, but will the NASDAQ follow the rest of the market if we don't get something besides "Operation Twist"? Probably, so be ready. Gold is flat and oil is up.

This is not a recommendation to buy or sell any securities. DAK was long BIDU, ARCO, AAPL, EDU, BRCM, and ARMH at time of publication but positions can change at anytime.

Wait and see...

So we're trading in that 20-30 point up or down range that we usually do before a Fed meeting as traders are in a "wait and see" mode. While most believe we'll get something in the form of stimulus (even if it's just "Operation Twist") later, I'm not sure if it will be enough . It's all about growth again today with the high-betas handily beating the overall market with Apple (AAPL), Hansen Natural (HANS) and Chipotle Mexican Grill (CMG) all showing nice gains. Gold is falling but may turn around mid-day if more stimulus is announced so it's something to keep your eye on. 2PM is when the magic happens so keep your fingers crossed.  

This is not a recommendation to buy or sell any securities. DAK was long AAPL and HANS at time of publication but positions can change at anytime.

I have to urge caution

If you didn't build any positions in this market yet I would suggest waiting. This type of frothy day spurs irrational buying and I have to warn against it. Don't get me wrong, I think all the stocks mentioned on this blog are undervalued and should be bought over time. I mean when you break it down, that's the game; identifying undervalued assets, and that's what I've done. I just think there is too much short-term downside risk coming out of the Fed tomorrow if Bernanke doesn't give us more QE. The lame-stream media would have you believe the entire rally off the August 8th lows has been in anticipation of more stimulus from the Fed. They would have you believe that if we don't get an announcement of QE tomorrow we're headed back to the lows or worse. There is some truth to that, but the stocks that have led this rally (high-beta) should continue to thrive regardless of the overall macro environment. It's true that if Big Ben doesn't announce more stimulus tomorrow we will sell-off, but it should provide an opportunity in the quality names I talk about regularly, especially tech. So raise some cash today and let's just watch what happens tomorrow. Worst case scenario we miss a little upside. If you learn one thing from this blog, learn this: The game is NOT about catching upside, but preserving capital. I can't stress this enough! We get too caught up in "missing" a big move one way or the other. Remember, there will always be another opportunity as long as you have the capital to invest. 

I'm not buying it....

Today was a very strange day for me. The market was down on the Bernanke non-event, but every stock I own was up. Two of the companies I own had huge breakouts, athenaHealth (ATHN) and Arcos Dorados (ARCO) were up 7% and 4% respectively. Hansen Natural (HANS) was up big too at 2.5%. We could see Hansen Natural (HANS) testing the $90 level again very soon. But for some reason I just don't feel good about this market right now. I'm not so negative as to get short, though many of my fellow traders have done just that, but a few things here worry me. Europe is the obvious one as the world waits with bated breath for the proverbial "other shoe to drop". My other problem is the fact that this market is sure that QE3 is coming on September 21st and I'm not so convinced. While I don't believe QE3 is necessary for the companies I watch to thrive in the coming months, they will get taken down with the rest of the market if we correct. I have raised some cash by selling some Spyder Gold Trust ETF (GLD) puts and Oil Service Holders ETF (OIH) calls yesterday and today and will be ready to put that cash to work.

This is not a recommendation to buy or sell any securities. DAK was long ATHN, ARCO and HANS, and short GLD at time of publication but positions can change at anytime.