Good evening. Today's 24 point trading range in the S&P 500 gave us the drop we were looking for to close SMH and SPY for nice gains. The problem is the drop only lasted about 2 hours before the markets bounced hard. I suspected this might happen in last night's updates and I am happy to book the gains. These kinds of volatility days have been the norm lately which keeps us guessing about the next move and makes conditions for swing trading difficult.
Tomorrow brings significant economic data in the pre-market with the GDP report, and then shortly after the bell with the Chicago PMI and Consumer Sentiment reports. Regardless of what these reports tell us, it is the reaction that is important as traders. As such, the smart thing to do is to tread lightly heading into these numbers which is exactly how our model portfolio is currently positioned. I will have two or three more new plays released this weekend after we digest Friday's move. In the mean time, I still like the short set-up in the utilities ETF (XLU) that I posted yesterday. XLU lost -1.50% today and there may be another -2% to -5% left in the move. I have also provided another play on my watch list below for those interested. This play may or may not make it into the model portfolio.
Long MOS (Mosaic): The stock broke up and out of an ascending triangle today and is maintaining an upward trend line from its 7/1 lows. There is some congestion/resistance from last summer/fall at current levels but if the broader market is strong MOS could run another +3% to +7% higher, or more. If the broader market is weak I would stay away.