Don't Trust This Rally. Be Patient And Let It Run Out Of Steam.

I don't trust this rally. Yesterday started with a bang but it was all the market could do to muster a green close. Overnight markets were juiced but fell off as the opening bell approached. More crappy home sales data this am gave the market a nice bounce (yes, welcome to the High Frequency Trading show) and we are now up over 200 on the Dow. Go figure......

With the S&P around 1150, we are about 25 points away from last week's resistance of 1170-1175 which is coincidentally the Nov 2010 double bottom (triple if you want to be generous) low.

If we explode to 1175 in the next day or 2 it will be a great shorting opportunity ( I like Sep >1200 call strikes). Ultimately we are heading lower but I feel fairly confident we will stay above 1050 in the short term. However, any short puts should be positioned below that area.

The big deal this week will be Uncle Ben and his Jackson Hole speech on Friday. Stay tuned and happy trading!

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