I am not usually surprised by what the market does… not to say, I am not wrong sometimes, but being wrong sometimes is more a given part of trading, than it is a surprise. But Tuesday… Tuesday surprised me, specifically the last hour of trade. After a lower open and a short squeeze higher midday Tuesday, the market failed to sustain the sharp rally and moved lower again, and the tape was very weak heading into the last hour. Then we got the kind of news reports that I thought surely should have sunk an already precarious market. We got a very quick sell off for a couple minutes, then the market stabilized and spent the last hour on a grind higher, to above where it was when the news hit. The news was on several fronts including relating to “Chinese aggression”, and “Hezbollah”. How the market rallied considering how the day had gone to that point, and the nature of the news, really left me wondering what I was seeing.

I am still not quite sure how to interpret it. It should be bullish that the market ignored the news, but I remain unconvinced. Rather I suspect that at some point this week, the market IS going to care, even if it appeared not to care on Tuesday. My hypothesis coming into this week was a rally early week, and then a sell off later in the week. I am going to stick with that, and certainly allow that any downside could be exacerbated by the news background. I remain in my IBM put position.

Thanks,

Joe