Trapdoor or Bounce?

Futures are flat in front of Alcoa’s earnings(or lack thereof), and the only stock that probably disappointments more often than AA is YHOO. Aluminum is the least sexy of all the commodities and it will be interesting to see how the street reacts to the number in the midst of a deep correction in the commodity/material space. Other than aluminum foil demand I don’t see much else.

Futures are flat but Europe is in the midst of a five day sell off, with financials and energy leading their market lower today. Questions about the dollars role as the world’s primary currency won’t go away as the G-8 leaders begin a three day get together.

The technicals told the story yesterday as advance-declines were nearly 4 to 1 negative  on New York and about 3 to 1 negative on Nasdaq.   Up/down volume was about 5 to 1 negative on New York on a light total volume of just over 1 billion.  Nasdaq traded nearly 2.3 billion and had a 7 to 1 negative volume ratio.

I’m finding it almost impossible to find long set ups that I like and I have been short now for over a week. Earnings are upon us and we truly lack any type of catalyst other than a possible case of boredom by the bulls that may light a brief brush fire. They better find the matches soon though, because this could get ugly in a hurry. I’m bearish, but looking for a possible bounce from the corner of my eye.

I’ve covered 2/3 of my energy shorts only because they collapsed faster than I thought they would, and am now focusing on other sectors like fertilizers, financials and commercial real estate from the short side, although no action has been taken there yet.I’m seeing beautiful short set ups everywhere. Good luck today.

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