The Wrap 5/18/10

{+++}We opened higher and the natural inclination was to look for and expect a rebound day, but then around 10am we started a slow slog lower and it just picked up steam as the day progressed.

We had some nice longs that worked in a crappy tape, UPI, VCLK, VVUS and CLDX. The rest of the day was mixed and my huge regret is that I didn’t have some wider stops on the shorts from Sunday nights video because some of the names did what I thought they would do, but unfortunately a day late. Example GS, CLF & AXP, but that’s the market, I would rather play it safe with this crazy tape.

I added CLF as a short again in the event that the market loses its bowels in the morning. The stock will either get crushed on a break of the level or not. On the other side of the coin there is a distinct possibility that over the next day or two, the Dollar which is very overbought, may decide to take a rest, especially if the Euro shorts(incredibly and obnoxiously short in a very crowded trade) decide to buy the Euro. For that reason I added UYM and XME as longs, please check the P&L tab on the blog for stops. Both ET’F are very oversold (could stay that way) but it’s because my thinking that the destruction of the Euro may be short term overdone.

There was a meeting of economists and currency types in Europe this past weekend. 600 were in attendance. When the question was asked, “how many of you think the Euro will have a recovery this year?, about 15 raised their hand. Doing what I do for over 25 years, leads me to believe the contrarian trade will work big at some point. That little ditty was from a guy I respect on Bloomberg yesterday. Also, buying dips and selling rips has so far worked well.

If I see any good setups later I will do another post, if not we’ll regroup in the morning.

We’ll see how it shakes out tomorrow.

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