DOW HOLDS 10,000

After a back and forth day in the market, the main focus near the close was to see if the Dow could close above 10,000. It did...barely. Tomorrow is September. We should start to see some volume enter into the marketplace, but it might not start to increase until next week. I'm still expecting a big move down soon, but I'm a bit concerned about the increase in a bearish outlook by many on Wall Street. The increasing percentage of bears could raise the probability for a rally. The current Elliott Wave count does allow for a possible rally, although the probability is low that we will get it. I'm still using the 1068 area on the S&P 500 as a stop loss point. Instead of getting out of all my put options trades on a move above 1068, I might use a "protective" call. For those that have taken my Advanced Option Strategies course, it would be similar to a protective put used for a bullish trade. With the likelihood that volatility will increase in September, I entered into a call option trade today on the VXX. This allows you to trade changes in the Volatility Index (VIX). I think it is very likely that we will get a spike up in the VIX in the near future. This trade will allow me to profit from that potential spike up. The S&P futures are up about 8 points at the time of this posting. If this hold up overnight, the market should gap up at the open. It is does gap up, it could immediately start selling off. A gap up would complete a possible small bearish ABC pattern...seen easier on a 15 minute chart. In other words, don't overreact to a gap up at the open and start buying a bunch of calls. Wait for about an hour before making any decisions...unless the market goes up enough to trigger your predetermined stop losses. A lot can happen between now and the market open. Last night the S&P 500 futures were down big when I went to bed. When the market finally opened, they were only down a little. The market then gapped down a bit at the open and almost immediately rallied up. I think the opposite might happen tomorrow morning. Be prepared.