NOT YET

The market started to sell off on Friday after the release of the not-so-great unemployment report. However, the sell off only caused a minor spike in the VIX which led me to question the strength of the sell off. The buying that came in at the end of the day looked to be caused by a bunch of short covering. This means that the sellers are still lacking the strength and conviction to push the market down. This also means that there is a good chance that the S&P 500 might break above 1131 in the next day or so. This could change the direction that I have been playing the market. You have already seen me point out a couple of possible bullish trades to keep an eye on. There could be more if we break above 1131. These current market conditions require a lot of patience. You should be significantly cutting back on the amount of trades you are making. Many impatient traders will over trade during these conditions, then complain about why they aren't making any money. The market isn't paying out a lot of money to directional traders right now. The spread traders are making some money, but they are even taking in smaller amounts due to the reduction in volatility. Don't be afraid to sit back and wait. When we start to get more confirmation on the next market move, the money will again seem easy to obtain. You can't force the market to pay you when you want to get paid. This is why you should always trade with money you can afford to lose. It is almost impossible to succeed when you trade with money you can't afford to lose. You have an additional emotional attachment to that type of money. You will rarely follow your trading plan because you can't afford to lose any of it. You will also end up over trading in markets that you should be sitting out because you need to make "X" amount of dollars by next Friday. Don't ignore these economic reports...especially the ones related to unemployment and housing. These are key indicators for a recovery. The CEO's of these major corporations are experts at squeezing good earnings out of these companies...even if the economic recovery is slow. However, they can't do it forever. If the employment and housing numbers don't start to show improvement, you will start to see an effect on these company's ability to make money. A "double dip" recession is still a strong possibility...and we are getting close to October. Many of the worst crashes have occurred in October (the crash of 2008 almost made it to October...it missed it by two days). Even though I may turn more bullish if we move above 1131, I will still be cautious. IBM and PG have both looked like good trades so far. I only need one of them to work out, but so far it looks like they both might.