Monday, December 31, 2012

Shutting It Down for 2012

So the fiscal cliff is still out there, and the market remains completely at the whim of every single headline, rumor, or comment made by any of the idiots involved in this mess.  With one day of trading left in 2012, it's enough for me to take the day off and call it a year.   I tried to make some trades last week but really just spun my wheels, which has been a theme for the past few months.  Everytime my account made a little progress, I immediately gave it back.   Most of this was because I tried to let some trades turn into longer ones and did not immediately take profits of 1-2%.  My preferred method of trading is to let 5-10% gains develop while always cutting my losses, but at least for me, the market simply wasn't giving those types of trades out over the last few months.  I guess I should have adapted a little better and become more of a scalper.  

We'll see how 2013 develops - I am hoping it is a little more swing-trader friendly.  I will day-trade but much prefer a market where stocks don't breakout, immediately reverse after a day and give all of the breakout gains and more back, and then proceed higher after stopping people out.  I saw a ton of those types of charts this year, enough that I think I have become conditioned to simply sell into every breakout I see rather than holding them.  Historically, that is not the way to make big gains, but the market seems to be changing with algorithms and black boxes and Fed intervention and incompetent governments (well, that has been there for a while now) so as a trader, I have to adapt too. 

I didn't have a terrible 2012 stat-wise, finishing up about 27%.  I was hoping for much better however coming off of a 58% gain in 2011.   My win percentage was slightly better in 2012 that the previous year, but my average gain was over 2% lower than in 2011 (3.6% vs. 5.8%).  Maybe that's my trading.  Maybe it's the market.  It's probably a little of both but it's something I need to look at over the next few days as I look ahead to the new year and decide how I can improve my performance going into 2013.  I became much more of a day-trader this year and again, I have to look at whether that was my fault, the market's fault, or a combination of both.  Perhaps it was the right decision even though I didn't like doing it as much.   You can only take what the market gives you. 


Going forward, I honestly have no idea what happens with this fiscal cliff but I do know that trading a market that can crash or spike on every single tweet or news release coming out of D.C. is not a market that is trader-friendly, at least in my opinion. 

If you are under the opinion that a deal will be reached and you want to go long, you have two problems.  The first would be trusting all of the idiots in Washington to actually get something done.   That is always risky.  The second is the idea that everyone is expecting a spike if a deal is announced, so any deal that is reached could turn into a massive, "sell the news" event.   We are oversold here so that is good for the bulls but a super-strong bounce on news of a deal is not a given in my opinion.  The market might spike for a few hours, maybe even a day.  After that, who knows?

If you are under the opinion that a deal won't be reached and the market will sell off, you are simply taking the big risk that at any moment, some semblance of a deal will be announced and a massive spike (even if it is short-lived) will be sending you off the "cliff" as you are squeezed out of your short position.  Not fun to be on the wrong end of a short-squeeze. 

Some markets are simply not meant to be traded, and this one falls into that category.  Until this whole mess is finished, trading is going to be all over the place.   Too difficult if you ask me, and if you don't have some sort of small edge in this game, it's best to sit out.   I certainly do not see an edge here one way or the other. When things finally get settled one way or the other, I will be ready to jump back in, but not until then.  

My guess is that a temporary, "kick the can" type deal is agreed to at some point today and we are revisiting this mess in a few months.   If that happens, I probably won't be trading then as well.  My market score in negative at this point but if things improve and charts show up, I'll be ready as always.   Hopefully 2013 brings a strong, easier to trade market for all of us.   Best of luck to you and your families in the new year.   Take care.

Sunday, December 23, 2012

Christmas Week Setups

Some crazy stuff Thursday night on Wall Street with the huge drop in futures and a lot of fear on Twitter and Stock Twits, but really, it didn't turn out that bad.  I was a little worried as I was fully invested going into Friday and expected the worst, and while my account was down, I thought it could have been a lot worse.  As of now, I am holding a long position in AMZN because my stop has yet to be hit, but that's it.  Although the market did end up lower on Friday, the way it bounced back and finished off of its lows was relatively bullish.  Again, it could have been a lot worse.  



Going into the week, I am simply looking at things from a day-trading perspective because of the schedule (half-day Monday and off on Tuesday) and the likely very thin volume that will accompany trading.   There are some setups I see that look interesting, but it will be one of those situations for me that I'll be able to tell in the first half hour if I want to make some moves or find something else to do for the rest of the day.  If you see a lot of reversals and whipsaws early on, you can have a pretty good idea that it isn't worth doing much because the computers are running things.  

The charts I will be watching are below.   Have a very merry Christmas and enjoy the time with your friends and family.  Take care. 
BLOX
 CZR
 FBHS
 INXN
 NOW
PHM
SPLK
 SRPT
Charts Courtesy of Worden Brothers, Inc.

Sunday, December 16, 2012

Stock Market Outlook - Choppy, Frustrating Market Continues - 12/16/12

I talked last week that the market was basically in a holding pattern waiting for a move one way or the other from the range it had built for very late November and the first two weeks of December.  That range was easiest seen on the Russell 2000, but was noticeable on the Nasdaq and S&P as well.  I had hoped a move out of this range (either way) would get a tradeable move going into the end of the year.  That was too much to hope for I guess.

We did get a great move out of that range on the Russell early Tuesday morning via a big gap up, a move that was matched on the S&P and Nasdaq, although not quite as strongly.  That gap held for most of the day.  Volume confirmed the move as well.   Then a little weakness came in late Tuesday on both the Nasdaq and S&P and our break out of the range was history. 

Russell 2000 - Breakout, Then Fake Out

If you're frustrated right now, you're not alone.  This simply isn't a very easy market at this particular point.  I made a little bit last week because I caught a decent trade in CLSN but over the past two weeks, my account has gone pretty much nowhere. Perhaps we do get the typical Santa Claus rally into the end of the year but so far all December has brought us has been choppy, confusing, lifeless trade.  Normally the meaningful technical breakout that was seen on the Russell last week that was immediately reversed would be extremely bearish, but the bears don't even have enough strength to push this market down hard.  I can't honestly call any of the selling seen on Wednesday, Thursday, or Friday heavy because only the Nasdaq is below its twenty day moving average right now and that's only because AAPL tanked on Friday.  

There were a few charts that stood out as I did my scans this week (shown below), but I honestly don't even have a gut feeling for where this market goes over the next few weeks into 2013.  We are a bit oversold and sitting on some moving average support for most indices, so perhaps looking on the long side is better at this point, but my guess is we just chop around the way we have for the past two weeks.  I absolutely hate saying that, but I think it's true. 

ARNA
 DK
 ECYT
 EPAM
 MANT
 PEGA
 SMBL
Charts from TC2000, Courtesy of Worden Brothers, Inc.

The fiscal cliff is still there and still hasn't been dealt with by Congress, and because nothing typically gets done in Washington until the last minute (if ever), we may be looking at a situation where rumors continue to drive trading until that last minute (which could be after Christmas).  Perhaps just trading lightly or not at all is the best idea right now.   Scalping or daytrading has really been the only way of making some dough the past few weeks, so I will continue to keep any trades I make very short-term in nature.

To be honest, after what happened in Connecticut last Friday, I don't know how much my mind will be focused on trading anyway for the next few days or weeks.  Having worked in the education field as well as being a parent of two young boys (one in first grade), this hit very close to home and I still can't get my mind around what Adam Lanza did to those kids and that community and what those parents are going through right now.  In general, I am not one to be emotional but thinking about this tragedy continues to bring me close to tears.  Life is difficult and throws curve balls at everyone, but I cannot fathom anything worse to have happen to a parent than this.  My thoughts like all Americans are with that school, that community, and our country as a whole. The only positive that could possibly come out of this horrible event is that perhaps something will get done in Washington to deal with this issue, both on the mental health side and the assault weapons side.   It just sucks that something like this would have to happen in order for change to finally occur. 


Best of luck this week and if you have kids, give them an extra hug this week.  Take care.

Sunday, December 9, 2012

Messy Market, So Keep It Simple

As I went through my scans tonight, I saw a ton of charts that I would best describe as being "messy".  Very few discernible patterns (bullish or bearish) out there.  This makes sense when you look at how the market is trading right now.   Last week was plain weird.   Seeing the Dow and S&P up with the Nasdaq down or vice versa is not normal market behavior and it seemed to happen all week.   One of the breadth tools I use tracking the number of 4% breakouts or breakdowns on heavier volume each day showed very little spread all week between breakouts and breakdowns.  Again, it's weird to see that for a whole week. 

We are currently in a very news-driven market, and those are very difficult to maneuver.  In markets like this, usually the best strategy is to either stay out or to keep things very simple.  That's what I plan on doing this week.  Since I see very few nice long setups (maybe MNST, CRM) and very few setups from last week acted well, I will simply focus on TNA this week.  It does move fast and it is setting up pretty clear levels from which to buy or sell. I don't have a problem going with a large position if it breaks one way or the other.   I would like to have some individual names but the market isn't presenting those opportunities in droves right now.  Again, keep it as simple as possible in difficult markets.   Good luck. 

Charts by TC2000, Courtesy of Worden Brothers, Inc.

Saturday, December 1, 2012

Stock Market Video - Outlook and Setups for Week of December 3, 2012

Hi traders - it's been a while since I put a video together but I had some decent setups and charts to look at this weekend so the time felt right.  In the video, I look at the overall market and what levels would have me concerned about the current uptrend.  My overall market score has been on the rise so I am hesitantly bullish here, hoping the bulls can hold this area in a strong manner.  I also share the setups I will be watching during the week ahead.   Hope you enjoy it. 

Sunday, November 25, 2012

We Need a Rest, But Is That Too Obvious?

The Thanksgiving tradition of squeezing the market higher arrived in full force last week, as the market followed through on last Friday's reversal day and has moved up five straight days now.  This Friday's action was most impressive as it took the S&P and Nasdaq above some key downtrend lines. 

Nasdaq
  S&P 500
Russell 2000

Unfortunately, I did miss out on the action last week as I tried some TNA on both the 14th and 15th but was stopped out both times and then didn't get back in for some reason.  For whatever reason, I am not good at all trading v-bottoms, and that is basically what we have here (if indeed this is a bottom).  IBD did put the market into rally mode on Friday, basing their decision on the fact that volume would have been heavier if the market was in session for a normal period of time rather than a half-day.   Volume is a big concern here but being that it was a holiday week, it is hard to judge.  From my perspective, last week just "felt" like short covering rather than pure accumulation from the big boys, but maybe I am just mad I missed it.

Although I hope the past week was just the start of a strong rally into the end of the year, I do have my doubts.  As I did my scans this week, I just didn't see much at all in the way of nice bullish charts.  If you would ask me "who are the leaders of this market?", I really don't know what I would tell you.   I am putting some charts below but most of these are very thin or under $10, and those are not typically what you would call "leaders" from a traditional perspective.   There are charts out there that were strong this week but are nowhere near a buy point and need to consolidate.

AVG
 CYBX
KKD
 NTE
 PERI
 NTE
 SIRO
 TASR
 All Charts from TC2000, Courtesy of Worden Brothers, Inc.

We are overbought on most measurements I use but not quite as extremely overbought as we were extremely oversold two weeks ago (if that makes sense).   I did find it interesting to see the T2106 (McClellan Oscillator) move straight up from -320 to +190 without any sort of pullback.  I ran a quick scan in TC2000 to show the number of times T2106 went up five days in a row over almost the last two years below and you can see the results below.   It only happened four previous times and each of those times did not compare to the overall move higher we've seen here over the past five sessions (some 500+ points on T2106).  Based on the last two years, a pullback of some kind seems likely.

T2106

Even with the aforementioned data points, it would not shock me at all if we squeeze higher next week without a rest. That might sound stupid based on the data, but I get the sense that everyone is seeing a market up five days in a row and very extended and everyone is thinking the same thing - "boy, could we use some rest."  Rarely does something obvious occur on Wall Street, so I am keeping my mind open going into this week.

Don't get me wrong - I would love to see a nice rest of three to four days where the market pulls back just slightly, mainly because the issue of lack of charts I am now seeing would be taken care of quickly.   This would be ideal.  There is little doubt too many charts are too extended right now to get involved heavily on the long side right now, but it is what it is.  Going forward, some rest this week would increase the chances of this "rally" being legitimate as well.  What everyone wants is rarely what everyone gets, however, so don't be surprised if we keep squeezing higher to frustrate the masses. 

My game plan for the week is to mainly stay on the sidelines until better buy points develop, but if I see any of the charts listed above trigger, I will consider them based on volume.  If you are still heavily long, congratulations, but you may want to selectively take profits if we continue to squeeze early in the week.  A pullback will take place at some point - it just might be at prices higher than where we are at currently.  Good luck this week.

Wednesday, November 14, 2012

Bounce Time? Maybe, But Don't Be So Sure

After another awful performance today, most traders are asking a simple question - "Are we ready to bounce?".   Unfortunately, it's not an easy question to answer with certainty.  Today's selling took us to somewhat extreme levels on the two major overbought/oversold indicators I follow but we are not yet even at the most extreme levels of 2012. 

From a technical viewpoint, all of the indices continue to get pounded with heavy volume distribution and even the slightest attempt at a bounce intraday has been met almost immediately with selling.  Today was a prime example, with the Nasdaq starting the day with a seventeen point gap up which was sold almost instantly.  An almost sixty point selloff from high to low is not what you see in a market that wants to put in a bottom.   The small caps got hit even worse and really look bad.

Nasdaq
Russell 2000
 

The McClellan Oscillator (T2106 in Worden) is certainly at oversold levels but has been lower three other times this year, so a bounce is not a given.  No doubt it's possible, but don't expect that much.  If you go back to May, the bounce lasted no more than a week before more selling came in and new lows were made soon after.
T2106

An oversold indicator that I created and follow that compares the number of stocks above and below certain RSI (2) levels is also in an oversold area, but this was also more extreme in May.  



I also find the VIX interesting here.  The Nasdaq is off about 180 points over the last six sessions and the VIX has actually fell over that time.  To my semi-trained eye, this would suggest a lack of fear in this market, which given the selling we have seen recently is not exactly a good thing. 

VIX - Complacency anyone?
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

I made a little cash this week with some quick day-trades here and there (having Monday off work helped in that regard) but my main game plan of remaining in cash has held true.  Protecting capital is goal number one when the market is in "sell everything" mode and that's what I will continue to do.   If we see further heavy selling tomorrow, we may reach the point where a sharp reflex bounce is a good possibility, but it will be a long time in my opinion before stocks are buyable again for anything more than a one or two day trade.   There has been tons of damage done to individual charts over the past few weeks and leaders are hard to find. 

Bottom line - it is right to expect a reflex bounce soon but don't be surprised if it comes from much lower levels.  Any trades I make over the next few days (weeks actually) will be short-term and nature and with very tight stop loss levels.   Good luck. 

Wednesday, November 7, 2012

Bored Out of My Mind But Perfectly Content (Plus a Little Politics)

Hi traders.  I'm going on three weeks strong now totally in cash, and although it is quite boring, I really wouldn't change a thing.  As today obviously shows, this market is in major correction mode and really there hasn't been anything to do but sit on your hands unless you're day-trading.   Not only has the market been weak, but there have also been so many unpredictable news events (Hurricane Sandy, the jobs number, the election, etc) that even if you wanted to make some trades, there has been no rational reason to do so unless you are simply a gambler and want some action (never a good reason to make moves as a trader).  

Today was a major technical breakdown on extremely heavy volume.  Both the Nasdaq and Russell 2000 have now sliced through their 200 day moving averages with no obvious support anywhere close.  This now has the looks of an intermediate-term correction that perhaps could turn into a full-fledge bear market over the next few months.   We'll have to see on that one but don't think it can't happen.  Defense without a doubt remains the correct play here for swing traders.

Nasdaq

Even if you're just a shorter-term trader looking for a quick bounce, there is little reason to be optimistic here.   We are nowhere near being oversold at this point, even with today's big selloff.  The T2106 has a long way to fall before getting into what I consider "extreme" territory (below -300).  My RSI(2) oversold indicator (a custom one I keep track of) is also nowhere near "extreme" territory.  Sure, we could see a bounce attempt off of today's selloff but I think there is just as good a chance of seeing another day or two exactly like today.  Maybe that's what we need to get to the point where we could see a decent week-long reflex bounce.   For now though, even for the short-term trader, cash remains the best place to be.

T2106
Charts from TC2000, Courtesy of Worden Brothers.

The big news item today was obviously President Obama's victory last night.  A lot of people assume that his win caused the big selloff today, and while I am sure it had some effect in some areas of the market (coal is the obvious one), it seemed like this outcome was known by everyone except Karl Rove for the last week at least.  I did vote yesterday but for neither Obama or Romney as I didn't think either of them were good candidates.  I guess you can say I went with the "protest" vote. 

In my opinion, President Obama was an extremely ineffective president over the past four years and did nothing to deserve a second term, but there were simply no dynamic, inspiring candidates in the Republican party and it obviously cost them.  I talked to several republicans over the past few months about why they were voting for Romney and I can't remember one time that any of them said anything other than "he's not Obama".  No one ever mentioned anything they actually liked about Romney.  I think the Republicans could have nominated Adolf Hitler and most would have voted for him simply because he was "not Obama".  It's probably the same for most democrats - they just didn't want to vote for anyone that was "like Bush" and many saw Romney as that type of candidate.  I wonder how many of the millions that voted yesterday actually voted for a candidate they truly supported and were behind rather than choosing between the lesser of two evils.

We are certainly a very divided country and I am both interested and scared to see where we go from here.  I wish President Obama the best going forward and I hope he can be successful dealing with the multitude of issues we as a country need to deal with (and deal with soon).  I see two outcomes for his presidency over the next four years and in my opinion, it all depends on what is more important for him - his legacy or his beliefs.  

If his historical legacy is more important to him, he will truly work to end the division that separates our capital and bring both sides together to compromise and get some things done.   Does he really want to go down in history as the president that allowed the country to fall off the "fiscal cliff"?  Does he really want to be know for another "great recession" that will likely come if that fiscal cliff is not dealt with successfully?  Will he be like his pal Bill Clinton and come to the center for the benefit of the country in his second term?   I have no idea.

If his beliefs are more important to him, then he may be even more aggressive with pushing his agenda through whether republicans and the American people like or not.  He is done after the next four years regardless of what happens and there will be no repercussions for his decisions to his political career.  He doesn't have to worry about being reelected.  Will he decide to push the country even farther to the left than he tried during his first term because of this?  I have no idea.

Certainly I hope the President decides to go with course one rather than course two.  These are historic and somewhat scary times and the decisions made over the next four years could affect the next forty years or more in a very powerful way.  We are still a great country with tremendous minds, resources, and power to solve any problems that we may face.  We need leadership to be able to do that however.   Let's hope we get it as we move forward following this election. 

Sunday, October 28, 2012

Cash Remains the Best Option This Week for Several Reasons

After spending the last week in cash other than a brief dip into HOV for a very, very small loss, I see absolutely no reason to change course entering this week for several reasons.  Technically, the distribution day count remains high and the bulls have done nothing that suggests they are ready to make a move.  Perhaps if they can get the indexes over the nine day EMA I would pay attention, but until that happens, why guess?  Yes, the market is a bit oversold but really not stretched in any meaningful way with the McClellan only at -133.  I would need to see much worse to get interested in playing a potential reflex bounce.

A more important reason for me to stay in cash this week, however, is the situation on the East Coast with "stormaggedon".  I really and truly hope that the meteorologists are blowing this whole thing out of proportion but when I see on Twitter that one of the main personalities on the Weather Channel (Jim Cantore) say that this could possibly be the biggest weather event of his lifetime, you pay attention.  Living in Pittsburgh, I hopefully won't be hit too bad by Sandy but with 2-4 inches of rain possible along with sustained 40-50 mph winds, power outages are certainly a possibility.  I personally don't feel comfortable trading if I can't see charts and don't have access to the internet.  Making sure stops are set and scanning for new stocks will be the least of my concerns if we happen to lose power, especially with a five year old and a three year old. 

In addition, although the electronic market will remain open tomorrow, I would be surprised if volume is not low tomorrow.  This isn't just because the trading floors will be closed - rather I wonder how many traders are going to be going into work along the coast to trade and how active they will actually be, especially in a weak market.  Depending on the outcome of this storm, we may see very low volume all week.  It will likely be similar to holiday trading which is typically volatile and difficult.   If this was a booming bear market, I might be interested.   Since we are smack-dab in the middle of a correction, sitting out is just fine with me.  Just because you will not be physically affected by the storm doesn't mean your trading might not be affected. 

Best of luck to all of those along the coast dealing with this storm and its possible outcomes.  Although I am not looking forward to the massive rains and heavy winds, I feel lucky to not be in New York, Boston, or any of the other coastal cities that will feel the brunt of the storm.  Stay safe. 

Sunday, October 21, 2012

Could Bounce A Bit, But Certainly Defense is Name of the Game For Now

So much for that "push" from the bulls, huh?   Last week I was cautiously bullish because I saw some good signs but any hope that the bulls had was quickly nixed based on Thursday and Friday's awful sessions.  Thursday saw the Nasdaq break below its fifty day moving average on much heavier volume and Friday brought a nasty selloff of over 2% on the heaviest downside volume since May 18th (which likely was an options expiration day anyway).   The Nasdaq is now up to six or seven distribution days in the last twenty sessions depending on what you count as distribution, but either number is very bad and typically leads to further correction.  That looks like what is coming.

Nasdaq

The Russell 2000 looks just slightly better than the Nasdaq but that's like saying Roseanne Barr is slightly more attractive than Rosie O'Donnell.   Both are still very ugly and so are the charts of the two most important indexes in my opinion when looking for furture market strength. 

Russell 2000

The S&P is holding up better than the other two because of relative strength in financials, homebuilders, and some commodity areas (namely coal).   It is still holding the breakout area of 1422 from early September but if that breaks, watch out.

S&P 500

I made a mistake getting away from my shorts early in the week because in hindsight, the breadth numbers I follow never went anywhere near bullish.   In fact, they've been bearish since September 26 and it will take several 1-2% positive sessions on heavier volume for this breadth ratio to push higher.   I didn't end up getting hurt terribly with my few longs but my account is off about 4% from highs in early October.   Right now I am in cash and will likely stay there for perhaps a while.


Looking ahead, I am kind of expecting a bounce early in the week simply because everyone now seems to be fully expecting a correction.  It's hard not to with the action we saw late last week, but the market always likes to screw with traders so a bounce that could set up a bear flag is a good possibility in my mind early this week.  I don't plan on shorting until a bounce comes but don't feel real comfortable about swinging some longs here, so like I said above, cash it likely is.

My main watchlist has been almost wiped out over the past week but there are a few remaining pockets of strength in this market.  Homebuilders remain very strong and were barely hit on Friday all things considered.   This is an area to watch going forward for both strength and weakness.  When they start coming for the last of the leaders, it is a sign that a true, meaningful correction is taking place.

Silver stood out to me as a sector to watch here because I saw several silver names that seemed to be holding up better than the commodity.   Just something to keep an eye on going forward.

Financials also continue to act well overall with BAC being the leader.  If this gets hit...well, another big warning sign going forward.

BAC
Charts from TC2000, Courtesy of Worden Brothers, Inc.

Going forward this week, the market certainly flashed some major warning signs the past and you must respect them.  Although I think we will see a relief bounce attempt early in the week, defense is the name of the game until the market proves it's ready to move higher.  You have to look for several heavier volume up sessions - if they don't come, continue to play defense.   Oh yeah - we still have lots of earnings this week so that can always thrown a wrench into things (see GOOG, Thursday, 12:00 ish).   Good luck - looks like we all need some right now.



Monday, October 15, 2012

Bulls Have a Chance Here But They Have to Push

We finally saw a bounce attempt today that didn't meet immediate selling.  So is this the start of something or just another tease?  It's really too early to tell.  The S&P is holding up well and is clearly the leading index at the current time, something I never like seeing.   That doesn't mean however that the market can't move higher.  

S&P 500

Ideally, I would like to see the Nasdaq and small caps lead the market as that is where the high-beta and high-growth names lie, but they certainly are not leading at this point.  Until the Nasdaq clears the trio of moving averages directly overhead, it is hard to get very bullish on this market.  I am not discounting the possibility of the market rallying, but I need to see some follow-through on today's higher close, something that we haven't seen from the bulls since early September.

Nasdaq

I saw virtually nothing from my scans this weekend so I went into today with very few names on my watchlist.  I currently have two short ETFs with stops set.  If the market rallies further, I will be out of these with some small losses and I am OK with that.  My main breadth signal turned bearish over two weeks ago and has shown no signs of changing, so I have to follow what I see.  

While I don't think we have put a significant top in over the past month or so, we are in a slight correction that could continue for longer than some think, so I am playing it accordingly.   If I do see the market move above the overhead levels mentioned above, I will go back to playing longs only.   That is always my preference, as much more money can be made on the long side and it is much "easier" to play.  I actually added a long position today at the close as a hedge and will be watching the charts below closely over the next few days. 

Housing is very strong and one of the few areas that was on my watchlist today.  Of course, I ignored them and passed on KBH and PHM, but they are worth watching as they seem to be a leading industry right now.

Housing is Strong

I did enter one long today off of its 50 day moving average.  There are some others looking similar.

ANN
URBN

Coal has been strong but ideally I would like to see some more rest in this group.  I saw some steel names too so perhaps commodities/materials will pick up in general.

ACI
SID

Other names I am watching are below.   Again, it all depends on the bulls showing some sort of continued strength tomorrow.  One day does not make a rally, so tomorrow will be important.  Good luck.
PCYC
NSM
SRPT
WTR
All Charts from TC2000, Courtesy of Worden Brothers, Inc.