I highly believe in having a large play book while having no game plan.  The market doesn’t give a shit what your game plan is, so don’t come to play with a bias.  In war, the game plan goes out the door the second you step onto the field of battle.  Conditions change, capabilities are lost, assets swing around in ways you didn’t expect, etc.  I often comment that I’ll take a certain trade above or below a price.  This is me looking through my play book and highlighting my favorite plays given the current environment.  But conditions change in the market from day to day, hell from minute to minute, and we must flip to a different part of the book when that happens in order to compete.

Ok, enough with that metaphorical crap.  Look, I had a bunch of gold and agriculture stocks on my radar going into today, the market isn’t allowing me to get long there right now.  I’m not a knife catcher, I’m anything but, I play momentum and trend.  Materials gave it up hard today as the $USDX bounced.  The gold miners $GDX ended down 4.2% with the larger materials sector ETF $XME giving up greater than 3%.  The US Dollar now stands at a very important level, on the precipice of breaking its downtrend and hopping above some major moving averages.

As you can clearly see, the $USDX made a run today pushing up against the upper trend line and strong horizontal resistance.  It failed to take those important levels in the afternoon, which held the market from getting completely demolished.  Each time we have seen this pattern since June the dollar has caved.  Is this the time it breaks through?  I’m not in the business of placing bets, I’m a trader.  I’m going to sit tight here as the dollar gasps for air.  If I wanted to be very aggressive I would put on a whole bunch of material longs tomorrow on the open with tight stops, but frankly that isn’t my cup of tea.  If the dollar fails tomorrow, sit back and relax, then look for a rebound.  If the second run at these levels doesn’t break through, look for a lower high to be put in place, and when it begins to fail for the second time, smash it by getting long the material and energy names.

I’ve got a few names in the play book if that patterns plays out.  $DE, $EGO, $RIG.  I still also like $BX from the long side if the financials can get their stuff together.

So what does the play book look like if the $USDX really starts to run?  I am stalking a short entry in $X, it just keeps banging away at that head and shoulders neckline.  If it breaks 40 we could see some major damage done in that name.

The regional banks look ready to roll over here regardless of what the dollar does.  I am stalking short positions in $ZION, $BBT, and the regional bank ETF $KRE which has put in a large symmetrical triangle as show on the chart.  The resolution of this pattern will say a lot about where the market is going over the next 4 months or so.  We would normally say that these types of patterns are resolved in the direction of the primary trend.  Problem is, the primary trend is not quite evident here.  The $XLF most likely saw a bottom back in March turning the primary trend positive.  We could still see a large giveback of the gains since then, but overall, those lows aren’t likely to be violated.  I am not so convinced in the regional banks as the moving averages aren’t quite as bullish here off the March bottom.  If the market rolls over this is where you really want to be positioned short for some mass destruction.

I took a long position in Aruba Networks $ARUN as it broke resistance at 9.50.  I like the longer term trend here and the long consolidation pattern it has put in here since July.  It is currently battling with a flat 100 week moving average which is about to be crossed from the bottom by the 20 week, a bullish signal.  $ARUN also has not given up the same ground as many of the other mobile internet stocks over the past few weeks.

Stopped out on two long positions today, $APWR and $PCX.

Headed out to the Ranger game, failed at bribing the immigration officer to revoke Redden’s work visa and strand him in Canada, so he will be in the lineup tonight sucking per his usual game plan which consists of playing like a pussy.