12:55pm (EST) 

Trading ranges can be tough, tricky, and frustrating and the events that cause them can take weeks or months to play out.  At times, when you are at the top or bottom of a range then trading can be easy as you buy the rips and sell the dips which is what we have been doing since August by playing the current range.

When trading ranges get stretched at the top, making money becomes even more difficult as part of you as a trader wants to bet on a breakout.  However, what we have learned this year is that it is best to wait instead of pushing the action although you still want to be involved in a little bit of the action.  The key is to play what is working.

The Japan earthquake in March, the Greece debt in June (and now), the government debt-limit crisis in July which led to the S&P downgrade of the U.S. credit rating in August have all caused the bulls a headache and the current trading range feels like a migraine.  But be patient, we will get some clues here shortly on if we are going to get a breakout or another breakdown.

Economic news here at home has been pretty good but Germany is once again swinging a big stick as it said it would consider a postponement of the European Union (EU) Summit as an option.  The bulls have been banking on a positive outcome from the EU Summit which is scheduled for this coming weekend but it could be delayed.  Imagine that. 

As far as the good news, Initial Claims came in at 403,000, which matched forecasts and were lower than last week’s count of 409,000 claims.  Continuing Claims were 3.71 million.  Elsewhere, the Philadelphia Fed Manufacturing Survey came in at a positive 8.7, versus expectations for a print of negative 9.4.  Existing home sales for September were 4.91million units which also matched expectations. 

We do have a Profit Alert for one of our trades as we are closing half of the position today to lock in profits and to take some risk off the table.  We mentioned our portfolio is lightening up and we are waiting patiently for the next “big move” which could happen at any moment given the current volatility.  However, we are also adding a new call option to one of our current trades because shares are showing tremendous strength.

As we head to press, the Dow is down 72 points to 11,432 but is still holding support.  The S&P is getting “stretched” and is off by 8 points to 1,202 but has fallen below 1,200 today.  The Nasdaq is getting punished for 34 points and is at 2,570. 

Subscribers, check the Members Area to lock up half profits and keep your fingers crossed for a good earnings report after the bell from the company we are following.  Also, look for the NEW TRADE we are adding on top of our current position.