Last night I felt the McClellan pic I posted was worth a thousand words. In relation to a trending market, these divergences are spot on. Normally, I'd post a picture with more longer term data to substantiate my claim, but its Friday. Therefore, I'll leave a few tid bits and start my weekend smiling.

I bought into this dip today, and have even held a handful of longs through most of this weakness, with only a small number of puts to offset the losses. Aside from the bullish divergence I posted last night, there are 3 main reasons why the market was going to crush the shorts today, and why this was a great spot to be a buyer.

1: Copper would not go down today.

2: Panic Selling / Forced Liquidation in Crude Oil. Equities don't go to new day lows on this move.

3: Take Your Cues From Goldman, as Goldman leads the way. 

Also, I loved the action in the XLF. Covered my JPM puts near the 200 day MA.

Through my buying efforts, I focused specifically on the materials sector, and have a few tech names I am dying to buy on Monday. The reason I like materials stocks was due to the oversold names in this group, the price action today as stocks like AKS, XRA, and PCX did not go to new day lows as the indices did, and the technical set-ups like you see in PCX. Easy to manage if it don't pan out.

In closing, going back to Goldman's 2010 forecast of a 2004-like range-bound market in stocks, you've gotta be a buyer here. If we do manage to fluctuate up 5% and down 5% over the next few quarters, you've gotta buy low and sell high.

I'll be back this weekend to provide you, the reader, my shopping list for next week.

Have a good weekend,

OA