Gap Open

Looks like we are set for a gap open following strength in overseas markets and in anticipation of another rate cut. A few of these markets are rallying off the capitulation type bottoms I was hoping would play out here. I'm going to play it safe and look for good points to take the rest of my gains on my opens shorts. I will also be mostly flipping the small positions I have been slowly accumulating and look to remount as they fill the gap. I plan to wait to see how things act first hour and what ranges are formed, before I make any material moves. The gap open looks to be mostly short covering thus far and there will be questions of whether the gap will hold.

Of particular interest today will be the Steel Sector. SCHN and X both reported good earnings but so have other stocks in the sector over the past couple weeks. I want to see how they act off lowered guidance. AKS just last week reported strong earnings, was up huge premarket, and then sold off sharply throughout the day and has been pounded ever since. If stocks like SCHN and X are able to hold their gains I will see this as a bullish signal and begin accumulating shares in the secor. My favorites are STLD, SID, and NUE because they have seen accumulation bars on up days and low volume on down days. On a fundamental basis I believe STLD and NUE are best suited to profit in an economic slowdown.

Let's see how stocks act the first hour...