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Good Monday all. We're getting more of the same type of price action already this week that we've been seeing for a good while now. The markets moved lower at the open on weak retail sales suggesting the economy is trying to work its way back to 2008 status. We haven't had three consecutive months of weaker retail sales since we fell off a cliff in '08. However, within an hour, the market reversed course and wiped out the early losses suggesting it was no big deal. Why? Because it's expected right now.

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The major indexes gapped up on the open this morning for no apparent reason other than an attempt to head fake traders into getting long the market or cover up their short positions. The strength didn't last long at all, as the major indexes moved lower and even took out yesterday's low to the downside.

Again, on a very short-term basis, this market absolutely loves to do anything and everything. This is why we reiterated yesterday that a contrarian approach on a short-term basis is the most playable strategy.

This morning was a perfect example. The NASDAQ Composite gapped up roughly 16 points offering investors an opportunity to buy index options and ETF's at higher prices than yesterday's close. Once it had its fill, the indexes reversed course and moved lower. The more prudent strategy would have been to pick up some puts or short the index ETF's on this morning's opening strength and sit tight using your open price as your stop price once the market started moving lower.

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Hope you had a nice weekend. We normally get what's called June gloom here in San Diego where cloud cover rules the weather roost, but we had an amazing run of sun in June here for the first time in years.

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For the last couple of days, we've made it pretty clear the way to play the market right now is to fade the rallies and get short the index ETF's on any short-term strength in the market. We followed our own suggestion and purchased some put options on the SPY's going into the close yesterday after a brief two day market-wide rally. Those same options are up 40% overnight as I type. Although those are excellent returns, it's important to remember options erode with time, so unless you're way in the money and the trade is going extremely well in your direction, it's important not to hang on to an options trade for long, especially in this market when things can change on a dime.

Bottom line here is if you're willing to pick your spots, you can make money in any market environment, you just have to be patient and disciplined about it. You're probably not going to win on every single decision you make, but as long as you're willing to quickly cut a loser like we did on Monday's open, you can live to trade another day and more than make up for one wrong trade in a single day.

Today's move to the downside most definitely doesn't help the bullish argument, that's for sure. I suspect our best case scenario right now for the major indexes would be to trade in some sort of range, but even that hasn't proved itself out yet. Today's sharp leg down is an indication again that we may test the June 4^th low of roughly 2726 on the NASDAQ Composite before it's all said and done. The question now becomes, will we get there in a straight line off today's sharp move lower or will we bounce around before we end up there? Who knows, however, depending on what happens, we'll remain opportunistic not optimistic.

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Thursday was ugly. Friday was better. Yesterday was ugly and today is better. Bottom line? All of the major indexes are lower since Thursday. And, much lower since the April top.