However, those considering putting new money to work need to approach the market with caution. We are still in a very volatile phase and this could end up being a huge bear market trap.

Yesterday, credit rating firm Moody’s (MCO) downgraded Portugal’s sovereign debt rating. The market brushed off the news and we ended up with very big gains on the day. The Moody’s ratings downgrade will most likely not be the end of the story. Portugal and possibly Spain will most likely at some point in the near future, spook the markets and send stocks lower again, so traders need to watch for that.

So far, second quarter earnings are encouraging and should this continue, we may get more of a lift that sends stocks higher, so while we would advocate being in the markets right now, we also advocate locking in profits and trading with stops, readjusting these if stocks continue to move higher.

Energy stocks were strong positive movers on the day on the back of a $1.83 rise in the price of oil. Anadarko Petroleum (APC) was up $2.97 to $44.56 and EOG Resources (EOG) added $2.42 to $106.22.

Retail stocks were mixed on the release of June sales numbers from the nation’s major retailers. Teen clothing retailer Abercrombie & Fitch (ANF) added $2.55 to $35.45 and Ross Stores (ROST) was off 41.32 to $54.03

Fertilizer producer CF Industries (CF) is up $3.17 or 5.12% to $65.13. Online retailer Amazon (AMZN) is up $3.33 or 3.07% to $111.94.

Among the losers, Celgene (CELG) is off $2.11 or 3.96% to $51.13. The stock is off the lows of the day however. CELG traded as low as $49.54 in earlier going.

In early afternoon trading, Wynn Resorts (WYNN) is up $0.87 to $86.90 and we are looking for some more upside in the shares. Yesterday, we sent out a buy trade alert to subscribers of our Navivest Options Capitalist service on the Wynn July 90 calls.

We also like commodity related stocks, which while already up on the day, should see some more upside. In the space, we like Freeport McMoRan (FCX), which is only up $1.26 to $64.70.

For the day, the Dow Jones Industrial Average lost 8.23 points to close at 10,442.41, NASDAQ was off 20.71 points to end the session at 2,289.09, while the S&P 500 shed 4.31 points to close at 1,113.20. The sucker’s rally was a stark reminder of the heavy volatility in the markets of late.

Highlighting the massive volatility on the day, Dow component Caterpillar (CAT), which closed on Friday at $65.85 and opened today at $67.56 and then hit a high of $68.35 intraday, only managed a $0.22 gain on the day, to close at $66.07.

Apple (AAPL) opened at $277.75, from last Friday’s close of $274.07, hit a high of $279.01, but ended up losing $3.90, to close at $270.17.

From a technical analysis perspective, the reversal was not at all suprising. Stocks hit a near-term bottom on June 8 and have been on an upward move since then. However, in the past few sessions, the rally was losing steam, with stocks only making half-hearted moves to the upside and the charts were foretelling that it was time to take a breather.

At 2:59, the Dow Jones Industrial Average is up 229.29 points or 2.32% to 10,128.54, which is very close to the day’s high of 10,150.76. Twenty-nine out of the thirty stocks in the index are up, with IBM (IBM) leading the way with a $3.63 gain to $127.53, while Cisco (CSCO) is the laggard, down $0.10 to $22.68.

Today could present some opportunity for some quick intra-day profits on the long side for traders. We are recommending trades for today to subscribers of our services, telling them to buy a few minutes after the open if stocks open strong as suggested pre-market action. We also recommend taking very quick profits as the stock market has taken on a bipolar personality of late. We could open to the upside, but still see some major selling as the day progresses.

Option traders have a chance for even bigger profit opportunities. We should see big moves in select stocks that could mean 20% or more profits in the front month call options of those stocks.

Standard and Poor’s cut its long-term local and foreign currency sovereign issuer credit rating on Portugal from “A+’ from ‘A-’ and cut its rating on Greece to “BB+”, which is considered junk status.

The Dow Jones Industrial Average dropped 213.04 points to close at 10,991.99, a loss of 1.9%, NASDAQ dropped 51.48 points to close at 2,471.47, a loss of 2%, the S&P 500 was off 28.34 points, to close at 1,183.71 or 2.3%, while the Russell 2000 ended the session down 17.59 points or 2.38%, to close at 721.27.

Among Dow stocks, Caterpillar (CAT), which rose from a close of $68.78 on Friday, to a close of $71.65 on Monday on the company’s latest earnings news, gave up all those gains on Tuesday, dropping $3.12 to $68.53. Chevron (CVX) was the next biggest dropper, losing $2.36 to $80.23, followed by United Technologies (UTX) – $74.32 -$2.08 and IBM (IBM) – $128.82 -$1.91.

3M (MMM), which reported better than expected Q1 2010 earnings before the bell, was the only gainer, adding $0.53 to $87.97. The stock was as high as $90.25 earlier in the session. Wal-mart (WMT) was unchanged at $54.04.

In broader trading, Cummins Inc (CMI) was the biggest gainer in the S&P 500, with a gain of $2.09 to close at $72.40, followed by Avery Dennison (AVY), also up by $2.09 to close at $41.39. Every other advancing stock in the S&P 500 rose by less than $1.25.

Washington Post (WPO) was the biggest point decliner, with a drop of $14.76, to close at $517.51, followed by MasterCard (MA) – $254.82 -$10.93, CME Group (CME) – $333.26 -$8.49, Apple (AAPL) – $266.04 -$7.46 and AIG (AIG) $37.37 -$7.14.

The Dow finished the session up 0.75 points to close at 11,205.03; the NASDAQ lost 7.20 points to close at 2,522.95, while the S&P 500 was off by 5.23 points, finishing the session at 1,212.05.

Caterpillar (CAT) was the stand out and kept the Dow in positive territory for the day. The stock rallied $2.87 to $71.65, a 4.17% gain on the company’s 2010 Q1 results, which was released before the markets opened.

For the period, Caterpillar reported a profit of $0.36 per share, a dramatic improvement over the $0.19 loss reported in the year ago first quarter period. Excluding special items, the company reported adjusted profits of $0.50 per share, from $0.39 per share in Q1 2009. Revenue came in at $8.24 billion from $9.23 billion in Q1 2009. Analysts had been looking for the company to report earnings per share of $0.39 on revenue of $8.84 billion.

Among other Dow stocks, 3M (MMM) was up $0.86 to $87.44, IBM (IBM) added $0.74 to $130.73 and Dupont (DD) was up $0.73 to $40.95.

In Broader trading, online movie rental company Netflix (NFLX), rallied $8.44 or 8.46% to close at $108.17 on no news. Last Wednesday, the company reported earnings that sent its stock soaring from $86.98 to $100.25 on Thursday.

Whirlpool (WHR) was another big gainer, climbing $10.20 or 9.98%, to close at $112.42. The company before the bell, reported 2010 Q1 earnings of $2.13 per share, better than the $1.33 per share analysts had been looking for. Revenue came in at $4.27 billion, against forecasts of $3.79 billion.

Tempering the better than expected earnings news, the company reported that it expects operating profits for the 2010 Q2 period of $220 million to $320 million on revenue of $6.1 billion to $6.7 billion against forecasts of $6.43 billion in revenue and $327.8 million in operating profit.

On those forecasts, the company’s stock was sold off in after-hours trading, tradiing as low as $139.50 overnight. Fifteen minutes before the opening bell, the stock has recovered somewhat and is now only down $4.92 to $145.17.

Traders might want to watch the stock and if it continues to improve, go long the shares. That the stock is not down substantially could be a bullish sign and we may actually see it close higher today if the overall market is in bullish mode. If buying the stock, do so only if it is moving off the current lows of $145 and make this a one day trade, exiting the position today.