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Daily Trading Plan for September 19, 2011

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September 19, 2011 – Comments (0) | RELATED TICKERS: SPY , BSX , PH

 

Current Long Positions: QCOM Oct 60 Calls, SDS ~ Inverse of S&P

Current Short Positions: PH, WWWW, BSX

BIAS: 100% Short (counting SDS as a short position)

Economic Reports Due Out (Times are EST): Housing Market Index (10am)

My Observations and What to Expect:

Futures are significantly down ~ in excess of 1% heading into the open. 

 

Asia was down over -2.5%, and Europe is also trading down on average about -2.5%.

Greece will be in the forefront this week, and the looming possibility that we see an actual default by them. 

Market has rallied impressively over the last five days - the first time it has done such since 7/1. We are now in overbought territory. 

Resistance looms at the underside of the trend-line (now broken) from July '09, which is also in conjunction with where the 50-day MA is at - 1225 on the S&P. 

S&P could be forming a head and shoudlers pattern over the course of the last month. A dip lower from here is a must, and a break below 1155 would confirm the pattern. 

Bearish Flag pattern that is in the works would also be confirmed at 1155 break. 

For the bulls, if they could trade their way back into positive territory today or this week, look to see if they can also break through 1230 - which represents previous highs, and a break of which, would establish a higher-high for them in this market.

Volume was noticeably higher on the S&P Friday, due to quadruple witching/expiration. SPY actually shows a drop off. 

I ultimately believe that we move lower, and will see another drastic move that likely breaks our recent lows from 8/9 in this market.

As always, you need to be on your 'tippe-toes' for possible 'intervention' news to help stymie the Greece situation, particularly with the 2-day Fed Meeting this week too.

Support level that you need to watch today: Rising support off of the 8/9 lows (bear flag support) at 1155, followed by 1120 where there is significant support for the bulls, and then 1101 which is where the 8/9 intraday lows are at. All three of these could ultimately come into play today.

If the market breaks below 1101 on the S&P, then we are almost assured of seeing a test of the major support level at 1040 in the coming weeks.

My Conclusion: Despite being heavily short going into the open today, I am a bit paranoid about the possibility of a major rally off of the lows we are seeing in the market this morning. So I plan on raising some cash as the day progresses. 

Here Are The Actions I'm Taking:

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