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Trading Plan for August 1, 2011

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August 01, 2011 – Comments (0) | RELATED TICKERS: SPY , DECK , AAPL

 

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, SPY Aug 136 Calls, DECK Sept 105

Current Short Positions (stop-losses in parentheses): None

BIAS: 10% Long

Economic Reports Due Out (Times are EST): ISM Manufacturing Index (10am), Consturction Spending (10am)

My Observations and What to Expect:

Futures are up over 1% after Congress/President reached a deal on the debt ceiling crisis. 

 

Asian markets were up over 1%, while Europe is trading up between 0.5 and 1.4%

Friday's market action perfectly tested the 200-day moving average on the S&P, and then bounced nicely as a result. 

With today's strength, look for the market to try and recapture the 50-day moving average at 1308.

House votes on the debt ceiling package at 11am ET. Expect a nice pop on the likeli passage, and a nasty sell-off if it doesn't. Same goes for the Senate vote. 

Also looming is the potential downgrade from one of the rating agencies even with passage of the debt ceiling legislation. I, personally, don't think it will happen if the legislation goes through. But you should be aware of this. 

Some overhead resistance will be seend around 1304-5. Which used to be a stong price suport level. 

Volume has noiticably picked up over the last 5 trading sessions. 

Market is extremely oversold at these levels, and should see a sizable bounce, if nothing falls through with Congress, that could last 2-4 days of solid strength. 

A break below the 200-day MA, and we're heading southward to 1260 for another test.

Short-term double-top formation in place on the S&P from late-June to present.

My Conclusion: Oversold conditions with a news catalyst that we are getting, I believe, leads to a sizable bounce for this week. 

Here Are The Actions I'm Taking:

 

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