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Trading Plan for August 10, 2011

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August 10, 2011 – Comments (0) | RELATED TICKERS: SPY

 

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, Sept 124 Calls

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

BIAS: 8% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Wholesale Trade (10am), EIA Petroleum Status Report (10:30am), Treasury Budget (2pm)

My Observations and What to Expect:

Futures are down about 1% heading into the open.

 

Asian markets were up about 1.5% on average, and Europe is experiencing gains of about 0.9% on average. 

The S&P, in the final hour bounced 70+ points in the final hour of trading in response to theFOMC Statement from yesterday.  

I am still of the thought that we will see a massive short-squeeze from here, and that the one hour of as much yesterday's last hour of trading is not nearly enough of a short squeeze. 

A move back above S&P 1200 would be huge for the bulls psychologically and also wipe out Monday's move as well as last Friday's. 

If this is a dead-cat bounce, then we will a move that takes us somewhere between current price levels and as high as 1250 (just below the March lows). 

We managed to get back inside of the lower bollinger band for the first time in six trading sessions - though just barely. But we are still well outside the lower BB on the weekly chart. 

Yesterday's volume was incredibly high, just a shade lower than the high volume mark from Monday's session. 

S&P bounced off of the highs of last Summer, which is now acting as support. 

1040 on the S&P is the next significant support level for the market - and it is a major one.

My Conclusion: Bulls can't afford to give up any of their gains today - need to press the bears to further cover their short positions like we saw in the final hour yesterday. A sell-off today, would re-invigorate the bears.

Here Are The Actions I'm Taking:

 

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