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Trading Plan for August 12, 2011

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August 12, 2011 – Comments (0) | RELATED TICKERS: SPY

 

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, Sept 124 & 136 Calls

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

BIAS: 8% Long

Economic Reports Due Out (Times are EST): Retail Sales (8:30am), Consumer Sentiment (9:55am), Business Inventories (10am)

My Observations and What to Expect:

Futures are slightly higher heading into the open, reversing the 1% in losses in overnight trading. 

 

Asian markets traded mixed/flat, and Europe is trading about 2% higher on average. 

Another day of trading nearly identical to what we saw on Tuesday, when the markets surged. 

More importantly though, was, despite yesterday's late 14 point sell-off at the close, we still managed to close above Wednesday's highs, which is technically significant, if even just by a smidgen. 

Volume was lower for the second straight day. But still significantly higher than the average. 

Very bullish to not see any problematic news events out of Europe overnight.

If this is a dead-cat bounce on the way to lower prices, targets for this bounce on the S&P include, current prices, 1208, 1228, 1255, or 1300

Max pain scenario for the bulls and bears would be a run to new recovery highs (though we are no where near this) - bears would lose their profits, and many bulls would be stopped out and miss out on the rally due to the huge sell-off that we've had. 

1120 on the S&P has acted as support for a 4th straight day. That is the main support level keeping the bears from extending this market into another leg-down.

A break today of 1100 on the S&P will likely send us down toward 1040.

My Conclusion: Market should continue rallying for at least another 1-2 days. Should we hit 1250 at some point, I'll become very nervous holding my current set of long positions. 

 

Here Are The Actions I'm Taking:

 

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