Trading Plan for August 15, 2011
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): Empire State Manufacturing Survey (8:30am), Treasury International Capital (9am), Housing Market Index (10am)
My Observations and What to Expect:
Futures are higher heading into the market open.
Asian markets saw gains range from 1.2% up to 3.3%. While Europe is experiencing gains around 0.7% right now.
Watch the 10-day moving average on the S&P today at 1187. If it can break and hold that pattern, it should be able to see a sizable bounce in the next 1-2 days as well.
The market on Friday, rallied for the first time in back-to-back sessions since 7/21-22. Yet we are very well-extended to the downside still.
Volume was noticeably lower on Friday, and lower each of the past four trading sessions. An indication that volatility may be decreasing some what.
We managed on Friday to close above 1172 which was very important for the markets, as it broke us out of a 4-day consolidation range on the S&P.
A break below 1120 on the S&P would indicate a new leg down in this nasty downturn that we've experienced.
If this is only a dead cat bounce, we'll likely see this market only move somewhere between 1220 and 1260 before facing renewed selling pressures.
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.
My Conclusion: Continue to ride this market as high as you can. Once the bears become reinvigorated - that is your sign to exit the long positions quickly.
Here Are The Actions I'm Taking: