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Trading Plan for August 24, 2011

August 24, 2011 – Comments (0) | RELATED TICKERS: SPY , GLD

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, SPY Sept 124 Calls, DZZ (3.79), NFLX (202.99)

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

BIAS: 7% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Durable Goods Orders (8:30am), FHFA House Price Index (10am), EIA Petroleum Status Report (10:30am)

My Observations and What to Expect:

Asian markets were down on average about 1.3% off of Moody's Japan downgrade, while Europe traded about 0.5% higher. 

We broke through numerous short-term pricing levels yesterday, but the most important seemed to be the push through of the 10-day moving average at 1161. Though it didn't last time this happened, usually we see at least a 1-2 day pop in equities, which would take us right into Bernanke's Jackson Hole speech on Friday. 

Be aware of Fibonacci retracement levels on the S&P: 38.2%=1207, 50%=1233, 61.8%=1260.

A potential double bottom is in place off of the 1120 lows. A confirmed move could see it move as high as 1280. 

S&P is bouncing off of relatively heavy oversold conditions. 

1120 on the S&P is quickly becoming what 1040 was for the bears last summer - a level that is unable to be broken through. 

Next resistance level to break through is the 1172, and after that it is the 20-day moving average at around 1193.

Gold looks to continue its sell-off after having a reversal type of day yesterday. 

S&P 3 points off of significant closing lows at 1120. Break it and we head for the 1101 market. After that you could see 1040.

My Conclusion: I believe we could see this market rally into Friday's Jackson Hole speech, at that point, all bets are off on how the market reacts. 

Here Are The Actions I'm Taking: