Trading Plan for August 29, 2011
Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, SPY Sept 124 Calls, IR (31.32)
Current Short Positions (stop-losses in parentheses): None
BIAS: 7% Long
Economic Reports Due Out (Times are EST): Personal Income and Outlays (8:30am), Pending Home Sales Index (10am)
My Observations and What to Expect:
Futures are trading about 1% higher heading into the open.
Asian markets were up between 0.4% and 1.4%, while Europe is trading as high as 1.8%.
Last 3 significant gap-ups in the market have all given up their gains. It's hard to put a lot of faith in gap-ups these days.
We are poised to open above the S&P 20-day moving average - key is whether we close above it. The last 2 sessions, the MA has acted as significant resistance.
Today's early morning strength, allows for a potential test of the highs from Thursday at 1190. A break there, puts us in line to test the intraday highs from 8/17 (1208), which also coincides with the 38.2% Fibonacci retracement level.
Volume over the last 5 trading sessions have been average - nothing significant.
We closed on Friday on the S&P just a shade above 1175 at 1176.80, which puts us above some short-term support.
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.
My Conclusion: I believe that, despite being in a significant bearish market, we will continue to see this market bounce in short term and expect to see this market rally over the course of the next 1-2 weeks.
Here Are The Actions I'm Taking: