Trading Plan for August 31, 2011
Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, SPY Sept 124 Calls, XIV (6.99)
Current Short Positions (stop-losses in parentheses): None
BIAS: 13% Long
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenger Job Cut Report (7:30am), ADP Employment Report (8:15am), Chicago PMI (9:45am), Factory Orders (10am), EIA Petroleum Status Report (10:30am), Farm Prices (3pm)
My Observations and What to Expect:
Futures are 1% higher heading into the open.
Asian markets were on average about 0.7% higher, and Europe saw gains average over 1% as well.
S&P recovered off of the day's lows yesterday, after an initial sell-off on a bad Consumer Confidence report.
The underside of the July '09 trend-line on the S&P continues to act as support. We broke through it yesterday, but end of day selling pushed price back underneath it at the close.
We are however, poised to open up at or above the trend-line. Beyond that, there is no real resistance until the 1250-1260 range.
There is also resistance at the 1252 mark too in the form of a 50-day moving average.
Except for 7/31, the last trading day of the month has typically been bullish (3 out of the last 4).
We are entering overbought territory in the short-term.
Volume improved slightly from Monday's total, but still below average. We could see volume get lighter as we near the Labor Day weekend.
Support now is at 1175 for the market. A break below that level, would send prices likely down to 1120 (again).
Be aware of Fibonacci retracement levels on the S&P: 38.2%=1207, 50%=1233, 61.8%=1260.
My Conclusion: With employment coming out on Friday we could see some whip-saw action, but there is positive news coming out of Germany, that should help to provide some stability today to the market.
Here Are The Actions I'm Taking: