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Trading Plan for August 5, 2011

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August 05, 2011 – Comments (0) | RELATED TICKERS: SPY , CAT

 

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

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

BIAS: 10% Long

Economic Reports Due Out (Times are EST): Employment (8:30am), Consumer Credit (3pm)

My Observations and What to Expect:

Futures are moderately higher. 

 

Asian markets were down between -3.1% and -4.3%, and Europe is down between -0.6% and -2.3%.

Yesterday was one of the worst days for the US markets in years...literally. With the S&P down 60 points. 

Support levels in this meltdown the markets have experienced over the last two weeks have been utterly useless as price continues to cut right through them. 

The head and shoulders pattern on the S&P that has been talked about for some time, and was confirmed on Tuesday, has shed 71 points since confirmation occurred. 

On H&S patterns, the length of the down turn is measured by taking the difference of the peak of the right shoulder and the neckline, and that is your target for a bottom. In this case, we are looking at aroughly 80-85 points of down side, so we are near the bottom in that regard.

S&P is currently sitting on support from a trend-line that began in July '09. Break it, and the next support level is the November '10 support level. 

We remain well outside the lower bollinger, for the third consecutive day. Typically this leads to strong bounces to the upside. 

Volume continues to creep higher, NYSE had its biggest trading day of the year yesterday. 

Hammer Candle from Wednesday, turned out to be a huge head-fake for bulls. 

My Conclusion: It seems like an eternity now, but nonetheless, the market is due for a bounce, that should be very significant - particularly with the positive employment report. We are just about as oversold as we can be and well outside the lower bollinger band. 

Here Are The Actions I'm Taking:

 

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