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Trading Plan for August 9, 2011

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August 09, 2011 – Comments (0) | RELATED TICKERS: SPY

 

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: 8% Long

Economic Reports Due Out (Times are EST): NFIB SMall Business Optimism Index (7:30am), ICSC-Goldman Store Sales (7:45am), Productivity and Costs (8:30am), Redbook (8:55am), FOMC Meeting Announcement (2:15pm)

My Observations and What to Expect:

Futures are higher - about 1%

 

Asian markets were down between -1.6% and -5.7%, while Europe was a mixed bag of goods trading as high as 0.2% and as low as -1.9%. 

S&P has declined 10 out of the last 11 trading sessions for a loss of -16.7%. 

For a legitimate bounce in this market, I am looking for the kind of rallies that we saw back in Oct. '08 where we saw 100+ moves on the S&P. The extent of the current sell-off and short duration in which it did it in, warrants a significant short-squeeze rally. 

Yesterday's volume was equal to the volume we got out of the May 2010 Flash Crash, which is incredible. 

Market essentially closed at last summer's highs, or better defined as the neckline of last summer's inverse head and shoulders' neckline. At the moment it is serving as support. 

Yesterday was also the first day ever that the S&P had all 500 stocks close in the red. HISTORIC.

No major resistance levels overhead for the bulls at the moment. 

1040 on the S&P is the next significant support level for the market - and it is a major one. 

Large volume spikes like what we saw on Friday, often mark a change of market direction. Check out 6/24, 3/16, and 11/30

We remain well outside the lower bollinger, for the fifth consecutive day. We are also 80 points outside of the weekly bollinger-band which is even more of a rarity.

My Conclusion: Skeptical of today's bounce based on the last 2 gap-up days that we've seen. However, we do have a FOMC Statement coming out at 2:15pm ET, and I can't imagine they'll say the same old thing. Expect something significant to be said. 

Here Are The Actions I'm Taking:

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