Trading Plan for Feb 24, 2011
Current Long Positions (stop-losses in parentheses): None
Current Short Positions (stop-losses in parentheses): None
BIAS: 100% Cash
Economic Reports Due Out (Times are EST): Durable Goods Orders (8:30am), Jobless Claims (8:30am), FHFA House Price Index (10am), New Home Sales (10am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am)
My Observations and What to Expect:
Futures are moderately down heading into the open.
Asian markets were mainly down in excess of 1% (China was up 0.6%), while European markets traded moderately lower.
Yesterday marked the first follow through to the downside these markets have seen since November!
The long-term trend-line dating back to 9/1 yesterday was broken, which dramatically changes the scope of this market.
Volume was strong yet again yesterday.
A new "lower-low" would come from a break of the 1/28 lows at 1275. If we break that level, we are in a confirmed downtrend.
S&P 1300 level will continue to provide some support in the near-term as buyers provided support at that level yesterday. Next support level after that is the 50-day moving average at 1286.
The market could see a dead cat bounce in the very near future, allowing for a quick profit opportunity to the upside.
For the bears - Continue to push the markets lower, and in particular, close below the 1300 price level today.
For the bulls - Look to see whether the dip-buyers are going to come in here soon to repair some of the technical damage being done to the charts - for starters, push price back above yesterday's highs.
My conclusion: Momentum is in the bears' corner right now, but with any sell-off there are a myriad of dead-cat bounces along the way. From the short side, I would start locking up gains, and look for better entries going forward.
Here Are The Actions I Will Be Taking: