Trading Plan for Jan 18, 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): Empire State Manufacturing Survey (8:30am), Treasury International Capital (9am), Housing Market Index (10am)
My Observations and What to Expect:
Futures are mixed, with the Nasdaq down over 15 points due to Steve Jobs going on medical leave.
Asian markets were flat, while European markets show strength in excess of 1%.
Steve Jobs going on medical leave, and Apple (AAPL) reporting after the bell, will be the focus of traders today.
Apple will act as a major drag on Nasdaq today and technology stocks in general.
A lot of reasons to believe the market will see some selling pressures in the days ahead. Particularly the overhead resistance in terms of price channels and bollinger bands that typify a pullback scenario - see my post from yesterday.
With that said, it appears that risk is increasing by a large amount at this juncture while reward looks greatly limited at this point.
A pullback to 1270 would be ideal (lower, short-term price channel), to help the market relieve some of the overhead pressures that it is currently facing.
There should be some support at 1278 on the S&P.
A strong move out of the upper price band, could see the S&P push higher up to 1310.
But expect some resistance at 1300 - a lot of talk about the market reaching that milestone, and now that it has, we could see a flood of profit takers hit the wires.
1261 represents the short-term 'higher-low'
Volume was slightly stronger on Friday then previous sessions. An increase today from Friday, on market strength would further encourage the bulls.
The more long-term trend-line dating back to 9/1 currently has support at 1247.
For the bears - Use the overbought nature of this market and the weakness created by AAPL today, to pounce on the bulls.
For the bulls - Breakout of the short-term price band overhead, and make a move for 1300, and close above the critical milestone.
Here Are The Actions I Will Be Taking: