Trading Plan for Jan 24, 2011
Current Long Positions (stop-losses in parentheses): QID (10.49), GLD (128.65), SDS (22.29)
Current Short Positions (stop-losses in parentheses): PII (75.36), T (28.74)
BIAS: 21% Short (counting QID and SDS as shorts)
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are flat to slightly negative heading into the open.
Asian and European markets are trading in a mixed fashion.
A large plate of earnings will be served up this week that includes MCD, MMM, CAT, JNJ, MSFT.
Two doji candles (hammer and shooting star) epitomize indecision in the markets over the last two days.
S&P is still maintaining short-term support levels such as the 10-day moving average and the lower band of the narrow rising channel that price has been trading within.
Nasdaq, is showing a lot more weakness, having broken its long-term trend-line dating back to August, on 1/20, and is even trading below the 20-day moving average.
Volume continue to increase, and remain above average.
Breaking the 20-day moving average on the S&P is the #1 goal for the bears at this point, as doing so, would likely invite further selling.
A move to new highs in the market would effectively end, for now, any hopes the bears had of pushing this market lower, and instead would see more price expansion.
Evening star formation from 1/17-1/19 should indicate a short-term top in place in this market.
On the intraday S&P charts (use 30min), the upward trend has been broken and a "lower-low" has been put in place - there is a clear downward trend on these charts, the lower high was established at 1290. If the market is to continue within this newly established intraday price channel, a move at least into the mid-to-low 1260's is a must.
1261 represents the short-term 'higher-low' on the daily charts.
For the bears - Push the S&P below the 10 day moving average and outside of the narrow rising price channel.
For the bulls - Recover after losing Friday's gains, and push price back closer to the 1300 level and new highs.
Here Are The Actions I Will Be Taking: