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Trading Plan for Jan 26, 2011



January 26, 2011 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): QID (10.49), SDS (22.29)

Current Short Positions (stop-losses in parentheses)EXPD (55.26), DKS (35.79)

BIAS: 28% Short (counting QID and SDS as shorts)

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), New Home Sales (10am), EIA Petroleum Status Report (10:30am), FOMC Meeting Announcement (2:15pm)

My Observations and What to Expect:

Futures are up moderately heading into the open. 

Asian market returns range from -0.6% to 1.2% and European markets are trading with strength in excess of 1%

The FOMC Statement to be released this afternoon, will dictate the ultimate direction of the market. 

There has been a lot of sell-the-news reactions of late, especially when it comes to earnings. Watch the Fed Statement to see if there is a similar reaction. 

The S&P broke below the 10-day moving average and lower band of the narrow, rising price channel on an intraday basis, but rallied in the final hour to reclaim those important price levels. 

Dip buyers continue to provide incredible support to this market, where even the most solid of sell-offs get bought up in afternoon trading. 

Volume was average yesterday. 

Watch the highs on the S&P today, as a break of those highs would put the bear argument to rest in the short term. 

We are poised to break the short-term intra-day price resistance on the S&P at 1291. 

From a candle pattern perspective, the S&P and Nasdaq are putting in, what looks like, a bear flag pattern. 

Nasdaq continues to look much weaker than the S&P and is running into resistance still at the 10-day moving average.

In order for this market to see a correction at this point, the bears need to break the 20-day moving average on the S&P.

Evening star formation from 1/17-1/19 should indicate at least a short-term top is in place in this market.

1261 represents the short-term 'higher-low' on the daily charts.

For the bears - Simple - push the market lower, erase the early morning gains, and keep dip buyers from erasing the day's losses.

For the bulls - Break to new highs, and in particular 1300 on the S&P. 

Here Are The Actions I Will Be Taking:

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