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Trading Plan for July 18, 2011

Recs

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July 18, 2011 – Comments (0) | RELATED TICKERS: SPY , MDF.DL2 , SIFY

 

Current Long Positions (stop-losses in parentheses): SPY August 136 Calls, SCLN (6.09), ABAT (0.94), MDF (4.66), SIFY (5.60)

 

Current Short Positions (stop-losses in parentheses): None

BIAS: 20% Long

Economic Reports Due Out (Times are EST): Treasury International Capital (9am), Housing Market Index (10am)

My Observations and What to Expect:

Futures are about 1% lower.

 

Asia was mixed and flat in trading, but Europe is down over 1% across the board.

Stocks on Friday, managed to rally nicely off of the day's lows, and close near the highs of the day to form a bullish piercing pattern on the previous two candles on the daily S&P chart. 

The 20-day moving average has acted yet again as a support level for the S&P for the second straight day, and with the early morning weakness we are currently experiencing, we are poised to test the 20-day MA again at the open. 

A break of last week's lows and the 20-day moving average could lead the market to test the 200-day moving average in the short-term. 

Last week's lows represent the 50% Fibonacci Retracement on the S&P at 1307 as well. 

Volume was much higher on Friday, mainly due to it being Options Expiration. 

On the weekly chart, the candles formed over the last 3 weeks represented an evening star pattern, which is indeed bearish. 

Market is heavily oversold in the Short-term, which could hamper the ability of the market to see further downside going forward. 

Earnings season will see a wide range of major companies reporting this week, including Apple (AAPL) 

Potential Head and Shoulders pattern forming on the S&P.

My Conclusion: Today's weakness heading into the market will make it difficult for the bulls to do much of anything. Watch to see if we stay below the 20-day moving average in the first hour of trading, if not, there's a good chance that we've established the day's lows.

Here Are The Actions I Will Be Taking:

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