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Trading Plan for July 28, 2011

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July 28, 2011 – Comments (0) | RELATED TICKERS: AAPL , QCOM , SPY

 

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, SPY Aug 136 Calls

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

BIAS: 6% Long

Economic Reports Due Out (Times are EST): Jobless Claims (8:30am), Bloomberg Consumer Comfort Index (9:45am), Pending Home Sales Index (10am), EIA Nautral Gas Report (10:30am)

My Observations and What to Expect:

Futures are flat heading into the open. 

 

Asian markets on average are down more than 1%, as is European markets. 

Huge sell-off yesterday on large volume, creating a lot of technical damage on the charts. 

S&P Ripped through the 10,20, and 50-day moving averages with ease, as well as the short-term, rising trend-line from 6/23.

There is a lot of support between 1295 and 1305 for the market to find support and bounce on the S&P. 

Below 1295, and we have a 'lower-low' in place on the market, which would likely lead to a retest of June's lows around 1260 on the S&P. 

Yesterday's large move didn't come on the heals of a significant rally top, instead it came after the market had already seen a sizable drop on the week, and when you get a sell-off of yesterday's size, after already previous selling, it isn't uncommon to see a bounce within 1-2 days. 

S&P and other indices (more noticeably the Nasdaq), are forming inverse head and shoulders patterns dating back to May '11. A break below 1295, would nullify this pattern. 

My Conclusion: Could be that yesterday's sell-off was enough to get politicians to figure out how a way to settle the debt ceiling issue. Overall, the move yesterday had an extreme feeling to it, and if the market is going to bounce, it'll have to do it here. 

Here Are The Actions I'm Taking:

 

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