Trading Plan for June 13, 2011
Current Long Positions (stop-losses in parentheses): COOL (3.76), ONTY (6.56)
Current Short Positions (stop-losses in parentheses): None
BIAS: 10% Long
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are up slightly heading towards the open.
Asia was mixed ranging between -0.7% and +0.4%. Europe was up on average about 0.2%
The market continues to break down, closing in on the S&P price support at the 1250 (3/16 lows) level and the 200-day MA at 1253.
While the S&P still remains slightly positive on the year, the Nasdaq is actually trading negative on the year.
By most standards and indicators, we are as oversold as we were back in mid-March, which was also a pretty heavy sell-off too.
We have options expiration this week, which also adds a little bit of trickery to the week in general.
Building heavy short-biased portfolios at this juncture in the market downturn is high-risk, and subjects you to a strong possibility of a short-squeeze.
We have seen the first 6-straight weeks of selling since July '08 which at that time lasted only six weeks as well. The probability of further decline in the absence of a major news event, is less than likely.
To date, the bears have shown no willingness to cover their short positions, which could make the bounce a very nasty one.
My conclusion: Even in the worst of markets, there exists weekly rallies, and I think we get one this week. The selling that the market has seen over the last six weeks is unsustainable.
Here Are The Actions I Will Be Taking: