Trading Plan for September 12, 2011
Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, SDS (22.90) ~ Inverse of S&P
Current Short Positions (stop-losses in parentheses): BKU (23.65), VIP (10.68), OZM (10.31), BSX (6.25)
BIAS: 40% Short (counting SDS as a true short position)
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are taking a beating - down over 2% heading into the open.
Asian markets were down an average of -3%, and Europe is currently trading down about -3.5%
The biggest development out of today's action is that the bear flag that had been talked about on the S&P for some time now, is going to be be confirmed with a breakdown out of the pattern.
As a result, this would lead me to believe that further downside action will occur in the very near-term.
At this juncture, there is very little reason to be going long on any stock.
The likelihood of a Greek default has grown exponentially, and will continue to weigh heavily on world markets. More defaults are likely too.
As always, you need to be on your 'tippe-toes' for possible 'intervention' news to help stymie the situation. Though a part of me believes that if that were to happen, we would have already seen it by now.
Support level that you need to watch today: Rising support off of the 8/9 lows (bear flag support) at 1144, which we are almost assured of breaking below at the open, followed by 1120 where there is significant support for the bulls, and then 1101 which is where the 8/9 intraday lows are at. All three of these could ultimately come into play today.
If the market breaks below 1101 on the S&P, then we are almost assured of seeing a test of the major support level at 1040 in the coming weeks.
Friday's action sent the market back below the 20-day moving average on the S&P.
Volume was much higher on Friday, the highest so far this month.
My Conclusion: Assuming that nothing significant comes out of Europe today to the contrary, we are in for a very bearish day, and any intraday rips should be sold.
Here Are The Actions I'm Taking: