Trading Plan for September 14, 2011
Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, SDS (22.84) ~ Inverse of S&P
Current Short Positions (stop-losses in parentheses): PH (68.25), WWWW (8.32), BSX (6.32)
BIAS: 40% Short
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Producer Price Index (8:30am), Retail Sales (8:30am), Business Inventories (10am), EIA Petroleum Status Report (10:30am)
My Observations and What to Expect:
Futures are up moderately heading into the open.
Asian markets were down about 1%, Europe is rallying on average well over 2%.
S&P's rally appeared sluggish at best but nonetheless did finish nearly 1% higher yesterday. However, it failed to break through the 20-day moving average when tested.
Rumors are swirling this morning and have lifted the markets off of its overnight lows.
Look for a max rally to 1192 before stalling out - Resistance comes from the descending trend-line off of the 7/22 highs.
Bearish flag breakdown occurs at 1152 on the S&P. If we break that level, look for a fresh leg down in this market to occur.
Volume has remained below average over the last two trading sessions.
Best case scenario for the bulls is a rally to the upper band yet again for the bear flag pattern which would be somewhere around 1247 up to 1255.
I still believe that ultimately we move lower, and will see another drastic move that likely breaks our recent lows from 8/9 in this market.
As always, you need to be on your 'tippe-toes' for possible 'intervention' news to help stymie the situation (like what we've seen this entire week).
Support level that you need to watch today: Rising support off of the 8/9 lows (bear flag support) at 1152, 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.
My Conclusion: I think this pre-market pop is short lived, and will work as an opportunity for bears to reload at higher prices.
Here Are The Actions I'm Taking: