Trading Plan for September 20, 2011
Current Long Positions: QCOM Oct 60 Calls
Current Short Positions: None
BIAS: > 99% Cash
Economic Reports Due Out (Times are EST): FOMC Meeting Begins, ICSC-Goldman Store Sales (7:45am), Housing Starts (8:30am), Redbook (8:55am)
My Observations and What to Expect:
Futures are up moderately after rallying +20 points off the overnight lows.
Asia was down on average about -0.9%, and Europe is trading about 1.7% higher.
Yesterday marked another Monday rally off of significant lows, and staged an impressive rally to cut them in half by the market close.
On the S&P the 10-day and 20-day moving averages have converged, and yesterday we saw the market test that area, but was unable to drop through it.
Look for some resistance around the 50-day moving average today which will probably be around 1222-1224.
Volume returned to normal volume levels and traded at lower levels that what we've seen in recent weeks.
We are now in overbought territory.
Resistance looms at the underside of the trend-line (now broken) from July '09, which is also in conjunction with where the 50-day MA is at - 1225 on the S&P.
S&P could be forming a head and shoulders pattern over the course of the last month. A dip lower from here is a must, and a break below 1155 would confirm the pattern.
Bearish Flag pattern that is in the works would also be confirmed at 1155 break.
For the bulls, if they could trade their way back into positive territory today or this week, look to see if they can also break through 1230 - which represents previous highs, and a break of which, would establish a higher-high for them in this market.
As always, you need to be on your 'tippe-toes' for possible 'intervention' news to help stymie the Greece situation, particularly with the 2-day Fed Meeting this week too.
Support level that you need to watch today: Rising support off of the 8/9 lows (bear flag support) at 1159, 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: No clear direction ahead of the Fed Statement coming out tomorrow. To much risk to be short going into that speech.
Here Are The Actions I'm Taking: