Trading Plan for September 9, 2011
Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls
Current Short Positions (stop-losses in parentheses): BKU (23.65), VIP (10.68), OZM (10.31), SDS (22.90)
BIAS: 30% Short
Economic Reports Due Out (Times are EST): Wholesale Trade (10am)
My Observations and What to Expect:
Futures are slightly negative heading into the open.
Asian markets were down about 0.3%, while European markets are down about 0.7%.
Bulls were unable to hold the follow through in the early morning yesterday, and instead sold off into the close.
Yesterday's selling also pushed the S&P back below the 10-day moving average and shows the potential for a resumption of further selling, just like we saw after 9/1 when the market couldn't push any higher.
Look for short-term support today (bottom channel of the bearish flag) to occur at 1142. If we break that level, we are then officially starting the next wave down.
Ultimate goal for the bulls today must be to break through yesterday's highs at 1204 and close above them.
Morning star formation recently formed/completed on 9/7 still in play (bullish).
The underside of the rising trend-line that started back on July '09 has been creating some resistance for the market over the past few weeks. Today it is at 1220.
S&P is trading in a well defined channel off of the 8/9 lows as well. However, it leads me to believe it is more of a bearish flag pattern than anything else - a break below 1140 would confirm the pattern and likely start the next leg down.
The rally could take us back up as high as 1240's before seeing the downward trend resume itself.
My Conclusion: I believe the market is facing headwinds going into today, and that we may very sell see a "sell-the-news" even off of th Obama speech from last night.
Here Are The Actions I'm Taking: