Trading Plan for September 15, 2011

by Ryan Mallory

Current Long Positions: QCOM Oct 60 Calls, SDS ~ Inverse of S&P

Current Short Positions: PH, WWWW, BSX

BIAS: 40% Short

Economic Reports Due Out (Times are EST): Consumer Price Index (8:30am), Empire State Manufacturing Survey (8:30am), Jobless Claims (8:30am), Current Account (8:30am), Industrial Production (9:15am), Bloomberg Consumer Comfort Index (9:45am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am)

My Observations and What to Expect:

• Futures are just slightly up. 
• Asian markets were up over 1% on average, and Europe is trading over 2% on average. 
• Market rallied nicely up to and against the steep upper-line of the downward channel. That means we are at an inflection point heading into the open. A close above 1187 today will be significant. 
• The next resistance level after the aforementioned, would be 1230, where the previous rally stalled out at. 
• If we sell-off today, watch for rising support on the bear flag at 1154. If it closes below that level, then you will likely see a new leg down in this market. 
• Yesterday's close is still showing that the market 'rips' are being sold, and that there is a very low level of trust. These rallies that we are seeing has more to do with short covering than they do with actual buying. 
• Volume was in line, but slightly higher, to what we've seen over the past few days. 
• S&P managed to break through and close above the 10 and 20-day moving average. 
• Best case scenario for the bulls is a rally to the upper band yet again for the bear flag pattern which this time 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 1154, 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: Not sure how high this rally goes, but ultimately I think it is going to get sold off.  There seems to be some false optimism over the situation in Greece. 

Here Are The Actions I'm Taking:

• Still holding my shorts from Tuesday. 
• No new positions to speak of. 
• Will look to add further to short positions once the market shows a bit of weakness. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else's).

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