Daily Trading Plan for December 14, 2011

Economic Reports Due out (Times are EST): MBA Purchase Applications (7am), Import and Export Prices (8:30am), EIA Petroleum Status Report (10:30am)

Premarket Update:

• Futures are slightly lower heading into the open.
• Asian markets were down about -0.5% in trading. 
• Europe is currently trading lower at an excess of -1%

Technical Outlook (S&P):

• The S&P gave up all of its gains on the day (more than 1% worth) and finished decisively in the red for the day, due to the reaction of the Fed’s FOMC statement yesterday.
• The S&P gave us the follow through that we were looking for from the market on Monday’s sell-off. 
• We saw price action drop below the 20-day and 50-day moving average intraday, but finish a shade above them to close out the day. 
• A fairly decent amount of price support exists at 1219, which is where we bounced at yesterday. If we break this level today, the next level is 1218, which comes from a trend-line formed off of the lows formed on 10/4.
• Volume was noticeably higher than in previous days. 
• The S&P has come off of its overbought short-term conditions. 
• For two straight days the VIX has been down despite the market also being down. Typically the VIX would be noticeably up on such days.
• The 200-day moving average continues to act as a problem for the S&P at 1262, watch for whether price can close above this level.
• The bull-flag on the 30-minute chart that we spoke of yesterday was broken with the afternoon sell-off. 
• Trend-line off of the 7/7 highs, just above the 200-day MA on the S&P, continues to act as resistance to price as well.
• Note the larger downward channel that we are in as noted below.

My Opinions:

• Yesterday’s intraday reversal as significant as it was, tends to usher in some psychological damage and pessimism for the bulls. 
• I expect stocks to continue to weaken going forward, with the continued failure at the 200-day and what we saw the last two days, the bulls are lacking conviction. 
• 5 min, 30 min, and daily chart on the S&P looks bearish, and expect continued selling going forward. 
• The only way I could bring myself to adjust my bearish outlook on this market is if we break above the aforementioned trend-line. Then the entire outlook would be different for the market.

My Portfolio:

• 50% Short
• Did not make any day-trades at all yesterday. 
• Added to my existing UltraShort Crude Oil (SCO) at 39.38 yesterday on strength in oil for a full position, and also added to UltraPro Short S&P 500 (SPXU) at the close.
• Established a new position in Weight Watchers (WTW) at 57.96.
• Added ProShares UltraShort Crude Oil (SCO) and UltraPro Short S&P 500 (SPXU) at the close.

The Chart: