Daily Trading Plan for September 19, 2011

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

Current Short Positions: PH, WWWW, BSX

BIAS: 100% Short (counting SDS as a short position)

Economic Reports Due Out (Times are EST): Housing Market Index (10am)

My Observations and What to Expect:

• Futures are significantly down ~ in excess of 1% heading into the open. 
• Asia was down over -2.5%, and Europe is also trading down on average about -2.5%.
• Greece will be in the forefront this week, and the looming possibility that we see an actual default by them. 
• Market has rallied impressively over the last five days – the first time it has done such since 7/1. 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 shoudlers 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.
• Volume was noticeably higher on the S&P Friday, due to quadruple witching/expiration. SPY actually shows a drop off. 
• I ultimately believe that 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 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 1155, 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: Despite being heavily short going into the open today, I am a bit paranoid about the possibility of a major rally off of the lows we are seeing in the market this morning. So I plan on raising some cash as the day progresses. 

Here Are The Actions I’m Taking:

• Still holding all my shorts from last week. 
• Added to my positions throughout last week in BSX, SDS, PH and WWWW. 
• Will look to cut some of my positions today, to stay nimble ahead of the Fed meeting on Wednesday. 
• Will look to day-trade as well to the short side today. 
• 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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