Trading Plan for August 10, 2010

Current Long Positions (stop-losses in parentheses): XLF (14.02), V (68.99), INTC (19.75), ENZN (10.15), QQQQ (44.79)

Current Short Positions (stop-losses in parentheses): None

BIAS: 65% Long

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Productivity and Costs (8:30am), Redbook (8:55am), Wholesale Trade (10am), FOMC Meeting Announcement (2:15pm)

My Observations and What to Expect:

• Futures down moderately.
• I do not like trading days like today when the Fed is scheduled to release their statement. It is very difficult to trade at all and creates utter market havoc.
• Of late, reaction to the FOMC statement has usually been positive – not always, but the majority of the time.
• Don’t try to play the Fed announcement. Whipsaw action can knock you out of your trade even if you are ultimately right.
• Productivity & Costs at 8:30 will impact market some, but the real test will come at 2:15.
• Volume will likely be light and trade range-bound prior to today’s announcement.
• Futures down 5-8 points looks very fade-able at the open.
• Unable to break through 1131 level yesterday, was disappointing for the bulls. Now they hope the Fed can boost them up through it today.
• Bears could make a BIG statement if they push this market down hard and fast today.
• Watch to see whether the bulls hold the 200-day moving average on the S&P.

Actions I Will Be Taking:

• Stop-Losses remain as it.
• Continue to watch the morning fade setup.
• Won’t trade/scalp at all today, particularly ahead of the FOMC statement.
• Will look for swing-trade opportunities for new positions in the portfolio later this week.
• No reason right now to be shorting stocks – that can always change though.
• Keep focused on long-setups for now.