Trading Plan for August 12, 2011

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, Sept 124 & 136 Calls

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

BIAS: 8% Long

Economic Reports Due Out (Times are EST): Retail Sales (8:30am), Consumer Sentiment (9:55am), Business Inventories (10am)

My Observations and What to Expect:

• Futures are slightly higher heading into the open, reversing the 1% in losses in overnight trading. 
• Asian markets traded mixed/flat, and Europe is trading about 2% higher on average. 
• Another day of trading nearly identical to what we saw on Tuesday, when the markets surged. 
• More importantly though, was, despite yesterday’s late 14 point sell-off at the close, we still managed to close above Wednesday’s highs, which is technically significant, if even just by a smidgen. 
• Volume was lower for the second straight day. But still significantly higher than the average. 
• Very bullish to not see any problematic news events out of Europe overnight.
• If this is a dead-cat bounce on the way to lower prices, targets for this bounce on the S&P include, current prices, 1208, 1228, 1255, or 1300
• Max pain scenario for the bulls and bears would be a run to new recovery highs (though we are no where near this) – bears would lose their profits, and many bulls would be stopped out and miss out on the rally due to the huge sell-off that we’ve had. 
• 1120 on the S&P has acted as support for a 4th straight day. That is the main support level keeping the bears from extending this market into another leg-down.
• A break today of 1100 on the S&P will likely send us down toward 1040.
• My Conclusion: Market should continue rallying for at least another 1-2 days. Should we hit 1250 at some point, I’ll become very nervous holding my current set of long positions. 

Here Are The Actions I’m Taking:

• I’ll be targeting stocks that are fundamentally strong but have pulled back significantly in the last two weeks and reside at support. 
• Will look to unload a number of my options positions this week should the market continue to spike higher.
• 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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