Trading Plan for August 15, 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): Empire State Manufacturing Survey (8:30am), Treasury International Capital (9am), Housing Market Index (10am)

My Observations and What to Expect:

• Futures are higher heading into the market open. 
• Asian markets saw gains range from 1.2% up to 3.3%. While Europe is experiencing gains around 0.7% right now. 
• Watch the 10-day moving average on the S&P today at 1187. If it can break and hold that pattern, it should be able to see a sizable bounce in the next 1-2 days as well. 
• The market on Friday, rallied for the first time in back-to-back sessions since 7/21-22. Yet we are very well-extended to the downside still. 
• Volume was noticeably lower on Friday, and lower each of the past four trading sessions. An indication that volatility may be decreasing some what. 
• We managed on Friday to close above 1172 which was very important for the markets, as it broke us out of a 4-day consolidation range on the S&P. 
• A break below 1120 on the S&P would indicate a new leg down in this nasty downturn that we’ve experienced. 
• If this is only a dead cat bounce, we’ll likely  see this market only move somewhere between 1220 and 1260 before facing renewed selling pressures. 
• 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.
• My Conclusion: Continue to ride this market as high as you can. Once the bears become reinvigorated – that is your sign to exit the long positions quickly. 

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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