Trading Plan for August 5, 2010

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

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

BIAS: 32% Long

Economic Reports Due Out (Times are EST): Jobless Claims (8:30am), EIA Natural Gas Report (10:30am), Treasury STRIPS (3pm).

My Observations and What to Expect:

• Futures up slightly.
• Jobless claims will set the tone. Employment # tomorrow will really shake things up.
• Bears had 2 great opportunities to push this market much lower this year and failed both times. I don’t see another opportunity like that happening again this year.
• Earnings season is wrapping up and it can be concluded as being a surprising positive for the markets.
• S&P holding the 200-day moving average incredibly well. 1131 on the S&P is in play today as well. We break that, I think we rally big-time.
• With the state of the US economy the way it is, I still believe there is a day of reckoning for the bulls. They just haven’t quite embraced it yet (nor has the bears apparently!).
• I think right now the charts are looking as good as they have all year for buying (can’t believe I am saying that). That isn’t necessarily a sure thing, but I do believe the odds are strongly in the bulls favor right now.
• Not overly worried about the employment number tomorrow. They keep finding ways to not make it look “too-bad” up to this point, why should we expect any different from the Feds.

Actions I Will Be Taking:

• Look to add additional 1-2 positions today. Added Intel (INTC) yesterday.
• Continue seeking out solid long setups.
• Positioning myself for the possibility of an end of year run.
• Whether I fade the gap or not this morning will depend on the reaction to the jobless claims (if there is a gap to fade – right now we are flat).
• Changed the stop-loss in XLF by raising it to 14.02 from 13.90.