Trading Plan for August 9, 2011

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

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

BIAS: 8% Long

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

My Observations and What to Expect:

• Futures are higher – about 1%
• Asian markets were down between -1.6% and -5.7%, while Europe was a mixed bag of goods trading as high as 0.2% and as low as -1.9%. 
• S&P has declined 10 out of the last 11 trading sessions for a loss of -16.7%. 
• For a legitimate bounce in this market, I am looking for the kind of rallies that we saw back in Oct. ’08 where we saw 100+ moves on the S&P. The extent of the current sell-off and short duration in which it did it in, warrants a significant short-squeeze rally. 
• Yesterday’s volume was equal to the volume we got out of the May 2010 Flash Crash, which is incredible. 
• Market essentially closed at last summer’s highs, or better defined as the neckline of last summer’s inverse head and shoulders’ neckline. At the moment it is serving as support. 
• Yesterday was also the first day ever that the S&P had all 500 stocks close in the red. HISTORIC.
• No major resistance levels overhead for the bulls at the moment. 
• 1040 on the S&P is the next significant support level for the market – and it is a major one. 
• Large volume spikes like what we saw on Friday, often mark a change of market direction. Check out 6/24, 3/16, and 11/30
• We remain well outside the lower bollinger, for the fifth consecutive day. We are also 80 points outside of the weekly bollinger-band which is even more of a rarity.
• My Conclusion: Skeptical of today’s bounce based on the last 2 gap-up days that we’ve seen. However, we do have a FOMC Statement coming out at 2:15pm ET, and I can’t imagine they’ll say the same old thing. Expect something significant to be said. 

Here Are The Actions I’m Taking:

• I plan on standing on the sidelines in the early going today, until the market shows it doesn’t plan on filling this morning’s gap-up at the open. 
• FOMC Meeting will add an additional amount of volatility to today’s market. 
• Will look to unload a number of my options positions this week should the market 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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