Trading Plan for December 15, 2011



Economic Reports Due out (Times are EST): Jobless Claims (8:30am), Producer Price Index (8:30am), Empire State Manufacturing Survey (8:30am), Current Account (8:30am), Treasury International Capital (9am), Industrial Productions (9:15am), Bloomberg Consumer Comfort Index (9:45am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am)

Premarket Update:

• Futures are up strong – about 1%.
• Asian markets were down 1.6%
• Europe is currently trading higher at a clip of 1.5% on average.

Technical Outlook (S&P):

• The S&P marched lower on a third consecutive day and is now short-term oversold. 
• The 1218 support level mentioned yesterday was broken, leaving 1183 the next level to be tested, and a much stronger one at that. 
• Volume was on par with what we saw on Tuesday – average.
• The S&P managed to close below the 20-day and 50-day moving average despite bouncing off of them the day prior. 
• VIX was higher yesterday, but still seems to be lagging in strength despite overall market weakness. 
• Nice Double bottom on the S&P 5min chart.
• Trend-line off of the 7/7 highs, just above the 200-day MA on the S&P, continues to act as resistance to price as well.
• Note the larger downward channel that we are in as noted below.

My Opinions:

• This was just the kind of sell-off hat I was looking for. I believe it will be difficult to break through 1183, and don’t believe that we’ll break it right away (if we do at all). 
• But like we are seeing in the pre-market, a bounce is due, and will use a bounce to get short yet again in this market. 
• The sell-off that we are seeing is by no means ‘panicky’ – but very orderly. That is favorable towards the bulls in that there doesn’t seem to be a lot of fear in this market despite the selling taking place. 
• The only way I could bring myself to adjust my bearish outlook on this market is if we break above the aforementioned trend-line. Then the entire outlook would be different for the market.

My Portfolio:

• 100% Cash
• Make one day-trade in TZA for 2%
• Closed my swing-trades in UltraShort Crude Oil (SCO) at $40.69 for 5.6%
• Closed my swing trades in UltraPro Short S&P 500 (SPXU) at 14.71 for a 2.2% gain and another at 14.80 for a 5.6% gain. 
• Covered Weight Watchers (WTW) at 57.16 for a 1.4% gain. 

The Chart: