Trading Plan for February 1, 2011

Current Long Positions (stop-losses in parentheses): QID (10.44)

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

BIAS: 7% Short (counts QID as a short)

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), ISM Manufacturing Index (10am), Construction Spending (10am)

My Observations and What to Expect:

• Futures are moderately higher prior to the open.
• Asian markets were slightly up. European markets are seeing gains of about 1% on average.
• Based on the morning futures and what we saw yesterday, the bulls are responding well to the sell-off we saw on Friday, and are making another attempt at 1300 – possibly even today. 
• Very strong probability that this morning gap-up that we are looking at is filled by the close. 
• S&P recaptured the 20-day moving average and is poised to open above the 10-day moving average again today.
• Held the September trend-line yesterday, and dip buyers managed to prop back up the market yesterday afternoon when the bears applied some selling pressure. 
• Closing above 1300 is the all-important goal right now for the bulls. 
• Before we get to 1300, it is my personal belief that we’ll see the bears come in strong and pounce on the bounce in the last two days. 
• Major trend-line support for the market rests at 1274, which also coincides nicely with a “higher-low” on the existing trend.
• 1300 on the S&P still represents major resistance in the short-term, as the market never closed above this important psychological price level.
• Should we break below the September trend-line as mentioned above, the 50-day moving average will become the next logical support level, currently at 1250.
• There are a lot of similarities to what happened on Friday, and what happened back in April, when the market was topping out as well. Action going forward has a high probability of being very volatile and choppy.
• For the bears – Keep the bulls from closing above 1300 and sell the morning strength to fill the gap. 
• For the bulls – Rally and close above the highs from Friday, and obviously 1300 in the process.

Here Are The Actions I Will Be Taking:

• QID was added yet again to the portfolio at $10.90 yesterday. 
• Very difficult to gauge where this market goes in the short term and as a result will stay light in my trading and focus more on very short-term trades that only last 1-2 days. 
• Closed out ZBRA and SSO yesterday on the morning bounce. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.