Trading Plan for Feb 10, 2011

Current Long Positions (stop-losses in parentheses): QID (9.99), TWM (11.39)

Current Short Positions (stop-losses in parentheses): LSI (6.53), GLD (133.67), SNDK (50.20)

BIAS: 28% Short (counts QID & TWM as a short)

Economic Reports Due Out (Times are EST): Jobless Claims (8:30am), Wholesale Trade (10am), EIA Natural Gas Report (10:30am), Treasury Budget (2pm)

My Observations and What to Expect:

• Futures are seeing a moderate amount of selling heading into the market open. 
• Asian markets were mixed with Hang Seng down 2% and Shangai composite up 1.6%. European markets were down ranging from -0.5 to -1%.
• Despite the selling that we saw intraday yesterday, the market in the final hour managed to wipe most of those losses in the final hour of trading, with the Dow finishing barely in the green for the eighth straight day.
• No POMO scheduled today – new schedule will be released by the Fed today at 2pm. 
• Cisco (CSCO) reported earnings that was met with a large amount of selling after hours, and is weighing on the overall markets today. 
• If the early morning selling persists, we could see another test of the 10-day moving average today, which currently sits at 1305. Watch for possible dip-buying at this level. 
• Volume was slightly  higher then what we saw the previous three days. If today finishes down (big “IF” with these dip buyers), I will be curious to see how much volume backed up the selling. 
• S&P is a shade inside the bollinger bands after yesterday’s close, but still well overextended.
• The intraday trendline using 30-min candles that started on 1/28 was broken yesterday. See my post from yesterday for more details. 
• Three support levels to watch on the S&P (as of Wednesday’s Close): 1305 (10-day MA), 1296 (20-day MA) and 1290 (Rising trend line off 9/1 lows). Break of all three of these including at the close, results in a very bearish shift in sentiment.
• For the bears – Build on yesterday’s market losses (albeit small ones), push the markets below the 10-day moving average, and avoid allowing the dip-buyers to prop the market back up. 
• For the bulls – Buy the dip to keep the market from running away, similar to what it did back on 1/28. 
• My conclusion: No doubt I believe this sell-off is warranted, and do think that we could see additional follow-through, which is something that hasn’t been done since early November. 

Here Are The Actions I Will Be Taking:

• Stopped out of my short position in SNDK at $50.20 for a 0.8% loss. 
• Will not likely add any new short swing-trade positions to the portfolio this morning – instead will resolve only to day-trade the market. Will wait for some technical barriers to break first before adding additional short positions. 
• May consider closing out my short position in GLD depending on how much weakness it shows today. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.