Trading Plan for Jan 20, 2011

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

Current Short Positions (stop-losses in parentheses): GLD (136.40)

BIAS: 7% Short

Economic Reports Due Out (Times are EST): 

My Observations and What to Expect: Jobless Claims (8:30am), Existing Home Sales (10am), Leading Indicators (10am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am)

• Futures are slightly down heading into the open.
• Asian markets saw heavy selling, well in excess of 1%. European markets are seeing selling in the range of 0.5% to 1.4%.
• Positive earnings reports yesterday from Apple (AAPL) and IBM (IBM) represented a “sell-the-news” event.
• S&P currently sits on the 10-day moving average – did break it on an intraday basis, but held the support level at the close. 
• Evening star formation over the past three days in the market, indicates that we are at the very least, seeing a short-term top being put in place. 
• Volume was above average yesterday, but less than what we saw the day prior. 
• The bulls showed no willingness, or even attempted to buy the sell-off yesterday – another sign pointing to a potential breakdown in this market.
• Despite these bearish observations that are unfolding, there is little in the way of technical damage that has yet to be done to the charts themselves. Even the 10-day MA remains intact. 
• The market will now start showing more sensitivity to bad economic numbers (previously ignored the bad and rallied on the good), so today’s job’s number is very important, and another miss, like last week, could create a repeat of yesterday. 
• On the intraday S&P charts (use 5 min), the upward trend has been broken and a “lower-low has been put in place (price dipped below the 1280 level.
• Three price levels/support levels to keep an eye on today (using the S&P): 1280 which represents the 10-day moving average, 1275 which represents the lower support level of the ascending price channel the S&P has been trading in, and 1271, which represents the 20-day moving average (hasn’t traded below it since 12/1 when this rally started)
• 1261 represents the short-term ‘higher-low’
• The more long-term trend-line dating back to 9/1 currently has support at 1254.
• For the bears – Follow through, Follow through, Follow through – Squash the dead cat!
• For the bulls – Bounce, Bounce, Bounce! Hold the 10-day moving average. 

Here Are The Actions I Will Be Taking:

• Unlikely I will be initiating any new long trades today, unless the market shows an impressive recovery to yesterday’s sell-off.
• Initiating 1-2 short positions is in the cards today, depending on how the market responds to the jobs report and once we dip below the 10-day moving average
• Focus will also be on day-trading intraday price swings. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.