Trading Plan for Jan 24, 2011

Current Long Positions (stop-losses in parentheses): QID (10.49), GLD (128.65), SDS (22.29)

Current Short Positions (stop-losses in parentheses): PII (75.36), T (28.74)

BIAS: 21% Short (counting QID and SDS as shorts)

Economic Reports Due Out (Times are EST): None

My Observations and What to Expect:

• Futures are flat to slightly negative heading into the open. 
• Asian and European markets are trading in a mixed fashion. 
• A large plate of earnings will be served up this week that includes MCD, MMM, CAT, JNJ, MSFT.
• Two doji candles (hammer and shooting star) epitomize indecision in the markets over the last two days. 
• S&P is still maintaining short-term support levels such as the 10-day moving average and the lower band of the narrow rising channel that price has been trading within. 
• Nasdaq, is showing a lot more weakness, having broken its long-term trend-line dating back to August, on 1/20, and is even trading below the 20-day moving average. 
• Volume continue to increase, and remain above average.
• Breaking the 20-day moving average on the S&P is the #1 goal for the bears at this point, as doing so, would likely invite further selling. 
• A move to new highs in the market would effectively end, for now, any hopes the bears had of pushing this market lower, and instead would see more price expansion.
• Evening star formation from 1/17-1/19 should indicate a short-term top in place in this market.
• On the intraday S&P charts (use 30min), the upward trend has been broken and a “lower-low” has been put in place – there is a clear downward trend on these charts, the lower high was established at 1290. If the market is to continue within this newly established intraday price channel, a move at least into the mid-to-low 1260’s is a must. 
• 1261 represents the short-term ‘higher-low’ on the daily charts.
• For the bears – Push the S&P below the 10 day moving average and outside of the narrow rising price channel. 
• For the bulls – Recover after losing Friday’s gains, and push price back closer to the 1300 level and new highs. 

Here Are The Actions I Will Be Taking:

• I won’t rule out adding additional shorts to the portfolio today, but the market conditions would have to be very favorable right now. 
• I don’t like to hold ultra ETF’s of any sort for too long, and as a result will look to close my positions in QID and SDS today or tomorrow. 
• Added 2 new long positions to the portfolio on Friday – GLD at $130.90 and SDS at $22.55
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.