Trading Plan for July 21, 2010

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

Current Short Positions (stop-losses in parentheses): ESV (42.84), WTFC (37.71), SLAB (44.80), CERN (82.08), ALB (43.59), HIBB (26.65),  WRC (40.95), QQQQ (45.83), SCHN (44.33), NSIT (14.79)

BIAS: 106% Short

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), EIA Petroleum Status Report (10:30am), Bernanke Speaks (2pm)

My Observations and What to Expect:

• No significant/market mover news pieces scheduled for today.
  
• Today will mainly be about market’s response to Apple’s (AAPL) blowout earnings.
  
• Other companies reporting this morning include: Coca-Cola (KO), United Technologies (UTX), Morgan Stanley (MS), Wells Fargo (WFC), Altria (MO), AMR (AMR), BlackRock (BLK), EMC (EMC), Airgas (ARG), Genzyme (GENZ), Textron (TXT), USBancorp (USB), Stanley Black and Decker (SWT), Abbott Labs (ABT) and Manpower (MAN). eBay (EBAY), Starbucks (SBUX), Baidu (BIDU), Xilinx (XLNX)
  
• Despite the rally yesterday no technical damage has been done to the bear argument that this market still goes lower from here.
  
• Still below the 50 and 200 day moving averages. No new highs have been made yet.
  
• Volume increased from previous day but still below the average and below Friday’s sell-off.
• A close above 1,100 on the S&P (futures) would be cause for alarm for bears – there would be a higher-high and higher low formed on the charts.
  
• Current trend-line on S&P breaks above 1093 (futures)
• Overall the market not up nearly as much as I thought it would be due to Apple earnings. Eerily similar to the Intel (INTC) earnings reaction.
  

Actions I Will Be Taking:

• Yesterday’s rally has put me back in capital preservation mode
• I don’t want to abandon my short positions at all, but I can’t let another rally put a licking on me like it did yesterday. Will use a Ultra 3x as necessary.
• I don’t expect to be adding any new short positions to the portfolio today.