Trading Plan for July 29, 2011

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, AAPL Sept 420 Calls, SPY Aug 136 Calls

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

BIAS: 8% Long

Economic Reports Due Out (Times are EST): GDP (8:30am), Employment Cost Index (8:30am), Chicago PMI (9:45am) Consumer Sentiment (9:55am), Farm Prices (3pm)

My Observations and What to Expect:

• Futures are down hard after a GDP miss. 
• Asian markets were down about 0.6% and Europe is trading down about 1%. 
• Market sold off late last night on word that the House Speaker’s debt bill would not be voted on. Further selling ensued on the GDP report. 
• We are looking at matching the same extreme sell-off that we saw from 6/1-6/7. 
• Look for a test of the 200-day moving average on the S&P at 1285. A break below the 200-day MA, and we’re heading southward to 1260 for another test. 
• Last time we test the 200-day MA, we held the average and was the basis for a sizable bounce in equities.
• Short-term double-top formation in place on the S&P from late-June to present. 
• Nonetheless, the market is extremely oversold and prime for a bounce here in the coming days. 
• My Conclusion: I’m expecting it to be a pretty nasty day out there – all the reports and news were about as bad as it could get today. But we could we could see this move as the final flush out of this market before making a move back up. Tough to say. 

Here Are The Actions I’m Taking:

• Not likely to make any trades to the long side today unless the market shows a significant bounce off of the day’s lows. 
• Added to my AAPL and QCOM calls. 
• Will continue to look for new long-setups today in the small caps breakouts.
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).

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