Trading Plan for July 9, 2010

Current Long Positions (stop-losses in parentheses): QQQQ (Hedge)

Current Short Positions (stop-losses in parentheses): ESV (42.84), MR (33.39), SPY (109.07), NUS (27.59)

BIAS: Neutral

Economic Reports Due Out (Times are EST): Wholesale Trade (10am)

My Observations and What to Expect:

• Futures are currently flat – no clear bias at this point.
• No significant economic reports due out today either, could make for a quiet session, especially with investors focusing their attention on earnings coming out next week, starting with Alcoa (AA) on Monday.
• The rally we have seen over the past three sessions is on pace to become overextended fairly quickly, having rallied 60 points on the S&P already.
• Can’t see more than 20-30 points of upside left, before we see the resumption of the downward trend.
• Volume continues to weaken in a near-horrific manner. Rally seems to be more about shorts covering their positions rather than buyers really being enthusiastic about this market.
• An Intraday reversal to the downside would be huge for the bears, and would likely make any  hopes of a big rally D.O.A.

Actions I Will Be Taking:

• Will stay in all of my short positions and look to get out of the QQQQ long position if there is no urgency by the bulls to move this market today. But will look to do so, in such a manner as to not expose myself to another market rally unnecessarily. As a result I will wait for a key support level on the intraday charts to be taken out first.
• I also won’t be surprised, if like yesterday, I get out of QQQQ and then have to get back in it again at the close of the session. At this point, it is touch-and-go.
• No change in my stop-losses.
• Will look to add a couple of more short positions to my portfolio as conditions permit, which would likely bring my portfolio to roughly 60-70% short (when not counting my Long QQQQ position).
• Fridays have a tendency to experience some nasty sell-offs so “Buyer-Beware”.