Current Long Positions (stop-losses in parentheses):
Current Short Positions (stop-losses in parentheses): SPY (108.68), DGX (45.95), FCN (35.01),
OMI (27.76), ADBE (29.78), DDS (22.16), BIDU (83.39)
BIAS: 52% Short
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenger Job-Cut Report (7:30am), ADP Employment Report (8:15am), ISM Manufacturing Index (10am), Construction Spending (10am), EIA Petroleum Status Report (10:30am),
My Observations and What to Expect:
- Futures rallying early this morning – up 1%
- Price action has been contained within 1065 and 1040 on the S&P. A break in either direction could spark additional follow-through.
- No major news this morning (as of this posting) is driving the market action.
- Short-term trend line mentioned in yesterday’s plan, could be broken to the upside today. It is around 1058ish.
- Expect volume to continue to weaken as we head into Labor-Day weekend. Previous two trading days have seen extremely weak volume.
- Another price level to watch for the bulls is 1070, I find it difficult to believe they will break through it today.
- Yesterday marked the third failed attempt in five days to break and close below the 1040 level. Major cause for concern, but once the level does break, it will spur on a significant amount of selling thereafter.
- Strong market rallies on the first day of the trading month isn’t all that surprising, historically. It is fairly typical.
- A rally today will work off all of the oversold conditions. Not a bad opportunity to reload the short positions.
Actions I Will Be Taking:
- Good chance I will be stopped out of my position in DDS, resulting in a small loss, since tightening it yesterday.
- I could end up adding as much as 3-4 new short positions to my portfolio this morning. I’ll post everyone of them.
- I will fade intra-day price extremes using TZA and TNA today.
- There should be a lot of good short setups throughout the day to capitalize on.
- I will likely, at some point, hedge the portfolio today, if it doesn’t show any signs of wanting to breakdown.
- I will refrain from fading this morning gap, unless there is considerable weakness that creeps in prior to the open.