Trading Plan for September 14, 2011

Current Long Positions (stop-losses in parentheses): QCOM Oct 60 Calls, SDS (22.84) ~ Inverse of S&P

Current Short Positions (stop-losses in parentheses): PH (68.25), WWWW (8.32), BSX (6.32)

BIAS: 40% Short

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Producer Price Index (8:30am), Retail Sales (8:30am), Business Inventories (10am), EIA Petroleum Status Report (10:30am)

My Observations and What to Expect:

• Futures are up moderately heading into the open.
• Asian markets were down about 1%, Europe is rallying on average well over 2%.
• S&P’s rally  appeared sluggish at best but nonetheless did finish nearly 1% higher yesterday. However, it failed to break through the 20-day moving average when tested. 
• Rumors are swirling this morning and have lifted the markets off of its overnight lows. 
• Look for a max rally to 1192 before stalling out – Resistance comes from the descending trend-line off of the 7/22 highs. 
• Bearish flag breakdown occurs at 1152 on the S&P. If we break that level, look for a fresh leg down in this market to occur. 
• Volume has remained below average over the last two trading sessions. 
• Best case scenario for the bulls is a rally to the upper band yet again for the bear flag pattern which would be somewhere around 1247 up to 1255.
• I still believe that ultimately we move lower, and will see another drastic move that likely breaks our recent lows from 8/9 in this market.
• As always, you need to be on your ‘tippe-toes’ for possible ‘intervention’ news to help stymie the situation (like what we’ve seen this entire week).
• Support level that you need to watch today: Rising support off of the 8/9 lows (bear flag support) at 1152, followed by 1120 where there is significant support for the bulls, and then 1101 which is where the 8/9 intraday lows are at. All three of these could ultimately come into play today.
• If the market breaks below 1101 on the S&P, then we are almost assured of seeing a test of the major support level at 1040 in the coming weeks.
• My Conclusion: I think this pre-market pop is short lived, and will work as an opportunity for bears to reload at higher prices. 

Here Are The Actions I’m Taking:

• Shorted WWWW at $8.21, BSX at $6.26, PH 67.62. 
• Bought SDS in the pre-market today at $23.74.
• Sold small gainers in TNA for 0.8%, covered 1/2 PH for -0.7% loss, and covered 1/2 WWWW for 2% gain. 
• 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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