Trading Plan for Jan 19, 2010

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

Current Short Positions (stop-losses in parentheses): GLD (136.40)

BIAS: 7% Short

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), ICSC-Goldman Store Sales (7:45am), Housing Starts (8:30am)

My Observations and What to Expect:

• Futures are mixed heading into the open. 
• Asian markets showed a respectable amount of strength in trading, while Europe is trading just below break-even.
• Apple (AAPL) earnings were announced yesterday after the close, and were well received by the market - now the markets must decide whether they rally on those earnings, or if it is a "sell-the-news" event.
• IBM (IBM) also reported solid earnings and is trading a few percentage points above their closing price.
• Ideally, one would think that a good earnings report from AAPL and IBM would be enough to rally the markets, particularly the Nasdaq, but instead, the market is acting very indifferent to the news, which could be a precursor to a good earnings season already being priced in.  
• S&P continues to trade up against the the upper channel line in the short term. If it holds, there is little opportunity for price appreciation.  
• S&P also continues to trade outside of the upper Bollinger Band, which is difficult for any major market index to sustain. 
• For 33 straight days the S&P has closed above the 10-day moving average, one of the more impressive streaks in market history. 
• Volume was strong, and much higher in recent days. 
• Market breadth continues to trend in a negative manner despite the market trending higher. 
• Other divergences are showing up, for example the RSI indicator that continues to trend lower and making a series of lower-highs and lower lows, despite the positive trend in the market. 
• With that said, the market can continue to trend positively much longer and further than one would expect, and can stay irrational for for far longer than one can stay solvent betting against the market. 
• A strong move out of the upper price band, could see the S&P push higher up to 1310. But for now 1300 is on the minds of all traders. 
• But expect some resistance at 1300 - a lot of talk about the market reaching that milestone, and now that it has, we could see a flood of profit takers hit the wires.
• 1261 represents the short-term 'higher-low'
• The more long-term trend-line dating back to 9/1 currently has support at 1250.
• For the bears - Push the market below the prior days lows, and avoid the late day buying rally that continues to occur.
• For the bulls - Break 1300, and close above it. 

Here Are The Actions I Will Be Taking:

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