Trading Plan for June 16, 2011
Current Long Positions (stop-losses in parentheses): AGYS (7.60), CALP (7.28)
Current Short Positions (stop-losses in parentheses): None
BIAS: 10% Long
Economic Reports Due Out (Times are EST): Housing Starts (8:30am), Jobless Claims (8:30am), Current Account (8:30am), Bloomberg Consumer Comfort Index (9:45am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am)
My Observations and What to Expect:
Futures are flat heading into the open after a few beats on the economic front.
Asia was down on average 1.6% and Europe trading down over 1%.
Weakness in the Euro, and the debt crisis in Greece continues to weigh heavily on the market.
We now have the 200-day moving average in our sights at 1256 (S&P). It's paramount for the bulls and broader markets to hold that MA and not break below the key moving average.
Huge bearish engulfing candle pattern over the last two days that wiped out all of Tuesday's gains.
Volume for the first time in a couple of weeks showed a noticable uptick in volume.
In the short-term, the market needs to rebound and reclaim the 1290 level going forward.
If the bulls can break the 200-day MA, the next price level would come in at 1249, which is the Japanese crisis lows from March. A break there, and we'd likely see a move below 1200 on the S&P.
Morning Start candle pattern we spoke of yesterday was essentially nullified after the sell-off yesterday.
Nasdaq broke below and closed below the 200-day moving average - a bad sign for the broader markets.
We have options expiration this week, which also adds a little bit of trickery to the week in general.
We have seen the first 6-straight weeks of selling since July '08 which at that time lasted only six weeks as well. I still wouldn't be surprised if we finished positive on the week.
My conclusion: Still do for a sustained bounce - perhaps something that lasts a couple of weeks - enough to provide bulls optimism and discourage the bears.
Here Are The Actions I Will Be Taking: