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Trading Plan for June 6, 2011

Recs

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June 06, 2011 – Comments (0) | RELATED TICKERS: SPY , URZ

Current Long Positions (stop-losses in parentheses): URZ (2.99)

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

BIAS: 5% Long

Economic Reports Due Out (Times are EST): Bernanke Speaks (3:45pm)

My Observations and What to Expect:

Futures are flat heading into the open.

Asia was down well over 1%, while Europe is trading mixed.

A lot of problems persisting in the markets. In the S&P, we saw price actually break below the descending channel, which is very problematic, particularly once it breaks below 1294. 

At this point, there is a real chance in the coming weeks/months that we could see a break below the 200-day moving average which currently resides at 1248. 

We have declined five straight weeks - the first time that this has happened since the March '09 recovery lows. We are definitely overdue for a bounce, and the possibility of seeing a sixth straight week of declines becomes less likely (which we haven't seen since July '08). 

The S&P continues to hold onto the 1300 price level, despite trading below that level on Friday. These are important psychological support levels for market participants. 

My conclusion: Market bounce seems likely at this point, based on the extent and duration of the declines that we have seen over the last five weeks. The bounce could be a descent 2-3% opportunity to take advantage of. 

Here Are The Actions I Will Be Taking:

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