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Trading Plan for June 9, 2011

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June 09, 2011 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): MGI (3.59), MHLD (9.18), SONE (7.25), SPY July 132 Calls

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

BIAS: 16% Long

Economic Reports Due Out (Times are EST): International Trade (8:30am), Jobless Claims (8:30am), Bloomberg Consumer Comfort Index (9:45am), Wholesale Trade (10am), EIA Natural Gas Report (10:30am)

My Observations and What to Expect:

Futures are up moderately, despite a miss yet again on the jobless claims. 

Asia was flat, and Europe is showing a small amount of strength. 

I can only find one time in the last 10 years where we declined for more than 6 consecutive days (Oct. '08), and that was in the middle of a financial meltdown. 

Prior to yesterday, the last time we sold off six consecutive days was February '09. 

To put it mildly, a bounce is in the cards for today, and would be shocked if we don't get it. 

To date, the bears have shown no willingness to cover their short positions, which could make the bounce a very nasty one. 

The S&P has some mild support at 1275 off of the 1/28 lows.

Yesterday saw a strong uptick in volume despite being range-bound for most of the day. 

Ideal objective for bulls on any bounce is to reclaim 1294 on the S&P. 

1250 is definitely in the sights of bears, but I don't think it happens until this market bounces. Markets don't move straight down with no reprieve.

We are only 22 points away from trading in the negative on the year.

We haven't had six straight weeks of declines since July '08. In order for that not to come to fruition, we'll have to see a bounce between today and tomorrow that takes us back above 1300.

My conclusion: Near-term bounce in the markets is imminent, bears are too hot and heavy and will likely see a massive squeeze to flush them out before resuming the downward trend.

Here Are The Actions I Will Be Taking:

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