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Trading Plan for March 2, 2011

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March 02, 2011 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): CPWR (10.90), TICC (11.90), NFLX (199.75), PFE (18.89) 

Current Short Positions (stop-losses in parentheses)None

BIAS: 26% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenger Job-Cut Report (7:30am), ADP Employment Report (8:15am), Bernanke Speaks (10am), EIA Petroleum Status Report (10:30am), Beige Book (2pm)

My Observations and What to Expect:

Futures are flat ahead of today's market open. 

Asian markets saw losses of as much as 2.4% and European markets are seeing declines between 0.5% and 0.7%.

S&P Reversed course yesterday after opening higher, only to close below the 10, 20 day moving averages and previous trend-line off of the 9/1 lows. 

A break of S&P 1294 (last week's lows) would put in a lower-low in the markets, and confirm a downtrend being in place. Then the next major support level becomes the 50-day moving average at 1292.

Volume was solid but less than Monday's showing. 

Market is trading specifically to the strength/weakness in oil. Rising oil prices will continue to hamper the markets going forward. 

Yesterday snapped the 6 month winning streak of strong gains on the first of the month. 

For the bears - Push the markets below 1294 and confirm the downtrend.

For the bulls - Recover from yesterday's losses and ultimately break its highs. 

My conclusion: With all the uninvited players doing what they can to prop the market up on a daily basis (i.e. Fed/POMO), it is hard to get excited about any downturn in the markets, because ultimately they provide a bid underneath it from dropping too far. Which is why we are constantly seeing "V" shaped bounces.

Here Are The Actions I Will Be Taking:

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