Trading Plan for March 21, 2011
Current Long Positions (stop-losses in parentheses): None
Current Short Positions (stop-losses in parentheses): SPY (131.35)
BIAS: 30% Short
Economic Reports Due Out (Times are EST): Existing Home Sales (10am)
My Observations and What to Expect:
Futures are up strong - in excess of 1%.
Japan rose another 2.8% while Hang Seng was up 1.7%. China was flat on the day. European markets are rallying between 1.2% and 2.1%.
Friday's market was troublesome for the bulls as it managed to give back most of the day's gains after gapping up strong.
Bearish engulfing pattern was formed with the intraday sell-off from the day's highs that we saw. Volume was strong, mainly due to options expiration.
Nasdaq is bear-flagging nicely just below the 100-day moving average.
New downtrend is in place, and as a result, rallies should be viewed skeptically, and with the idea that they are opportunities to reload on short positions.
20 & 50-day moving average are next to each other around 1302, and will provide a strong layer of resistance for the S&P to move through.
Trades, whether long or short, should be held for a much shorter period of time. Market volatility can quickly erase gains.
My conclusion: Like Friday's rally, I believe today's strength will be short lived, and ultimately the bears will re-emerge to take this market lower.
Here Are The Actions I Will Be Taking: