Trading Plan for March 24, 2011
Current Long Positions (stop-losses in parentheses): None
Current Short Positions (stop-losses in parentheses): SPY (131.35), ALXN (95.61), VAR (66.75)
BIAS: 72% Short
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), New Home Sales (10am), EIA Petroleum Status (10:30am)
My Observations and What to Expect:
Futures are moderately higher heading into the open.
Asian markets were flat, while European Markets were up on average over 1%.
With the early morning strength, we are looking at opening above 1300, and at or above the 50-day moving average on the S&P.
Volume was once again below average, which makes it hard to validate the rally we have seen over the last 5 days.
Yesterday's rally off of the lows was impressive but did little to repair the technical damage on the charts.
S&P resistance barriers to watch today is 1302 (20-day moving average), 1304 (50-day moving average), 1311 (descending trend line).
Tough call whether this market will be heading back up to previous highs, or whether there will be a retracement back to the lows seen last week.
Failure to break above and close above the 20 & 50-day moving averages as well as the 1300 level, would mark a failure for the bulls today.
Bulls have a text book inverted head and shoulders pattern working in their favor on the hourly intraday charts.
S&P also struggling with the 10-week moving average on the weekly charts which was previously a major support level off of the September lows.
Remember we are in a confirmed downtrend. You cannot be as trusting of market dips as being a 'buying opportunity' - instead, as traders you have to reverse course and sell-the-rips.
My conclusion: Hard to get bullish until we see some breakthrough on the technical side, which is why I am much quicker to take profits on trades to the long side.
Here Are The Actions I Will Be Taking: