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Trading Plan for May 12, 2011

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May 12, 2011 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): GOOG (533.00), NFLX June 270 Calls, AAPL (343.95), NTAP (52.45), B (24.84), PEP (68.75), APH (55.20), HPQ (40.65), RSH (15.93)

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

BIAS: 82% Long

Economic Reports Due Out (Times are EST): Producer Price Index (8:30am), Retail Sales (8:30am), Jobless Claims (8:30am), Bloomberg Consumer Comfort Index (9:45am), Business Inventories (10am), EIA Natural Gas Report (10:30am)

My Observations and What to Expect:

Futures down strong heading into the open.

Asia was down well over 1% in trading, and Europe is looking at losses in excess of 1.5%.

With the early morning weakness, the market is poised to open below 1340 and 20-day moving average - 2 key support levels.

But more than anything, watch where the S&P finishes at, in relation to the previous higher-low at 1329. A close below that mark, would indicate this market is trying to roll over. 

There is a large amount of news coming out at 8:30am this morning as indicated above that could dramatically worsen or better the futures heading into the open.

By breaking 1340, we confirmed the inverse head and shoulders that had been in development since February '11. Last time we confirmed a IH&S pattern was back in Sept '10 and we rallied 220 points after the confirmation.

My conclusion: Tough call here - I am using the 1329 S&P mark and whether we can hold it going forward, to determine market sentiment and my strategy.

Here Are The Actions I Will Be Taking:

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