Trading Plan for May 18, 2011
Current Long Positions (stop-losses in parentheses): PEP (70.10), STZ (22.20), EP (17.84), EXPE (24.74), FTR (8.57)
Current Short Positions (stop-losses in parentheses): None
BIAS: 50% Long
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), EIA Petroleum Status Report (10:30am), FOMC Minutes (2pm)
My Observations and What to Expect:
Futures are flat heading into the open.
Asia saw gains ranging from 0.5% up to 1%; Europe is trading up on average of 0.5%.
Commodities are showing noticeable strength heading into the open, with silver leading the way (up over 3%).
To continue confusing both the bulls and bears, the market managed to recover into the close and finish right on 1329.
On an intraday basis, the market dipped below the long-term trend-line (off of 9/10 lows) and the 50-day moving average. At the end of the day it managed to recover, close above those levels and form a nice bullish hammer candle.
S&P is at an inflection point - after today, we should have a much better idea of whether we are moving higher in the short-to-intermediate time frame or lower. The closing price is really what matters to me here.
S&P shows us trading in a well-defined downward channel on the 30-minute chart. We are currently trading at the bottom end of that range, and setting up nicely for a bounce over the next few days.
3 additional support levels to watch on the S&P: 1323 - 50-day moving average, 1325 - long-term trend-line, 1294 - another major long-term support level.
My conclusion: Yesterdays recovery off of the lows, and bounce into the close, leads me to believe we are prime for a dead-cat bounce at the very least.
Here Are The Actions I Will Be Taking: