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Trading Plan for May 24, 2011

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May 24, 2011 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): PEP (70.10), PCLN (502.75), SLV (33.36), NFLX (237.25), GLD (144.73)

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

BIAS: 50% Long

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), New Home Sales (10am)

My Observations and What to Expect:

Futures are slightly higher heading into the open.

Asia was flat overnight, while Europe saw gains range from +0.3% all the up to +0.8%.

We touched nearly perfectly the descending bottom channel line, that can be seen in the daily and intraday-time frames. Should this hold, it would make sense for us to bounce in the coming days and make a move back up to the 1340's.

The day after the previous options expiration week, we had a similar sell-off that marked the end of a previous decline before ripping off 7 out of 8 days where stocks moved higher (from 4/18).

Of note - we broke the trend-line the market had been previously trading on which causes us to flatten out the existing trend-line even more.

The most important price level on the S&P now become 1294, which now represents the previous higher-low. Break it, and things will unravel at the seams. Also a break out of or below the descending channel, would go a long way in changing the character of this market.

Volume was fairly light yesterday

My conclusion: I'm looking for a bounce led by commodities here and believe that today could be the start of one.

Here Are The Actions I Will Be Taking:

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