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Trading Plan for May 9, 2011



May 09, 2011 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): GOOG (529.00), NFLX June 270 Calls, AAPL (343.95), SSO (53.99), AN (33.67), SLV (32.99), NTAP (50.98)

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

BIAS: 42% Long

Economic Reports Due Out (Times are EST): None

My Observations and What to Expect:

Futures are slightly higher heading into the open.


Asia was mixed seeing returns between -0.7% to +0.8%. Europe is trading -0.7% lower on average.

Friday was a disappointment for the bulls - in a major way. We closed at the significant 1340 price level, but gave up 14 points of gains on the S&P - walking away with only 25% of the potential gains on the day.

Greece leaving the EU drove the markets down off of its highs, and will likely play a key role in market sentiment. This causes the Euro to go down against the dollar, and when the dollar spikes, like it has over the last 3 days, equities tend to weaken.

The last two days of trading has revealed that there is support at the 20-day moving average, which currently sits at 1335.

No significant patterns on the 30min S&P chart.

Volume levels dropped back down on Friday in line with the averages from the last 3 weeks of trading.

I am still looking for a similar response to the markets after bouncing off of the 3/16 lows.

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.

Higher-low has been established at 1294. Look for this pullback to establish the next higher-low.

My conclusion: As disappointing as Friday was for the bulls, there has been no significant damage done to the S&P chart as this juncture. As a result, I am still positioning myself for a market bounce.

Here Are The Actions I Will Be Taking.

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