Trading Plan for May 9, 2011
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