Trading Plan for May 20, 2011

by Ryan Mallory

Current Long Positions (stop-losses in parentheses): PEP (70.10), STZ (22.20), FTR (8.57), CB (64.32), PCLN (502.75), KCI (57.69)

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

BIAS: 50% Long

Economic Reports Due Out (Times are EST): None

My Observations and What to Expect:

• Futures are slightly lower heading into the open.
• Asia was flat during their trading sessions and Europe had a slight negative bias.
• Of importance is the fact that the S&P continued to maintain support on the long-term trend-line, as well as above the 10-day moving average. However, it was unable to close above the 20-day MA.
• It is extremely important that the S&P doesn't get bogged down inside the descending price channel - defined below and most noticeable on the 30-min chart. A move above 1349 would dramatically increase the bullish outlook on this market. 
• Last two days have represented a slight dip in volume.
• Watch-out for a break of yesterday's lows which would also represent a break of the long-term trend-line dating back to September '10.
• 3 support levels to watch on the S&P: 1324 - 50-day moving average, 1327 - long-term trend-line, 1294 - another major long-term support level.
• My conclusion: I'm still looking for a move to 1349-50 in this market. If we break it - I'll become much more aggressive in my trading.

Here Are The Actions I Will Be Taking:

• Closed out BMS at $33.27 for a 0.2% loss and closed STZ at $22.27 for a 2.1% loss.
• Added KCI at $58.97. 
• No changes to the stop-losses.
• Will look to add 1-2 new positions this morning - will probably sell an equal amount if we cannot close above 1349 by the close.
• I will start tightening the duration of the trades that I make - I'll look for most of my trades to last 1-2 days at the most, should the recent market weakness persist. .
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else's).