Trading Plan for April 20, 2011

Current Long Positions (stop-losses in parentheses): HD (37.16), DISCK (35.36), SSO (50.35), BAC (12.03), RAX (41.17), ENZN (10.86), AAPL May 350 Calls

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

BIAS: 50% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Existing Home Sales (10am), EIA Petroleum Status Report (10:30am)

My Observations and What to Expect:

• Futures are up strong, in excess of 1%, heading into the open.
• Asian markets saw gains of over 1.5%. Europe is trading with a whopping +2% in gains across the board. Everything is rallying hard and strong.
• We are poised to open up at 1330 today on the S&P, which is higher than the previous six trading sessions. 
• The key resistance level at 1340 is definitely in play today. We break it, then it becomes very likely we are on our way to new highs. 
• At the open today, we’ll be trading above all the moving averages, which includes the 10, 20, and 50-day. 
• Volume was low despite the nice bounce that we received yesterday.
• The downtrend on the 30 minute chart on the S&P will be break decisively today (downtrend began on 4/8)
• You could make the conclusion, that the downgrade by the S&P on Monday, ultimately led to the sell-off in the dollar, and is helping the markets today (along with the tech earnings of course).
• Doji-Hammer that I spoke of on Monday, has played out perfectly.
• The obvious double-top being formed of late, will be dead if the market closes above 1340 today.
• The longer-term trend of the market suggests the market is in a state of flux/confusion, with steep sell-offs taking place over the past two months, but no long-term downtrend having been established.
• My conclusion: This is a big move, if it holds. Assuming as much, could lead a to game changer for the markets going forward. But we need to break 1340 first.

Here Are The Actions I Will Be Taking:

• Bought ENZN yesterday at $11.07, RAX at $42.01, and Apple May 350 Calls at 4.98.
• Sold SSO at 51.75 for a 1.5% gain. Sold BAC at $12.32 for  nominal gain.
• Torn with my AAPL calls, whether to hold tonight through earnings, or book the gains now. Originally, the trade was for earnings, but I can honestly say that I wasn’t expecting to hold the gains I am currently holding at this point. Very tempted to sell them.
• Depending on how the market performs today, I will be closely watching DISCK, ENZN and RAX to determine whether I should book profits.
• Will look to add an additional 2-3 new positions today on this rally.
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).