Trading Plan for March 21, 2011

Current Short Positions (stop-losses in parentheses): SPY (131.35)

BIAS: 30% Short

Economic Reports Due Out (Times are EST): Existing Home Sales (10am)

My Observations and What to Expect:

• Futures are up strong – in excess of 1%.
• Japan rose another 2.8% while Hang Seng was up 1.7%. China was flat on the day. European markets are rallying between 1.2% and 2.1%.
• Friday’s market was troublesome for the bulls as it managed to give back most of the day’s gains after gapping up strong. 
• Bearish engulfing pattern was formed with the intraday sell-off from the day’s highs that we saw. Volume was strong, mainly due to options expiration. 
• Nasdaq is bear-flagging nicely just below the 100-day moving average. 
• New downtrend is in place, and as a result, rallies should be viewed skeptically, and with the idea that they are opportunities to reload on short positions. 
• 20 & 50-day moving average are next to each other around 1302, and will provide a strong layer of resistance for the S&P to move through. 
• Trades, whether long or short, should be held for a much shorter period of time. Market volatility can quickly erase gains. 
• My conclusion: Like Friday’s rally, I believe today’s strength will be short lived, and ultimately the bears will re-emerge to take this market lower. 

Here Are The Actions I Will Be Taking:

• Sold EWJ for a quick 3.3% gain and CHK for a +5% gain. 
• Added more to my SPY position at $128.42
• Will look to add more to my short position on additional market strength in the A.M.
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.