Trading Plan for March 4, 2011

Current Long Positions (stop-losses in parentheses): CPWR (10.90), TICC (11.90), NFLX (199.75), PFE (18.89), PGH (12.65), SCO (43.99)

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

BIAS: 28% Long

Economic Reports Due Out (Times are EST): Employment Situation (8:30am), Factory Orders (10am), Treasury Strips (3pm)

My Observations and What to Expect:

• Futures are flat ahead of the open. 
• Asian markets were all up in excess of 1%, while European markets saw moderate gains as well. 
• Yesterday’s market rally was huge for the bulls, and formed a short-term double bottom in the markets and wiped away all of the losses from Tuesday. 
• Momentum suggests this market is more likely to breakout to new highs (above 1344 on the S&P) than it is to break recent lows (1294). 
• Yesterday epitomized why it is so difficult to short this market, even in what appears like solid technical setups – because with the Fed and POMO operations, the market doesn’t tend to sell-off over a long period of time. Instead it is usually in a 1-2 day time frame with a “V” shaped bounce that occurs thereafter. Rarely do we see any basing at the lows. 
• Bulls managed to reclaim the 10 and 20 day moving average but will need to break and close above Tuesday’s highs for clear sailing to 1344 on the S&P. 
• 10 & 20 DMA crossover on the S&P to the downside will occur today. The last three times this has occurred, has resulted in a mild amount of additional selling – on average, about 30 points, before seeing the opposite upside crossover. However, when the downside crossover occurred back in April, there was a significant sell-off that ensued.
• A break of S&P 1294 (last week’s lows) would put in a lower-low in the markets, and confirm a downtrend being in place. The S&P also sits at that same price level, making it a significant price support level.
• Market continues to trade specifically to the strength/weakness in oil. Rising oil prices will continue to hamper the markets going forward.
• For the bears – Avoid allowing the bulls to close above the Tuesday highs, and above all costs, not allow for them to breakout to new recovery highs. 
• For the bulls – At the very least, close above 1332 on the S&P, and continue building on the gains from the past two sessions, off of oversold market conditions. 
• My conclusion: Yesterday’s market drastically hampered the bears to push this market down further in the short-term, and as a result we are likely to see another push to new recovery highs. 

Here Are The Actions I Will Be Taking:

• Closed out my position in SCO yesterday for 1.2% in gains, NFLX for -1% loss, and PFE for a 2.2% gain. 
• Added LSCC at $6.75 and traded SVNT yesterday for a +2% gain. 
• Will look to tighten my position in LSCC this morning. 
• Will look to add 1-2 new positions to the portfolio, unless we see a significant sell-off on the GDP news. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.