Trading Plan for May 10, 2011

Current Long Positions (stop-losses in parentheses): GOOG (529.00), NFLX June 270 Calls, AAPL (343.95), AN (33.67), NTAP (50.98), TZOO (72.45), B (24.25)

Current Short Positions: None

BIAS: 52% Long

Economic Reports Due Out (Times are EST): NFIB Small Business Optimism Index (7:30am), ICSC-Goldman Store Sales (7:45am), Import and Export Prices (8:30am), Redbook (8:55am), Wholesale Trade (10am)

My Observations and What to Expect:

• Futures are moderately higher heading into the open.
• Asia was up on average 0.5%. Europe saw a very strong rally of 1.5% as a whole. All of the world markets are up going into the open.
• From what happened on Friday, and last week in general, yesterday’s response – moving 6 points higher on the S&P – was a best case scenario, and sets a nice tone for the week ahead.
• Seeing Europe and Asia rally strong overnight,  and particularly Asia, sets a solid tone going into the open.
• I would like to see the S&P regain the 10-day moving average, which it is currently sitting underneath at 1351. Early morning strength puts us in position to challenge that moving average at the open.
• 1329 marks the lows of last week’s pullback, and if we move higher in the day’s ahead, that will become the S&P’s new higher-low.
• On the 30min charts, a move above 1350 would take us out of the expanding downward channel the market has been trading in since 5/2 (megaphone shape).
• 20-day moving average has provided some support in the last 3 days, which also corresponds nicely with the 1340 support level.
• Volume was extremely light yesterday – watch to see if it picks back up again today.
• 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.
• My conclusion: If we can close above Friday’s highs, I think we will be in position to challenge and make new Recovery highs.

Here Are The Actions I Will Be Taking:

• Closed out AN yesterday $33.92 for a -1.4% loss. Closed out JBL at 21.44 for a 2.1% gain, and sold UNH at $50.47 for a 0.3% gain.
• Added TZOO at $74.35 and $B at $24.92
• No changes to my current stop-losses.
• Will look to add as many as 2-3 new positions to the portfolio today.
• Follow me in the SharePlanner Trading Block today for all my live trades and ideas (as well as everyone else’s).