Trading Plan for May 10, 2012

Economic Reports Due out (Times are EST): International Trade (8:30am), Jobless Claims (8:30am), Import and Export Prices (8:30am), Bernanke Speaks (9:30am), EIA Natural Gas Report, Treasury Budget (2pm)

Premarket Update (Updated 8:00am eastern):

• US futures are slightly higher ahead of the open. 
  
• Asian markets, are slightly lower – about -0.2%. 
  
• European markets are trading about 0.4% higher. 
  

Technical Outlook (S&P):

• Yesterday marked another extreme sell-off with intraday recovery into the close. At one point, the market almost went green. 
• All of these intraday recoveries (since Monday) tells me that this market is ready for a bounce, being that we are short-term oversold. 
• Whether we can actually reverse course or not beyond just a dead-cat bounce is anyone’s guess. 
• S&P broke cross some pretty significant bearish barriers yesterday, by dropping below 1357, and putting in the S&P’s first true lower-low since the rally began back in December. 
• We also confirmed the double-top pattern on the S&P daily. 
• Key support lies at 1340. 
• The triangle that we spoke of before has been broken out of to the downside on the daily S&P. 
• The S&P is now trading below the 10-day, 20-day and 50-day moving averages.
• The market’s whip-saw action of late has created a convergence of moving averages (10, 20 & 50 DMA’s). 
• The previous trend-line off of the October lows has become resistance for price action on the underside. 
• On the weekly chart, we confirmed the bearish wedge pattern that we had been following for weeks. Very bearish development for the market. 

My Opinions & Trades:

• Action from the past two days, has tilted me bearish. I plan on selling  my longs into any market bounce that we get, and use those bounces to get into new short positions. 
• Bought AAPL yesterday at $571.44
• Bought AEIS yesterday at $13.25
• Remain long USO from $36.74. 

Chart: