Trading Plan for May 14, 2012

Economic Reports Due out (Times are EST): None

Premarket Update (Updated 8:00am eastern):

• US futures are down yet again, nearly -1% on Greek exit worries. 
  
• Asian markets traded from +0.2% to -1.2%. 
  
• European markets are trading about -2.2% lower.  
  

Technical Outlook (S&P):

• Over the last three days the S&P looks like a bear flag is forming on the daily chart. 
• Today’s weakness at the open, puts us in a position to gap down below Wednesday’s lows, which will indicate a resumption of the downward trend and could easily result in us testing the lower 1300’s later in the week. 
• If we break 1340 price support level, there are few key support levels until you reach 1294 area. 
• 5 min and 30  min charts have a strong bear-flag look to them as well. 
• We are slightly off of oversold levels at this point. 
• We now have the year’s first significant lower-low in place, which essentially ends the longer-term trend higher that we had been on. 
• 1340 becomes the next main level of support, which represents the March lows. 
• Though we’ve seen plenty of sell-offs in the market of late, and are well off of the recent highs, the bears have, nonetheless, been rarely able to close at the day’s lows, and avoid the bullish buy-the-dip mentality that is pervasive in this market. 
• We also confirmed the double-top pattern on the S&P daily. 
• S&P is now trading below the 10-day, 20-day and 50-day moving averages.
• 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:

• I’d be suspicious of the large gap down in the market this morning. Time and time again, these gap downs start seeing buying strength pour in after the first hour of trading. 
• I’m viewing this market with a sell the rip, cover the dip approach. 
• The problem is, that this market has been quick to move to the downside, and not a lot a lot of opportunity was afforded to get short. I’m careful not to to be chasing at these levels. I want more of a bounce first. 
• Remain Short UPL from $20.93
• Remain long USO from $36.74, AAPL at $571.44