Trading Plan for May 17, 2012

Economic Reports Due out (Times are EST): Jobless Claims (8:30am), Philadelphia Fed Survey (10am), E-Commerce Retail Sales (10am), Leading Indicators (10am), EIA Natural Gas Report (10:30am)

Premarket Update (Updated 8:30am eastern):

• US futures are flat ahead of the open after giving up the overnight gains. 
  
• European markets are trading -1.3% lower. 
  
• Asian markets were mixed, ranging from -0.3% up to +0.9%. 
  

Technical Outlook (S&P 500):

• Yesterday, we saw the market, yet again, give up its solid intraday gains, and finish in the red. 
• 9 out of the last 11 trading sessions have finished lower, and we are now firmly back in oversold territory short-term.
• Minor support at 1301. Significant support in the 1294 area. 
• Slight up tick recently in S&P volume levels. 
• A bounce at these levels seems  likely. A strong bounce could take us as high as 1357. 
• Closing lows haven’t been seen since 2/1/12. 
• 30-minute chart shows a very strong downtrend in place with consecutive lower-highs and lower-lows.
• 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:

• Attempts at a market bounce keeps losing momentum intraday, which highlights the greater underlying weakness in this market. 
• I’m viewing this market with a sell the rip, cover the dip approach. 
• Sold DF at $14.49 from $14.75 for a -1.8% loss. 
• Remain short SAP at $62.31, SIAL at $70.27, VAR at $63.56, WCRX at $20.82 and ST at $30.37

Chart: