Trading Plan for May 24, 2012

Economic Reports Due out (Times are EST): Durable Goods Orders (8:30am), Jobless Claims (8:30am), EIA Natural Gas Report (10:30am), Kansas City Fed Manufacturing Index (11am)

Premarket Update (Updated 8am eastern):

• US futures are slightly higher ahead of the open.
  
• European markets are trading on average 1.1% higher. 
  
• Asian markets were mixed/flat. 
  

Technical Outlook (S&P 500):

• Huge reversal yesterday in the market erasing over 1% in losses to finish in the green. 
• As noted yesterday, gap-downs have the tendency to be most problematic for the bears. 
• Despite the reversal, the S&P is still below the downtrend off of the 5/1 highs. 
• S&P is well off of oversold levels. 
• Additional resistance lies at the price level of 1340. 
• Downtrend resistance level is at 1313. The 10-day moving average represents continued downside resistance as well. 
• 1294-5 becomes the key support level for the bears to push below. After that we have a support area at 1275. 
• Volume the last three days has dropped off notably, showing a lack of conviction in the market bounce we saw. 
• Steep downtrend off of the 5/1 highs still in place – resistance on the downtrend lies at 1320. Break it, and additional buying momentum could come back into the market. 
• VIX is still elevated and rests above 22. 
• We have managed to come off of oversold levels in the short-term
• 30-minute chart shows perfect downtrend in place. 
• S&P is trading below the 10-day, 20-day and 50-day moving averages.

My Opinions & Trades:

• There is the potential for a shift in market sentiment based on what the bulls can do with yesterday’s reversal. Keeping the momentum up is key. 
• Shorted SIG at $46.33
• Remain short $JCI at $30.29, WCRX at $20.15, ATVI at $12.14
• No plans to add additional short positions today. 

Chart: