Trading Plan for May 29, 2012

Economic Reports Due out (Times are EST): S&P Case-Shiller HPI (9am), Consumer Confidence (10am), State Street Investor Confidence Index (10am), Dallas Fed Manufacturing Survey (10:30am)

Premarket Update (Updated 8:30am eastern):

• US futures are moderately higher ahead of the opening bell.
  
• European markets are trading mixed/flat. 
  
• Asian markets finished 1% higher. 
  

Technical Outlook (S&P 500):

• Choppy session on Friday, that ended up seeing the market sell-off into the afternoon. 
• Daily chart of the S&P shows me that we are merely forming another bear-flag pattern. 
• The 10-day moving average was tested on Friday for the third time in the past four sessions and still did not manage to close above the declining resistance level. 
• Four-day bounce from last week has  pushed the S&P towards short-term overbought. Weekly chart we remain oversold. 
• Nearest level of resistance for the S&P is at 1340 and then again at  1357. 
• 1294-5 becomes the key support level for the bears to push below. After that we have a support area at 1275. 
• VIX is still elevated and rests above 20
• 30-minute chart shows some consolidation finally, and the potential for a higher-low. 
• S&P is trading below the 10-day, 20-day and 50-day moving averages.

My Opinions & Trades:

• If the market can hold the pre-market gains it is seeing, there’s a good chance, that in the days to come it tries to squeeze the bears out of their short positions. 
• I’ll be keeping a tight leash on my existing short positions, and may add a couple of longs to offset my exposure. 
• Remain short CPWR at $9.03, short $JCI at $30.29, WCRX at $20.15, ATVI at $12.14.

Chart: