Trading Plan for May 16, 2011

Current Long Positions (stop-losses in parentheses): GOOG (528.75), NFLX June 270 Calls, AAPL (342.25), NTAP (52.45), B (24.64), PEP (69.75), APH (55.20), HPQ (40.65), RSH (15.93), STZ (22.20), CHKP (54.19), SSO (53.35)

Current Short Positions (stop-losses in parentheses): None

BIAS: 60% Long

Economic Reports Due Out (Times are EST): Empire State Manufacturing Survey(8:30am), Treasury International Capital (9am), Housing Market Index (10am)

My Observations and What to Expect:

• Futures are down moderately ahead of the open. 
• Asia, as a whole, was about down 1%, and Europe is worse trading with losses of about 1.2%.
• Currently there is some mixed sentiment surrounding commodities this morning with silver continuing its decline with oil, while gold is actually showing some strength.Dollar is showing a hint of strength as well.
• Some weekend news that may be weighing on the market – 1) fighting around the Israeli boarder. 2) Head of IMF arrested on rape accusations. 
• The 1340 breakout level was broken on Friday. Now the big question is whether it can hold is previous higher-low at 1329. We are setting up for a challenge of it right at the open.
• There is also a rising, long-term trend-line to watch at 1319 on the S&P.
• Over the last two weeks, the market mentality has been to bend but not break and that is exactly what it did last week. 
• We broke the 20-day moving average, which had provided a descent amount of support in previous sessions. The 50-day is at 1323, but for me I’ll be more concerned with the 1329 level.
• A break of 1329, will likely see 1290 in the near future.
• By breaking 1340 recently, we confirmed the inverse head and shoulders that had been in development since February ’11. Last time we confirmed a IH&S pattern was back in Sept ’10 and we rallied 220 points after the confirmation.
• My conclusion: I still remain cautiously bullish, and will be drawing a line in the sand at 1329. If we close below that level, I’ll be closing out my long positions and re-evaluating my trading strategy at that point.

Here Are The Actions I Will Be Taking:

• Added SSO off of an extreme TICK negative tick reading on Friday.
• Closed out GOOG at $529.75 for a 1% gain, AAPL at $340.61 for a 2.6% loss, B at $24.85 for a 0.2% loss, and NFLX June 270 Calls for a 68% return on the premium and 9.1% on the underlying asset.
• Will to add 1-2 new positions to the portfolio today, if we can show any type of market strength.
• I’ll likely close out my SSO position before the end of the day.
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).