Trading Plan for May 22, 2012

Economic Reports Due out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), Existing Home Sales (10am), Richmond Fed Manufacturing Index (10am)

Premarket Update (Updated 8am eastern):

• US futures are slightly higher ahead of the open.
  
• European markets are trading on average +0.9% higher. 
  
• Asian markets were about 1.0% higher. 
  

Technical Outlook (S&P 500):

• We got the bounce yesterday, that we knew was coming after such an extensive sell-off. 
• The volume was weak yesterday (compared to what we saw during the sell-off) and little was accomplished in repairing the technical damage from the past month of trading. 
• Steep downtrend off of the 5/1 highs still in place – resistance on the downtrend lies at 1324. Break it, and additional buying momentum could come back into the market. 
• 1294-5 became key support for the S&P yesterday, and going forward, that will be the price level the bears need to break to continue the downtrend. 
• The Russell index reclaimed its 200-day moving average, the only such index trading below it previously. At 785 you have a clean level of resistance to watch. 
• VIX is still elevated and rests at 22. 
• We are still considered oversold at this point in time. 
• Continuation should not be unexpected at this point. 
• 30-minute chart shows firm downtrend in place. 
• S&P is trading below the 10-day, 20-day and 50-day moving averages.

My Opinions & Trades:

• Don’t be surprised by additional continuation today from yesteray’s rally. There is plenty of room for the markets to run without heading into resistance. 
• Covered ATVI at $11.90 from $12.06 for a 1.33% gain. 
• Day-traded DVA and sold at $84.36 from $80.22 for a 5.2% gain. 
• Day-traded LNKD and sold at $100.05 from $97.25 fora 2.9% gain. 
• Shorted EUO at $20.59.
• Will look to scale into some new shorts off of market strength to prep for what I believe will be a resumption of a new way of selling in the short-term. 

Chart: