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.

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Here Are The Actions I Will Be Taking:

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