Open Positions:
Symbol	Direction	Cost Basis	Close	Profit	%	Since
SPY	Long	129.28	133.84	4.56	3.53%	23-Mar
GLD	Long	147.72	145.82	-1.90	-1.29%	10-May

The S&P 500 needs to break its downtrend next week and stay above 1,332:

If 1332 fails to hold then the market will probably slip down to its 50DMA, currently at 1,323. It has breached the 50DMA twice since Jan 1 but the 100DMA has held. The 100 DMA currently stands at 1,323.20. If the 50DMA or 100DMA is breached then program driven selling will probably push it down more on the day that it is breached.

If the dollar continues to strengthen then that will hurt many of the companies that have provided leadership in this bull market. We saw this with CMI and CAT.

Flooding along the Mississippi River could be a problem. Gas prices could spike next week if the shipping channel gets closed due to high water.  Thirteen percent of US daily refining capacity will be shut down if the shipping channel is closed. The channel could be closed as early as Monday. Dow Chemical has already closed dock operations along the Mississippi.

Next week we have some earnings risk:

Macy's (M) and Kohl's (KSS) seem to have taken market share from other retailers. Some of these retailers are probably reporting this week:  URBN, JCP, TGT, SHLD, and WMT which also has Japan exposure.

Home Depot (HD) and Lowe's (LOW) are also reporting. The poor housing market will be a headwind for them. The expectations are fairly low so this is should be non-event but there still remains room for surprises either way..

DELL and HPQ report on Tue and Wed. DELL and HPQ have not been top performers for many years and we should not expect any blowout surprises with them. Following on the heels of the CSCO debacle, these two could put a lid on technology stocks this week.

What type of plan should we go with next week? The banks are definitely out of the question for long positions. The banking ETFs seem poised to break support levels. They would be a good short candidate but the volatility is probably going to be high, resulting in a high risk of whipsaw.

The best entry points in a bull market come on pullbacks. Pullbacks are hard to time and you need to fight the barrage of negative opinions. The bottom of a pullback is a hard thing to spot when it occurs and your emotions are trying to get you to sell instead of buy. One of the more common events of a pullback bottom is a big bad down day that gets a partial recovery in the afternoon and the overall volume for the day is above average. However, there is usually at least one false bottom before the real bottom that exactly fits the parameters of a real bottom.

So far this is a very mild pullback. We need to reach down to the 50DMA to make it just a mild pullback. It would need to close below the 100DMA for at least two days in a row to talk about an end to the bullish trend, and an end to the buy-the-dip strategy. The current choppy and inconsistent action is often bearish in the short term.

The ideal event would be a pullback to the 100DMA where we then load up on a wide array of great opportunities and a relief rally would then propel us to new highs in the S&P 500.

Opportunities may exist now that we can take advantage of. SLV looks like it might have put in a bottom and it may be a safe haven if the market declines. A breakout above 34.50 would be an attractive entry condition.

Goldcorp (GG) looks like it is at a great entry point. We are expecting Gold to regain strength soon.

We will be initiating a longer term portfolio to capture opportunities that could run strong well beyond our usual hold period. The first of these is Ameren (AEE), and S&P 500 public utility holding company with good prospects and a hefty 5.20% yield on its dividend. It is in a strong sector and should have good room to run on price after it breaks above $30.00.

Captain Scott

Our stock Tells are: AAPL, BRK.B, CAT, ORCL, CSX, GM, JPM

Our sector Tells are: BKX, DJT, RLX, SOX, XLP

Some of our terminology and directions on how to use Tells are found in the Pirate Trading University area on our website. If you would like additional clarification then send me an email to us. We always are interested in your opinion of our performance as well.

You should not treat any opinion expressed by in this letter as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of our opinion. Strategies or investments discussed may fluctuate in price or value. Before acting on information on this website, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser. We plan to trade the securities discussed herein, on behalf of ourselves. This material does not take into account your particular investment objectives, financial situation, or needs and is not intended as recommendations appropriate for you. Past performance is not indicative of future results. We do not guarantee any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed in this letter.