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Trading Plan for November 15, 2011



November 15, 2011 – Comments (0) | RELATED TICKERS: SPY

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Producer Price Index (8:30am), Retail Sales (8:30am), Empire State Manufacturing Survey (8:30am), Redbook (8:55am), Business Inventories (10am)

The Breakdown:

Futures are down moderately ahead of the open. 

Asia was down over -0.7% in trading, while Europe is currently trading down between -0.6% and -1.6%. 

If we get a move below 1233 today, that would effectively put us below the consolidation/triangle that we've been trading in the past few weeks. 

1270 on the S&P would represent the upside breakout. 

The wedge that we are currently trading in, represents the #1 market variables to be keeping our eyes on. Inside of the wedge, the price action is meaningless. Outside of it, you have clear direction for trading. 

Support was found at the 20-day MA yesterday and we remain just on top of it and the 10-day MA today. 

After 1233, pay close attention to 1215. Break this key support level and fear will rapidly pick up across Wall Street. 

We are currently trading right in the middle of the gap up from the 11/11 open (See SPY intraday). We should come close to filling it, if morning weakness holds up. 

Volume remains nearly non-existent. 

In the very short-term, we've managed to work off the overbought nature of the market.

Intermediate and long-term, we are still overbought.

Likely will see a 10-20 day MA negative crossover. Last time this happened (back on 9/20) we saw a significant amount of selling that ensued over the next couple of weeks.

Even if this market decides to continue marching lower, you can expect a ton of rallies throughout, before it gets to where its going to settle. If you can stomach those rallies...fine. If not, you need to become a pro at consistently covering in weakness.

Worth noting as well, is the obvious head and shoulders pattern forming on the weekly chart. Should this be the case, I'd expect then that this market is reaching a short-term top very fast.

Make sure that whatever you do, that you protect the gains that you have, and be ready for sudden and quick reversals in this market.

My Conclusion: I'm pessimistic on the market in all time frames at this point. Bulls are quickly becoming disenchanted with this market, which will offer the bears a great opportunity to strike again. 

Here's the chart markup on the S&P.  

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