Trading Plan for November 16, 2011
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Consumer Price Index (8:30am), Treasury International Capital (9am), Industrial Production (9:15am), Housing Market Index (10am), EIA Petroleum Status Report (10:30am)
Futures are down about 1% heading into the open.
Asia was down about 1.4% on average, while Europe is trading in mixed fashion.
Not much change in the state of market from yesterday. We remain firmly entrenched in the ever-tightening triangle price pattern.
If we get a move below 1234 today, that would effectively put us below the consolidation/triangle that we've been trading in the past few weeks.
1267 on the S&P would represent the upside breakout.
The wedge that we are currently trading in, represents the #1 market variable 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 1234, pay close attention to 1215. Break this key support level and fear will rapidly pick up across Wall Street.
We almost filled the 11/11 gap up yesterday but not quite.
Volume remains non-existent over the last 4 trading sessions. It should pick up once we break out of consolidation.
We are close to seeing 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 skeptical that the market has enough mojo for an upside breakout, I still expect us to see the market break down out of consolidation.
Here's the Market Chart Analysis.