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Trading Plan for November 5, 2010

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November 05, 2010 – Comments (0) | RELATED TICKERS: SPY , QID

Current Long Positions (stop-losses in parentheses): TICC (9.97), NFLX (165.00), MCD (76.92), QID (11.92)

Current Short Positions (stop-losses in parentheses)None

BIAS: 6% Long (-10% short considering the leverage in QID)

Economic Reports Due Out (Times are EST): Employment Situation (8:30am), Pending Home Sales Index (12:30pm), Bernanke Speaks (2pm), Consumer Credit (3pm)

My Observations and What to Expect:

Futures are showing some weakness prior to the employment number. 

Asian markets are seeing a lot of strength in trading with gains as much as 2.8%. European markets are trading with a slight negative bias to them. 

The S&P is clearly in a breakout mode after recently trading out of consolidation from the previous three weeks. 

S&P managed to close well above the 200-week moving average which has acted as major resistance to the overall market - very bullish and promising for its long-term prospects.  

Yesterday's rally pushed the market above the April highs, which allows for the market to continue the long-term trend, dating back to March '09. 

Today's  employment number should play a pivotal role in the market today.   

Be very careful about piling on new positions at this stage of the rally - the market is overextended and well outside of its Bollinger Bands, and makes it more likely we'll see a healthy pullback or at the very least some consolidation before moving higher. Use any weakness to add new positions to the portfolio.

The bears main aim is to erase at least 50-60% of yesterdays gains, which would essentially create a bearish piercing candle pattern. 

Here Are The Actions I Will Be Taking:

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