Trading Plan for November 9, 2011
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Ben Bernanke speaks (9:30am), Wholesale Trade (10am), EIA Petroleum Status Report (10:30am)
The Breakdown (as of 12am ET):
Futures are down slightly prior to the open.
The S&P over the last 3 trading sessions has represented a "buy the dip" mentality.
10-day moving average has held strong over that same 3-day period.
Price action closed back above the 200-day moving average after struggling with it in earlier in the prior trading session.
S&P also manage to close back above the neckline of the S&P's Head and shoulders that was formed during the first 7 months of the year.
Within a month's period we have rallied over 20% on the S&P. While it can still go higher, it's not the time to start loading up on new long positions or jumping on the boat worried that it'll run 20% more without you. Wait for at least a pullback of sorts that will cool off some of this market euphoria.
Worth noting as well, (See Monday's Trading Plan) 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.
Volume continues to dry up, and bulls seem to be losing their steam in terms of aggressively buying this market.
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've turned bearish this week, without much success but I've been scaling into my SPY position all week long and have yet to accumulate what I would consider a full position. I don't discount the fact that the market could continue to march higher, but I believe it will struggle to do so in the aggregate sum over the next few weeks.
Here's the S&P Chart Analysis.