Trading Plan for October 5, 2011
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenge Job-Cut Report (7:30am), ADP Employment REport (8:15am), ISM Non-Manufacturing Index (10am), EIA PEtroleum Status Report (10:30am)
My Observations and What to Expect:
Futures are moderately higher this morning.
Asia saw losses range from -0.9% to -3.4%. Europe is seeing strong gains of about 2.6%.
In the final hour of trading yesterday, we saw a short squeeze of epic proportions. I personally have never seen the S&P rally 47 points within that short of a time-frame. It was absolutely stunning.
Interestingly, we made new new lows, but ended up finishing a shade above the 1120 support level that has been a thorn in the side of bears.
Look for a test today at approx 1135 on the S&P which represents the 10-day moving average.
The past couple of weeks reminds me of late 2008, when the market would experience a series of massive sell-offs followed by a significant rally or two.
A lot of people calling for a bottom, but honestly, I believe the market has a lot to prove before that can be considered.
Volume was very strong yesterday, and has continued to increase over the past four days.
As stated in previous trading plans "I don't believe the S&P can 'stair-step' its way down, without subjecting itself to major bounces in the process."
Another poignant warning recently made "The market continues to act as a dangerous place for the passive trader. Intraday day whip-saws creates gains and erases them very quickly. Take the gains when you can."
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 still remain overall bearish on this market, but would let the dust settle some on this last hour rally from yesterday before adding any new short positions.
Here Are The Actions I'm Taking: