Trading Plan for October 6, 2011
Current Bias: 100% Cash
Economic Reports Due Out (Times are EST): Jobless Claims (8:30am), Bloomberg Consumer Comfort Index (9:45am), EIA Natural Gas Report (10:30am)
My Observations and What to Expect:
Futures are moderately higher this morning.
Asia saw gains range from 1.5% to 5.7%. Europe is seeing strong gains of about 1.7%.
S&P finally managed to close above the 10-day moving average, though barely. Previous four attempts resulted in failure each time.
1158 on the S&P represents resistance in the form of a downward trend-line off of 9/20 highs.
Volume was dramatically less from the prior day.
Be cognizant of the move we have seen in the last 8 hours of trading (since Tuesday's 3pm rally) we have rallied 70 points on the S&P. That is quite a bit and warrants caution on additional long positions being added.
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.
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'm not buying into the bottom talk at this point. Market needs to prove it to me (not vice versa). I believe that this market will run out of steam yet again.
Here Are The Actions I'm Taking: