Trading Plan for September 27, 2011
Current Long Positions: Netflix (NFLX) Nov 160 Calls
Current Short Positions: None
BIAS: 7% Long
Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), S&P Case-Shiller HPI (9am), Consumer Confidence (10am), State Street Investor Confidence Index (10am)
My Observations and What to Expect:
Futures are up almost 2% heading into the open.
Asia saw average gains of 3.3%, and Europe is trading with open gains of 4%
Silver-bullet plan in Europe to bailout the PIIGS is propping the market up this morning.
Today's strength will put opening price back inside the bear-flag pattern, which damages the legitimacy of the price-pattern.
With price continuing to advance, and the 50-day moving average continuing to decline on the S&P, we are looking at a potential re-test of the MA this week.
Yesterday's strong open saw a quick and successful attempt to fill the opening gap. This will be more difficult to do on a day like today, because price action is being supported by significant news.
Very possible we'll see a test of the 10 & 20-day moving averages. These two MA's have offered little support/resistance on the S&P recently.
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.
The bulls have yet to successfully trade AND close below 1120 on the S&P. There is continued buying support at these levels. Should this level eventually break, watch 1114, and then 1101 for additional support.
Volume over the last two positive sessions, have witnessed declining levels on the S&P.
We are on pace for five straight down months in the market - the likes of which we haven't seen happen since 11/07-3/08. In order to avoid this, the S&P would have to rally 57 points before Friday.
This week marks the last trading week for the quarter, and should expect some interesting price moves as we head towards Friday.
S&P confirmed the head and shoulders pattern from the past month.
My Conclusion: Since this rally is based on significant news, and there is less volatility in overnight price action, I believe that these gains have a much better chance at sticking.
Here Are The Actions I'm Taking: