Trading Plan for Nov. 12, 2010

Current Short Positions (stop-losses in parentheses): None

BIAS: 73% Long

Economic Reports Due Out (Times are EST): Consumer Sentiment (9:55am)

My Observations and What to Expect:

• Futures are down significantly, but has managed to bounce off of its overnight lows. 
• Asian markets closed well below 1% across the board, European markets are down, but have managing to rally substantially off of its lows.
• S&P once again bounced after testing the 10-day moving average, and the trend-line that began in late August. Strong sign of strength by the market. 
• S&P stands poised, yet again, to test the 10-day moving average and August trend-line. 20-day moving average is also in play, which the market has not traded below since 9/1.
• Today marks the first day of QE2. The full schedule can be found here. 
• One big question surrounding Wall Street is whether QE2 will represent a “sell-the-news” type of event. 
• A lot of volatility in overnight futures trading should be an alarm to traders to be very careful heading into the open. 
• A doji hammer candle formed yesterday, further signifies that buyers continue to “buy-the-dip”. 
• One lesson that bears should have learned this year is that when you have profits – take ’em. Don’t let the inevitable bounce wipe those gains out. 
• 1227 represents a near-term resistance level for the bulls while 1275 on the (give or take a few points) represents the next area of resistance on the charts.
• Also causing some resistance in the very near term is the fact that we are at the 61.8% Fibonacci Retracement level from the Oct. ’07 highs to the March ’09 lows.
• Yesterday was another failed opportunity by the bears to drive this market lower, in some sense, the bulls came away from yesterday’s market session a bit more emboldened. Today, with the early morning weakness in the markets, the bears, need to push this market lower, and close at the day’s lows, and below the 10-day moving average. 

Actions I Will Be Taking:

Read more…