Trading Plan for February 6, 2012

by Ryan Mallory

Economic Reports Due out (Times are EST): Treasury STRIPS (3pm)

Premarket Update (Updated 8:40am eastern):

• US Futures are slightly lower heading into the open. 
  
• Asian markets saw returns range from -0.2% up to +1.2%.
  
• European markets are down ranging from -0.2% down to -0.5%.
  

Technical Outlook (S&P):

• The S&P, as well as other indices (particularly the Russell), have gone completely parabolic in their price action of late. 
• 1333 - my line in the sand for bears was crossed off of a solid Employment number on Friday, and closed above it in a convincing fashion. 
• As a result, this breaks the long-term trend-line off of the 2007 highs, that has acted as resistance. 
• On the other hand, we remained as overbought as ever, which eventually has to be reconciled. 
• Volume picked up some on Friday. 

My Opinions:

• This market has sustained its buying action far longer than I thought was possibile. But trying to jump in front of this market and shorting it is a dangerous exercise.
• We have yet to see the "buy-the-dip" mentality cease. Each market open where weakness is present, the bulls buy the open, no matter what, and recovers most if not all of the day's losses. As long as this persists, the bears do not stand a chance, and the bull rally will prevail.
• This rally is due in large part to the fed easing that will last through 2014. My guess is that it will be difficult for the bears to stomp on the bears while this persists. 

My Portfolio:

• 100% Cash
  
• Closed my TZA position at $18.85.