Trading Plan for November 28, 2011

Economic Reports Due Out (Times are EST): New Home Sales (10am)

The Breakdown:

• Futures are sky-rocketing ahead of the open – S&P up over 30 points. 
• Asia traded up on average of 1.7% higher, while Europe is trading with gains ranging from 2.3% up to 3.7%.
• The S&P is looking to bounce after 7 straight days in the red, four straight outside the lower bollinger band. 
• From the October lows to the October highs, we have retraced perfectly to the 61.8% retracement level on the S&P. 
• Leading up to today, this was the a near perfect bounce environment
• Two S&P resistance levels to watch today and this week are 1191 and then at 1218.
• Finally, a break of the downward trend-line (mid-term) off of the October highs would effectively end at 1255 (resistance is declining). 
• All indicators point to a very oversold market on both the short-term and intermediate-term time frames. 
• Volume has been tapering off the last 5 trading sessions. Mostly due to last week’s holiday schedule. 
• If we can hold most of the day’s gains, we should be able to see a nice multi-day rally out of this market. 
• All significant moving averages are above the current price action.
• Worth noting as well, is the obvious head and shoulders pattern forming on the weekly chart. Should this be the case, I’d expect then that this market is reaching a short-term top very fast.
• 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: Bounce is well overdue, regardless of the news in Europe, but often technicals do line up nicely with economic news as we are seeing today. I think it is safe to say that this market will likely rally over the next couple of days.