Trading Plan for November 29, 2011

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), FHFA House Price Index (10am), State Street Investor Confidence Index (10am),

The Breakdown:

• Futures are moderately higher today.
• Asia traded up on average of 1.7% higher, while Europe is trading with gains ranging from 2.3% up to 3.7%.
• Yesterday’s bounce was very healthy for the markets, and need to see some continuation/follow-through from yesterday. 
• Yesterday’s price action came right off of the 61.8% retracement level (based on the rally from the October lows to October highs).
• We could see a challenge of the 50-day moving average at 1204 on the S&P today. Previous attempts has been met with very little resistance. We could also bounce above the 10-day moving average, which usually leads to additional strength in the market. 
• Volume was slightly higher on Monday, despite it being the first day back from a holiday weekend. 
• Significant sell-offs like what we saw over the last two weeks, typically leads to abnormal bounces like we saw yesterday, which means I expect further strength in the short-term. 
• We’re no longer trading outside the lower bollinger band, as we had the previous 4 trading sessions. 
• We broke above the 1191 resistance level yesterday (just barely). Watch 1218 on the S&P today. 
• Finally, a break of the downward trend-line (mid-term) off of the October highs would effectively end at 1253 (resistance is declining).
• 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: Don’t be a hero if your bearish and try to jump short already. Let this rally fade first. There is too much euphoria and hope right now surrounding the bailouts and funding of Spain, Greece, Italy, etc. Momentum is still in the bull’s corner.