Trading Plan for November 30, 2011

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenger Job-Cut Report (7:30am), ADP Employment Report (8:15am), Productivity and Costs (8:30am), Chicago PMI (9:45am), Pending Home Sales Index (10am), EIA Petroleum Status Report (10:30am), Charles Plosser Speaks (10:45am), Beige Book (2pm), Farm Prices (3pm)

The Breakdown:

• Futures are soaring higher today on coordinated actions taken by central banks across the globe to lower the cost of borrowing the dollar (liquidity swaps).
• Asia traded, on the whole, slightly lower, while Europe is averaging over 3.5% in gains.
• We are poised to open above the 10,20, and 50-day moving averages on the S&P.
• A break of the downward trend-line (mid-term) off of the October highs would effectively end at 1251 (resistance is declining). With the premarket move, that is very close to being ‘in-play’.
• This is why shorting these market rallies are so dangerous, and why I warned all last week about adding new short positions to the portfolio, because these market rips are so violent and irrational, that it is an absolute capital killer for the bears who don’t go cash beforehand.
• Considering the move that we had on Monday and again today, I would start looking to liquidate some long positions on this incredible strength and over 70 S&P points in 3 days.
• 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 fight the trend by trying to short this market, let someone else take that risk. But on the other hand, don’t ignore the huge gift this market has been to your long positions: start locking in those profits.