Trading Plan for November 7, 2011

Current Bias: 100% Cash

Economic Reports Due Out (Times are EST): Consumer Credit (3pm)

Today’s Breakdown:

• Futures are only down slightly after being down as much as 19 points on the S&P at one point in overnight trading. 
• Asian markets are down on average about -0.5% while Europe is trading with losses of about -0.3%.
• S&P is back to trading under the 200-day moving average, but at this point though, there seems to be the most support with the 20-day moving average, and and should be watched closely for whether the bears can push the market below it (closing price is all that matters – intraday breaks are somewhat irrelevant). 
• Volume in the market continues to be relatively light 
• A friend pointed out last night to me, a broader Head & Shoulders pattern that may be getting formed dating back to early 2010. If that is the case, then we are currently forming a right shoulder top and upward movement would likely be as good as its going to get for a long, long time. 
• On another H&S note, in particular the one that formed over the course of 2011, we are trading up against the neckline of this pattern, and should encounter some resistance. 
• Most, if not all indicators show the market as being extremely overbought at this stage and up against some stiff resistance. 
• 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: I think this market is overheating and while the gains may be nice, you have to view them as short-term and do everything you can to make sure that if this market reverses you don’t loose those hard earned gains.  

Be sure to follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).