Trading Plan for October 24, 2011

Current Bias: 100% Cash

Economic Reports Due Out (Times are EST): Chicago Fed National Activity Index (8:30am)

Today’s Breakdown:

• Futures are slightly positive heading into the open.
• Asian markets saw gains range from 1.5% up to 4.1%. Europe is currently trading mixed/flat.
• The S&P on Friday closed at new 2-month highs, effectively wiping out the 1230 resistance level. 
• Friday’s move came on the heels of a five-day consolidation pattern without giving up recent gains. This appears to be healthy market action. However, the wild market swings (moves in excess of 2% in both directions on a regular basis) is not.
• The market’s consolidation prior to Friday’s move allowed for the S&P to work off its overbought conditions, so the market in the very short-term is outside of overbought territory. 
• S&P appears marked for a rendezvous with 1270, which represents the head and shoulders neckline from and the 200-day moving average. 
• With the tear the market has been on of late, I believe that this will be a very difficult barrier to break through, particularly since, all the noise out of Europe still precludes us from attaining a viable solution to crisis. 
• Volume picked up nicely on Friday, more likely due to options expiration than anything else. 
• The 20- and 50-day moving average crossed to the upside, marking further bullish developments in this market. 
• The past few weeks reminds me of late 2008, when the market would experience a series of massive sell-offs followed by a significant rally, only to reverse course yet again.
• 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: The market has already moved much more than I would have expected it to, however, as more people become bullish at these levels, I would recommend you becoming less, until we see a bit of a pullback here. 

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