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Today's Trading Plan: A Bounce Is Looming

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November 12, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , QQQ

Pre-market update (updated 1:00am eastern):

Europe has yet to open.  

Asian markets are trading mixed. 

US futures are slightly higher. 

Economic reports due out (all times are eastern): Veteran's Day - Banks closed. 

Technical Outlook (SPX):

Initially, Friday's action saw a respectable amount of buying take place. During the Obama speech on the fiscal cliff, the market quickly sold-off. 

Price remains in the downward channel, but still below the 200-day moving average. 

Short-term the market is back into oversold conditions. 

Any bounce that we get here, is likely to take us northward of 1405-1415 on the SPX. At that point, we should see some short-term resistance kick in and prove problematic for the markets. 

Price remains outside of the lower Bollinger Band for the second straight day. 

Back in October we traded outside of the lower bollinger band and remained out there for two straight days, before bouncing back to the 20-day moving average. 

Biggest wave of selling that we've seen since bouncing off of the 6/4 lows.

A lower-low was established at 1403 as well as a previous lower-high. All bearish developments of an established downtrend. 

Last time we broke through the 200-day SMA, it led to a major sell-off in August 2011 that lasted through early October of that same year. 

The 30-minute chart also validates the daily chart with the well-defined downtrend that is in place. 

Divergence in the VIX yesterday as it closed lower on the day at 18.48. The lack of enthusiasm by the VIX during last week's sell-off could be a warning sign for bears

My Opinions & Trades:

Chart for SPX:

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