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Today's Trading Plan: Market At Heavy Resistance

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November 02, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , IWM

Pre-market update (updated 8:30am eastern):

Europe is trading flat. 

Asian markets traded +0.8% higher. 

US futures are moderately higher ahead of the open. 

Economic reports due out (all times are eastern): Employment Situation (8:30am), Factory Orders (10am)

Technical Outlook (SPX):

Strong bounce out of the market yesterday as the market pushed its way into key resistance levels between 1425-32.

A pop from the employment report has the market pushing through this resistance level at the open but keeping price above that level will remain a challenge.

Volume was notably light yesterday, adding skepticism to the idea that the rally was more of a dead-cat bounce. 

Short-term we are off of the oversold conditions. Longer-term we are definitively oversold.

1400 held as a solid level of support for the past week. 

If conditions are to get bearish, it can't do so until it breaks this 1400 level. 

Triple-top confirmed on the SPX over the past two months. 

Weekly chart also supports a breakdown in the previous channel, and end to its longer-term uptrend off of the June lows. 

VIX dropped hard yesterday and below 17.

Fed's QE3 launch is going to add a lot of buying power to this market and drive more people out of interest-bearing assets and into equities in search of some kind of return. 

One area of concern is the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3

My Opinions & Trades:

Chart for SPX:

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