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Trading Plan for August 1, 2012

Recs

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August 01, 2012 – Comments (0) | RELATED TICKERS: SPY , IWM , QQQ

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

European markets are trading in a mixed range from -0.3% up to +0.8%

Asian markets in a mixed range from -0.9% up to +0.1%

US futures are trading slightly higher ahead of the bell

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), ADP Employment Report (8:15am), PMI Manufacturing Index (9am), Treasury Refunding Announcement (9am), ISM Manufacturing Index (10am), Construction Spending (10am), EIA Petroleum Status Report (10:30am), FOMC Meeting Announcement (2:15pm)

Technical Outlook (SPX):

After making a higher-high on Friday, the SPX has put completed a bearish 3-day Evening Star price pattern. 

I'm very concerned about getting heavily long at this juncture in the market, particularly with FOMC slated for 2:15pm today and employment on the horizon, that could become market catalysts to the downside. 

Volume picked back up yesterday, after a dismal showing on Monday. 

Markets remain in short-term overbought levels as well as on the weekly. 

Very nice bull flag forming on the SPX 30-min chart. 

VIX is a huge concern as it continues to spike higher despite the market being relatively flat during the same 2-day time period, sitting just a shade below 19.

Trading on the first day of the month, typically sees some monster rallies and on lesser occasions, large sell-offs. Be prepared for a significant move today. 

Resistance barriers have, including the down-trend off of the 4/2 highs, been broken on Friday. There aren't any major resistance barriers in the near term for the SPX to face. Minor resistance lies around 1402-6. 

Current uptrend support lies at 1337. 

If another sell-off were to ensue, watch for a break and close below 1329 for a new lower-low in the market.  

At this point, the goal for the bulls has to be to continue to trade higher and challenge the 1422 highs from 4/2 which are now well within reach. 

Solid support formed at the 50-day moving average. 

Of concern is the bearish crossover signal found in this week's SharePlanner Reversal Indicator. Caution is warranted. 

My Opinions & Trades:

 

Charts:

 

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