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Trading Plan for August 10, 2012

Recs

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August 10, 2012 – Comments (0) | RELATED TICKERS: SPY , IWM , QQQ

Pre-market update (updated 7:30am eastern):

European markets are trading -0.8% lower. 

Asian markets traded -0.8% lower. 

US futures are trading moderately lower.  

Economic reports due out (all times are eastern): Import and Export Prices (8:30am), Treasury Budget (2pm)

Technical Outlook (SPX):

Despite opening lower, SPX managed to finish higher for a fifth straight day, the first time that has occurred since 3/7-3/12. 

However, the gains that are being made are sluggish at best, and without much fanfare. 

Volume continues to drop unbelievably lower on SPX. 

Setting up for a pullback at the very least heading into next week as buyers seem to be lacking conviction at these levels. 

Market remains well overbought on multiple time frames. 

For a while, the rally off of the 6/4 lows looked more like a bear-flag forming, but no longer with the strength in the market over the last month. 

If the SPX is to finish again in the green today, it would be the first 6-day rally since the 12/7/10 - 12/14/10 - to say the least it hasn't happened in a while. 

SPX poised to make a move to 1422 and challenge the year's highs. 

Biggest news so far this week, technically, has been the SPX breaking out of the descending trend-line off of the 4/2 highs (as noted below). 

It's not uncommon to see large market rallies going into an incumbent re-election.

30-min chart has us primarily trading in a sideways channel. 

If you look at the 4 previous higher-highs in the market since the 6/4 bottom, then one could conclude that we've reached another temporary top, and are prime for another pullback. 

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

At this point, uptrend support rests at 1354.

SPX trading above all significant moving averages (10,20,50,200).

VIX remains under 16.

If another sell-off were to ensue, watch for a break and close below 1354 for a new lower-low in the market.  

Downside reversal signal still remains intact on the SharePlanner Reversal Indicator

My Opinions & Trades:

Charts:

 

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