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Trading Plan for August 13, 2012

August 13, 2012 – Comments (0) | RELATED TICKERS: SPY , QQQ , IWM

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

European markets are trading in a mixed fashion. 

Asian markets traded mixed/flat. 

US futures are trading break-even.  

Economic reports due out (all times are eastern): None

Technical Outlook (SPX):

Late afternoon rally managed to lift the markets into positive territory for a sixth consecutive day. 

Volume, despite the strength in the market, is seeing holiday-like volume, which to put it plainly, is incredibly weird. 

We remain well-overbought on all time frames. 

If we were to rally for a 7th day in a row, it would be an event that hasn't happened in years. 

Watch the 10-day moving average for minor support at 1390. 

The six-day rally the market is on, hasn't occurred since 3/7-3/12. 

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

Setting up for a pullback at the very least heading this week as buyers seem to be lacking conviction at these levels (just look at...yes...volume!)

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

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 1355.

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

VIX has moved below 15 for the first time since March. 

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

Charts