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Trading Plan for August 14, 2012

Recs

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August 14, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , QQQ

Pre-market update (updated 9:00am eastern):

European markets are trading 0.6% higher. 

Asian markets traded 0.7% higher.

US futures are slightly higher ahead of the bell. 

Economic reports due out (all times are eastern): NFIB Small Business Optimism Index (7:30am), ICSC-Goldman Store Sales (7:45am), Producer Price Index (8:30am), Retail Sales (8:30am), Redbook (8:55am), Business Inventories (10am)

Technical Outlook (SPX):

S&P finished lower for the first time in seven sessions. 

Volume has become nearly obsolete and in line with holiday like volume. In fact volume has decreased 8 out of the last 9 sessions. 

Such low volume levels leads me to believe that we may be weakening under the surface and that the slightest bit of bad news accompanied with volume will trigger a stop-order raid on the bulls. 

The choppiness that has been a part of the trading action is due in large part to the low volume levels as well. 

We remain well-overbought on all time frames. 

Watch the 10-day moving average for minor support at 1392. 

Next level for bulls to overtake is the 1422 recovery highs on the SPX. 

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

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 1356.

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.  

My Opinions & Trades:

Charts:

 

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