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Trading Plan for August 15, 2012

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August 15, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , QQQ

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

European markets are trading 0.4% lower. 

Asian markets traded 0.6% lower.

US futures are slightly lower ahead of the bell. 

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), Consumer Price Index (8:30am), Empire State Manufacturing Survey (8:30am), Treasury International Capital (9am), Industrial Production (9:15am), Housing Market Index (10am), EIA Petroleum Status Report (10:30am)

Technical Outlook (SPX):

Despite trading higher for most of the day, the SPX succumbed to a late day sell-off that finished the market slightly in the red. 

Volume picked up some, but extremely low still. 

Last 3 days in the market has shown sideways consolidation and a bit of distribution, leading me to believe we'll probably push lower in the coming days. 

Should a pullback occur, watch the 10-day moving average - its been a popular destination for bulls to reload at. 

Since the pullbacks off the 6/4 bottom, the pullbacks have ranged around 30-60 points each time, which would give us a range of 1380-50.

Choppy action on the 30-minute chart over the past 7 trading sessions. 

Volume has become nearly obsolete and in line with holiday like volume. In fact volume has decreased 8 out of the last 10 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. 

Short-term we've actually slightly dipped below overbought levels. 

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 1358.

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

VIX has moved below 15 for the first time since March but spiked noticeably higher yesterday (+8%)

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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