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Trading Plan for August 16, 2012

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August 16, 2012 – Comments (0) | RELATED TICKERS: DIA , SPY , IWM

Pre-market update (updated 8:00am eastern):

European markets are trading mixed/flat. 

Asian markets traded 1.7% higher.

US futures are slightly higher ahead of the bell. 

Economic reports due out (all times are eastern): Housing Starts (8:30am), Jobless Claims (8:30am), Philadelphia Fed Survey (10am), E-Commerce Retail Sales (10am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

The SPX managed to creep higher, just barely, but remain within a 5-day consolidated range. 

Volume dropped back down to Tuesday's extremely low levels. 

We've managed to come off of overbought levels in the short-term. But remain extremely overbought longer-term. 

Last 5 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.

With these low volume levels, continue to expect choppiness in the market. 

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. 

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 1359.

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 on Tuesday (+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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