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Trading Plan for August 2, 2012

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August 02, 2012 – Comments (0) | RELATED TICKERS: SPY , QQQ , IWM

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

European markets are trading 0.5% higher.

Asian markets in a mixed range from -0.7% up to +0.4%

US futures are trading moderately higher ahead of the bell

Economic reports due out (all times are eastern): Challenger Job-Cut Report (7:30am), Jobless Claims (8:30am), Factory Order (10am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

We saw the third straight day of mild selling in the SPX. 

Over the last three days, the selling, has been light and without panic, which would signify more of a 'breather' for the markets than a legitimate change of winds for the market. 

At this point, uptrend support rests at 1343.

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

Volume has seen a steady increase since Monday. 

Bull-flag from the past 3-days of trading has formed. But needs to bounce here, to validate it. 

Markets remain in short-term overbought levels as well as on the weekly. 

Very nice bull flag forming on the SPX 30-min chart. 

VIX is a huge concern as it continues to spike higher despite the market seeing a slight sell-off over the past 3 days, sitting just a shade below 19.

Resistance barriers have, including the down-trend off of the 4/2 highs, been broken on Friday. There aren't any major resistance barriers in the near term for the SPX to face. Minor resistance lies around 1402-6. 

If another sell-off were to ensue, watch for a break and close below 1329 for a new lower-low in the market.  

At this point, the goal for the bulls has to be to continue to trade higher and challenge the 1422 highs from 4/2 which are now well within reach. 

Solid support formed at the 50-day moving average. 

Of concern is the bearish crossover signal found in this week's SharePlanner Reversal Indicator. Caution is warranted. 

My Opinions & Trades:

Charts:

 

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