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Trading Plan for August 21, 2012

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August 21, 2012 – Comments (0) | RELATED TICKERS: DIA , QQQ , SPY

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

European markets are trading 0.4% higher. 

Asian markets traded in a mixed/flat manner. 

US futures are slightly higher ahead of the opening bell. 

Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am)

Technical Outlook (SPX):

We saw dip buyers jump in after establishing the lows from the first hour's trading today. 

Volume was incredibly low today. Interesting tidbit - while the SPY hit a 52-week high, its volume hit a 52 week low. 

We'll once again look to challenge the 1422 level to see whether we can break through resistance and post new recovery highs. 

It's not uncommon if we consolidate below this resistance level for a while. You just don't want to see a steep sell-off after touching the 1422 level. 

The 10-day moving average is trailing price nicely and is offering solid support, but is close to parabolic. 

We remain overbought both in the short and long-term time frames. 

VIX is at unbelievably low levels that  haven't been seen since 6/2007 - currently it sits at 14. 

You may also see a pullback to 1405, which is the top consolidation range the market pulled out of. That too may offer a level of support for SPX as well before eventually breaking through 1422. 

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

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 1368.

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

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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