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Trading Plan for August 3, 2012

Recs

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August 03, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , IWM

Pre-market update (updated 7:30am eastern):

European markets are trading 2.2% higher on average.

Asian markets traded -0.8% lower. 

US futures are trading nearly 1% higher ahead of the bell. 

Economic reports due out (all times are eastern): Employment Situation (8:30am), ISM Non-Manufacturing Index (10am)

Technical Outlook (SPX):

SPX is looking to bounce after a four-day pullback in the SPX

Yesterday, price closed just a shade above the 10-day moving average and managed to bounce off of the 20-day MA as well. 

The lows from yesterday was a 61.8% Fibonacci retracement and 26 points off of recent highs. Respectable bounce off of the intraday lows yesterday, erasing 1/2 of the day's losses.  

1391 will represent minor resistance today, should we rally that high. 

We've come well off of the short-term overbought levels in the market, but on the weekly/mid-term we are still overbought. 

Selling over the past four days in the market have not shown must panic or concern at this point. 

At this point, uptrend support rests at 1345.

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

Despite yesterday being the largest of the 4-day sell-off period, volume was also light. 

VIX indicator diverged signficantly yesterday dropping over -7% despite the market being down as well. 

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. 

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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