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Trading Plan for August 6, 2012

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August 06, 2012 – Comments (0) | RELATED TICKERS: SPY , IWM , QQQ

Pre-market update (updated 7:00am eastern):

European markets are trading 0.3% higher on average.

Asian markets traded 1.8% higher. 

US futures are trading slightly higher. 

Economic reports due out (all times are eastern): Ben Bernanke speaks (9am), Treasury STRIPS (3pm)

Technical Outlook (SPX):

Amazing day for the markets, where after 4 days of straight selling, the SPX wiped out all 4 days of and formed anintraday higher-high in the markets. 

SPX finished right below the downtrend off of the 4/2 highs.

Needs to see some continuation today to see a close for the first time above that downtrend. 

Last time we experienced a large bounce off of a 4-day pullback (7/26) the large rally was followed up up with another substantial gain the next day too. 

We could be setting up for a run to 1422 which would mark new recovery highs for the market. 

One area of concern are the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3

The lows from 8/2 was a 61.8% Fibonacci retracement and 26 points off of the previous highs.

1391 will represent resistance for the markets as the recent high for the markets to try closing above. 

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

At this point, uptrend support rests at 1345.

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

VIX was crusted on Friday dropping back below 16. 

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

Downside reversal signal still remains intact on the SharePlanner Reversal Indicator

My Opinions & Trades:

Charts:

 

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