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Trading Plan for August 8, 2012

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August 08, 2012 – Comments (0) | RELATED TICKERS: DIA , QQQ , SPY

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

European markets are trading 0.5% lower. 

Asian markets traded 0.8% higher. 

US futures are trading slightly lower. 

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), Productivity and Costs (8:30am), EIA Petroleum Status Report (10:30am)

Technical Outlook (SPX):

After seeing the SPX sell-off 4 straight days last week, we are now attempting to move higher for the 4th straight day this week. 

SPX managed to close above the mental hurdle of 1400 yesterday, and poised to make a move to 1422 and challenge the year's highs. 

Market is back to being short-term overbought after rallying more than 35 points in 3 days. 

Biggest news so far this week, technically, has been the SPX breaking out of the descending trend-line off of the 4/2 highs (as noted below). 

Volume continues to be extraordinarily light over the past few days and if you compare it to this time last year, it is as much as 30% less. 

It's not uncommon to see large market rallies going into an incumbent re-election - (post later on this today).

Very strong rally in place on the 30min chart of the SPX.

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 are 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 1350.

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

VIX has now bucked the trend during the last two trading sessions - should be of concern for the bulls as a divergence. 

If another sell-off were to ensue, watch for a break and close below 1354 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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