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Trading Plan for August 9, 2012

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August 09, 2012 – Comments (0) | RELATED TICKERS: SPY , QQQ , IWM

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

European markets are trading -0.4% lower. 

Asian markets traded 1.0% higher. 

US futures are trading slightly lower. 

Economic reports due out (all times are eastern): International Trade (8:30am), Jobless Claims (8:30am), Wholesale Trade (10am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

Fourth straight day of gains in the SPX. 

Low volume continues to be the norm for the rally over the same time period. 

Market remains well overbought on multiple time frames. 

Solid higher-high with doji-hammer candle yesterday, could be the signal for a pullback here. 

For a while, the rally off of the 6/4 lows looked more like a bear-flag forming, but no longer with the strength in the market over the last month. 

If the SPX is to finish again in the green today, it would be the first 5-day rally since the 3/7-3/12 period from earlier this year. 

SPX poised to make a move to 1422 and challenge the year's highs. 

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).

30min chart is beginning to look like a head and shoulders pattern, which spells trouble for the markets, if the neckline of the pattern confirms. 

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 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 1353.

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

VIX had a large reversal yesterday and remains below 16

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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