Trading Plan for February 2, 2012
Economic Reports Due out (Times are EST): Challenger Job-Cut Report (7:30am), Jobless Claims (8:30am), Productivity and Costs (8:30am), Bloomberg Consumer Comfort Index (9:45am), Bernanke Speaks (10am), EIA Natural Gas Report (10:30am)
Premarket Update (Updated 8:40am eastern):
U.S. Futures are Flag with a slight negative tilt
Asian markets were up strong ranging from +0.6% up to 2%.
European markets are up trading down about about -0.2%
Technical Outlook (S&P):
We got a strong rally yesterday, but remained firmly entrenched below the key multi-year resistance level that currently resides at 1333.
Employment Report tomorrow will play a large role in how we end the week tomorrow.
Volume yesterday was slightly above average but less than what we saw the day prior.
If the bears want to gain control of this market, they need to push this market back below 1300. If the bulls want to breakout and start triggering the stop-losses, then they need to break above 1333. That is essentially what this market boils down to at this point.
A lot of traders poured into the Russell yesterday at the close despite the broader market, including the S&P selling off - a major divergence.
SPY close fairly close to where it opened up at yesterday - just a shade above.
At that level you have a strong multi-year resistance level that I think will be difficult to break, dating back to 2007 market highs. See the article "A Bullish Love Affair", where I outline this in chart.
I wrote about a head and shoulders pattern on the EUR/USD chart on Tuesday. While the pattern was tested, the downtrend still remains in place, and we are seeing weakness in it today.
We saw the 50-day moving average cross the 200-DMA yesterday, but I put little importance into this phenomenon - more folk lore than anything else.
Some minor support at 1286, but the next notable level of support comes from the up-trend off of the November lows, and currently lies at 1278.
Strong doji-candle formed on the weekly chart last week, which often signals reversals in the market direction.
Whether this market can sustain itself to the upside is anyone's guess long-term. But Short-term, there needs to be a pullback, perhaps as low as 1270..