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Trading Plan for January 17, 2012



January 17, 2012 – Comments (0) | RELATED TICKERS: SPY

Economic Reports Due out (Times are EST): Empire State Manufacturing Survey (8:30am)

Premarket Update (Updated 9am eastern):

Futures are strong on the heels a strong China GDP.

Asian markets were up from 0.9% up to 3.2%

Europe is showing positive gains averaging about 1.4%.

Technical Outlook (S&P):

Friday's action saw the S&P sell off nearly 20 points in the early morning, only for the market to spend the rest of the afternoon rallying higher and recovering nearly 3/4 of those losses.

Over the past 3 months we have rarely had a trending down-day, meaning the market continues to put in lower-lows and lower-highs. Instead, we get a strong push in the morning, followed by a brief basing pattern, and finally a rally in the afternoon that wipes away much of the day's losses. Remember this going forward.

Overnight the S&P futures formed a head and shoulders pattern on the 5 minute chart, that could  ominously lead to the market giving up some or all of its gains.

Volume levels still remain flat in comparison to recent weeks. Seasonally it is very low.

Issues taking place in Europe is gradually creeping back into the economic picture, particularly with the S&P downgrading a number of countries, and threatening to do so with a number of others.

1313 is the key level on the S&P for the index to break down and through, as it would technically end the down-trend that we've been on since reaching the 5/2/11 highs. 1300 will also be an important psychological level as well.

Short term support for the S&P lies at 1255, and long-term support off of the October lows lies at around 1228. The market doesn't appear to be anywhere close to threatening these levels.

No need to remind you have overbought we are right now.

Market is up 13 out of the last 17 sessions.

There still remains unfilled gaps from 11/28, 1/3, and 1/10. The latter two would make it seem likely that we need them to be filled before we can have any substantial move upward.

On the 30 minute chart we are looking very toppy/distributive

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