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Trading Plan for January 18, 2012

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January 18, 2012 – Comments (0) | RELATED TICKERS: SPY , TZA , AFFY

Economic Reports Due out (Times are EST): MBA Purchase Applications (7am), ICSC-Goldman Store Sales (7:45am), Producer Price Index (8:30am), Redbook (8:55am), Treasury International Capital (9am), Industrial Production (9:15am), Housing Market Index (10am)

Premarket Update (Updated 9am eastern):

U.S. Futures are slightly up.

Asian markets averaged 0.5% in gains.

Europe is slightly positive.

Technical Outlook (S&P):

Yesterday, we saw the market open up strong, only to fade continuously throughout the day, and even accelerate as the day progressed.

While we've had no problem trading above 1293, the S&P still seems to be magnetized to this price, coming back to it each time.

Russell shows a double top on the daily charts formed over the last three months.

Short-term we are working off the over bought conditions, but intermediate-long-term shows us still well-overbought.

Last four trading days we've seen the market fade the initial direction of the market.

Volume was average in comparison to what we've seen over the last month.

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.

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.

Market is up 14 out of the last 18 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 candles shows a market, that is only making progress through overnight surges, and unable to build off of that momentum once the market opens. Good sign of a tired market.

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