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Trading Plan for January 19, 2012

January 19, 2012 – Comments (0) | RELATED TICKERS: SPY

Economic Reports Due out (Times are EST): Consumer Price Index (8:30am), Housing Starts (8:30am), Jobless Claims (8:30am), Bloomberg Consumer Comfort Index (9:45am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am)

Premarket Update (Updated 9am eastern):

U.S. Futures are up moderately heading into the open.

Asian markets averaged 1.1% in gains.

Europe is up about 1% in early trading.

Technical Outlook (S&P):

Yesterday was an absolute back-breaker for the bears, as they added much of the rally's fuel

Volume continues, even on strong trending days, to be light.

We've traded above the 10-day moving average for 19 straight days, and have finished in the green 15 times during that span.

Watch for major technical resistance today at 1313 off of the 5/2/11 market highs downtrend.

Market is absolutely due for a pullback - "when" is the big question. Last January we marched up nicely in similar fashion, then on the 28th of the month, there was a major sell-off out of nowhere. I would be surprised to see a similar scenario between now and the end of the month as well.

Russell shattered the double-top mentioned yesterday.

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.

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 isn't anywhere close to threatening these levels.

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. 

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