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Trading Plan for January 23, 2012

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January 23, 2012 – Comments (0) | RELATED TICKERS: SPY

Economic Reports Due out (Times are EST): None

Premarket Update (Updated 9am eastern):

U.S. Futures are mixed/flat.

Asian markets in a mixed fashion as well. 

Europe is trading about 0.5% higher on the day. 

Technical Outlook (S&P):

For the second straight session, we have closed above the downward trend that started last year off of the 5/2/11 highs.

Volume picked up noticeably, due mainly to Friday being Options Expiration. 

We're at overbought levels, that practically always leads to a pullback of some kind in the short-term.

Any sell-off we get of significance at this juncture, would likely push us back below the descending trend-line from the 5/2/11 highs. 

We've traded above the 10-day moving average for 21 straight days, and have finished in the green 17 times during that span (+80% of the time).

30-min chart shows another nice bull-flag pattern. In recent past, these have been precursors to new leg-ups in the market. 

5-min chart shows a similar bull flag trying to break above 1315.

Last January we marched higher in all the indices in similar fashion in similar fashion to what we are seeing now, then on the 28th of the month, there was a major sell-off out of nowhere. I would not be surprised to see a similar scenario between now and the end of the month as well.

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 1278, 1261, and long-term support off of the October lows lies at around 1242. The market isn't anywhere close to threatening these levels.

There still remains unfilled gaps from 11/28, 1/3, 1/10 and 1/17. Highly, highly unlikely all four of these gaps go unfilled for very long. 

My Opinions:

My Portfolio:

Chart: 

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