Trading Plan for January 6, 2012
Economic Reports Due out (Times are EST): Employment Situation (8:30am), Treasury Strips (3pm)
Premarket Update (Updated 9am eastern):
Futures are moderately, and have managed to make an impressive rally off of its overnight lows (at one point as much as 15 points on the S&P).
Asian markets were mixed ranging from -0.9% up to +0.5%
Europe is down on average about -0.4% so far in early morning trading.
Technical Outlook (S&P):
The last two days of trading we've seen the bears take control in the early morning, by pushing stocks noticeably lower, only to lose their grip on the market and thereby allowing the market to rally and close in positive territory.
We've seen the same thing play out in overnight trading as well. Which tells me that weakness is being bought up at every opportunity - something we saw a lot of in early 2011.
Volume continues to under-impress, coming in yet again below average.
We're back in overbought territory, but remember that markets can run for a long time in overbought territory, so don't front-run.
Best case scenario for the bulls today would be to break 1292.
We still have a gap higher from Tuesday that has seen the bears attempt to fill, but failed the last two days.
The 30 minute chart doesn't look quite so bearish after yesterday, now that it has formed a higher high and broke its short-term downtrend. The same goes for the 5 minute chart.
Quick stat to remember, when the S&P finishes higher during the first week of trading in a new year, then the odds say there is an 86% chance the market finishes higher on the year. We finished higher last year in the first week of trading but closed unchanged for the year.