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Trading Plan for June 11, 2012

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June 11, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , QQQ

Economic Reports Due out (Times are EST): None

Pre-market Update (Updated 8:30am eastern):

US futures are up moderately after erasing half their gains overnight. 

European markets are trading 1.1% higher.

Asian markets traded on average 2.0% higher. 

Technical Outlook (SPX):

We saw another strong rally by the market and is beginning to look very similar to the strength that we saw back in September 2010 and October 2011 when the markets put in bottoms after extended sell-offs. 

The markets in general have pulled back roughly 10% off of its recent highs which is typically considered a "pullback" in the markets. 

This mornings strength on the Spanish bailout news, puts the market in position to test 1335 on the S&P. A close at or above would be a very bullish sign for the market. 

The possibility also exists that we are putting in a very short-term inverse head and shoulders pattern on the S&P, in which we would unlikely push past 1334 before pulling back moderately to form the right shoulder. 

We are well outside of the bullish wedge that was broken last week. 

S&P needs to find its way back above 1329, and then challenge resistance at 1334.

Market is back into short-term overbought conditions. Risk increases for bulls on long positions as a result.  

S&P crossed back above the 20-day moving average, which has provided quite a bit of problems to break through in recent weeks. 

Major bottoms or at the least, interim bottoms, tend to make huge gains in the initial days following the bottom. See last October and September 2010. 

Minor support at 1249, 1209 would also represent a level of price support, should we close below 1266 support. . 

30-minute chart has an inverse head and shoulders pattern with a small right shoulder (but this doesn't show up on the daily chart, making it less legit). 

VIX is still elevated and rests above 21 - below 20 and the bear's hopes for a break higher is greatly hampered. .

My Opinions & Trades:

Charts:

 

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