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Trading Plan for June 20, 2012

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June 20, 2012 – Comments (0) | RELATED TICKERS: SPY , IWM , QQQ

Economic Reports Due out (Times are EST): MBA Purchase Applications (7am), EIA Petroleum Status Report (10:30am), FOMC Meeting ANnouncement (12:30pm), FOMC Forecasts (2pm), Chairman Press Conference (2:15pm)

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

US futures are flat ahead of the open.

European markets are trading mixed/flat. 

Asian markets traded on average 1.1% higher.

Technical Outlook (SPX):

The market gave us a solid 1% move yesterday.

We saw price on SPX cross and finish above the 50-day moving average. Very bullish. 

The move off of the June 4th lows is very similar to the bullishness that we saw in October of last year and September 2010. 

Next level of resistance lies in the 1365-68 range. It's not major resistance, but worth noting nonetheless.

Also important is the angle of the 10-day moving average, when it turns suddenly steeper in slope like it has over the past four trading sessions, it can be a good indication that the market is ready to rally for an extended period of time. 

By steep I mean by more than 45 degrees. Refer to price action from late December 2011 and January 2012. 

We are right back in overbought territory, but the thing is, if the market is indeed on a strong run, it can stay in this area, for quite a while. 

Yesterday we pushed a shade outside of the upper Bollinger-Band - something I'm not a big fan of. If this continues in a more aggressive manner, I will likely book gains faster than originally anticipated. 

Large moves outside of the Bollinger Bands usually leads to hard pullbacks. 

There is now an established uptrend in place on SPX off of the 6/4 lows with consecutive higher-highs and higher-lows now (two of each). 

FOMC statement comes out at 12:30pm est today - expect a lot of volatility to come with it in anticipation of further easing. 

Quite a ways from current price, but ultimately, if the price can clear 1401 we'll have a market that is very bullish. 

Represents the slightly descending resistance level off of the 4/2/12 highs. 

SPX confirmed the inverse head and shoulders pattern on Friday. 

Of late, respectable support lies at the 10-day moving average. 

Has touched it multiple times in the past 2 weeks and held each time. 

IH&S pattern very obvious on the 30-minute chart.

Confirmed on Friday.

Volume was fairly light yesterday.

A break below 1306 would represent a resumption of the downward trend. 

VIX is back below 20 and is a bullish development for the market. 

My Opinions & Trades:

Charts:

 

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