Trading Plan for September 4, 2012
Pre-market update (updated 8:30am eastern):
European markets are trading 0.5% lower.
Asian markets finished -0.3% lower.
US futures are trading mixed ahead of the bell.
Economic reports due out (all times are eastern): PMI Manufacturing Index (9am), ISM Manufacturing Index (10am), Construction Spending (10am)
Technical Outlook (SPX):
Semi-decent recovery off of Thursday's sell-off.
There is a price support level that has formed over the last month that is showing a bit of importance at 1396-1397.
At the same time, the SPX still has the look of a bull flag to it still.
Keep an eye out too, on SPY where there is a bullish island reversal pattern that has formed over the past three days. The last 3 times that we have gotten these, we've seen an immediate boost out of the market. Let's see whether the same thing happens again.
Long-term uptrend support off of the 6/4 lows now shows support at 1383.
Friday's volume was the highest since 8/3.
Despite the market showing some fatigue of late, the bias should still be to the long side.
30-min chart shows quite a bit of consolidation and side-ways trading over the past couple of weeks.
Also a short-term double-bottom on the 30-min chart.
10-day moving average has been rather useless of late, largely going ignored by the indices.
Going forward SPX needs to close above 1422 and take out 1426 recent intraday highs.
We are well-off of overbought levels - which gives this market plenty of room to run.
VIX continues to climb and is at +17.
One area of concern is the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
If another sell-off were to ensue, watch for a break and close below 1354 for a new lower-low in the market.
My Opinions & Trades: