Trading Plan for September 6, 2012
Pre-market update (updated 8:30am eastern):
European markets are trading 1.4% higher.
Asian markets finished 0.1% higher.
US futures are trading moderately higher ahead of the bell.
Economic reports due out (all times are eastern): Challenger Job-Cut Report (7:30am), ADP Employment Report (8:15am), Jobless Claims (8:30am), ISM Non-Manufacturing Index (10am), Quarterly Services Survey (10am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am)
Technical Outlook (SPX):
Another controlled/orderly sell-off in the market yesterday.
The 10-day moving average crossed below the 20-day moving average just as we spoke about yesterday. This is the first time since 6/14 that the 10-dma has been below the 20-dma.
SPX continues to bull-flag over the past 12 trading sessions. Today, based on pre-market action, could be the day that it breaks out of that pattern.
If we can trade above and close above 1411 today, it would likely signify a breakout of that bull-flag pattern.
Volume has improved a good bit over the past three trading sessions.
SPX is nearing oversold conditions for the first time since mid-July.
We continue to see is SPX fighting off a drop below 1396-7 short-term support level, as well as close above the psychological 1400 level.
Keep an eye out too, on SPY where there is a bullish island reversal pattern that has formed Wednesday-Friday last week. 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 1384.
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.
Going forward SPX needs to close above 1422 and take out 1426 recent intraday highs.
VIX continues to climb and is a shade below 18.
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: