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Today's Trading Plan: Emotions Are Ramping Up

23 May 2013
by Ryan Mallory

Pre-market update (updated 8:30am eastern):

  • European markets are trading -2.3% lower.
  • Asian markets traded 3.9% lower. The NIKKEI alone was down 7.3%.
  • US futures are trading about 1% lower ahead of the opening bell.

Economic reports due out (all times are eastern): Jobless Claims (8:30am), PMI Manufacturing Index Flash (8:58), FHFA House Price Index (9am), New Home Sales (10am), EIA Natural Gas Report (10:30am), Kansas City Fed Manufacturing Index (11am)

Technical Outlook (SPX):

  • There is suddenly a huge infusement of bearishness in the markets after China's PMI came in below 50, and Bernanke & company had made references about pulling back their involvement in the markets as early as June. 
  • This is the main reason for the -7% drop Japan's NIKKEI. 
  • Overnight you have a HUGE inverse head and shoulders pattern that has formed on the S&P futures, where if it can get above 1645, the bulls could thereby push this market somewhat higher. 
  • Gap downs are the bears worst enemy. More times than not, they will give up the morning gains. Look for a bottom in the first hour followed by some consolidation and an ultimate push higher. 
  • There is a lot of news out there today, particularly with what we are hearing from the FED from yesterday making a lot of traders very nervous. 
  • We will open up below the 10-day moving average. We will also be trading below the short-term trend-line which support rests at 1655. 
  • The long-term trend-line off of the February lows sits at 1607 today, and likely safe from the reaches of the market. 
  • Huge bearish engulfing pattern on the SPY yesterday. 
  • Incredible volume in the markets yesterday, almost the highest we've seen all year for the SPY. 
  • 30-minute chart of the SPX has completely broken down. 
  • Drawing a Fibonacci retracement on the most recent market rally, from the April lows, has a 50% retracement at 1604. A 38.2% retracement would be a 1620. 
  • My biggest concern, and the reason why I think we will ultimately see some consolidation here, is how far removed the SPX is from the rising trend line off of the November lows. 
  • I do have big reservations about whether this market can truly get up to 1700 as quickly as it is trying to do. It has gone straight up since crossing 1600, and bulls have become gluttons in their market outlook. 
  • We are up seven straight months, the last time we saw such a rally was when the market bottomed in 2009. 
  • Markets don't care about the economy. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 
  • We haven't seen a market pullback in excess of 4% since October/November time-frame. 

My Opinions & Trades:

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Today's Trading Plan: Low Expectations

22 May 2013
by Ryan Mallory

Pre-market update (updated 8:30am eastern):

  • European markets are trading 0.1% higher.
  • Asian markets traded 0.3% higher.
  • US futures are slightly higher.

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), Existing Home Sales (10am), Bernanke speaks (10am), EIA Petroleum Report (10:30am), FOMC Minutes (2pm)

Technical Outlook (SPX):

  • We finished higher yet again yesterday, however, the action falls along the lines of the consolidation argument I made earlier this week. 
  • You have a trend-line that is much steeper and short term off of the April lows, that lends rising support at 1645.. 
  • Along those same lines, the 10-day moving average continues to be an excellent gauge for determining short-term market strength, as long as price manages to stay above it, the market undoubtedly remains bullish. 
  • A bearish divergence yesterday to take note of in the VIX as it rose nearly 3% despite the market moving higher as well. This has become more common place in the market of late. 
  • 30 minute chart is starting to look like a possible double top is forming. 
  • I think that we are likely to see more consolidation this week, as there is little in the way of news that can affect the market's outlook. 
  • Drawing a Fibonacci retracement on the most recent market rally, from the April lows, has a 50% retracement at 1604. A 38.2% retracement would be a 1620. 
  • My biggest concern, and the reason why I think we will ultimately see some consolidation here, is how far removed the SPX is from the rising trend line off of the November lows. 
  • Eventually the equities bubble we are in right now will burst, but until then, you have no choice but to trade to the long side. 
  • I do have big reservations about whether this market can truly get up to 1700 as quickly as it is trying to do. It has gone straight up since crossing 1600, and bulls have become gluttons in their market outlook. 
  • Traders will point at the fact that we are overbought but we have been since April - move on, nothing to see there. 
  • We are up seven straight months, the last time we saw such a rally was when the market bottomed in 2009. 
  • Markets don't care about the economy. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 
  • We haven't seen a market pullback in excess of 4% since October/November time-frame. 

My Opinions & Trades:

Read more...

Today's Trading Plan: A Week To Consolidate

21 May 2013
by Ryan Mallory

Pre-market update (updated 8:30am eastern):

  • European markets are trading 0.2% lower.
  • Asian markets traded 0.4% lower.
  • US futures are flat 

Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am)

Technical Outlook (SPX):

  • The slightest of pullbacks yesterday, but might have been enough for the market to continue advancing forward based on past precedent. 
  • I think that we are likely to see more consolidation this week, as there is little in the way of news that can affect the market's outlook. 
  • Drawing a Fibonacci retracement on the most recent market rally, from the April lows, has a 50% retracement at 1604. A 38.2% retracement would be a 1620. 
  • My biggest concern, and the reason why I think we will ultimately see some consolidation here, is how far removed the SPX is from the rising trend line off of the November lows. 
  • There is a good deal of intraday support on the 30 minute chart with support lying at 1660. 
  • Continue to follow the 10-day moving average and whether price on any pullback can hold this price level. 
  • Yesterdays sell-off was (albeit a small one) was out of exhaustion, not due to any true bearishness. 
  • Strong spike in the VIX taking it back up to 13. 
  • I'm not to concerned about this market at this point. I think you want to keep stops tight in case of reversal, but not be afraid to add new opportunities where they exist. 
  • Eventually the equities bubble we are in right now will burst, but until then, you have no choice but to trade to the long side. 
  • I do have big reservations about whether this market can truly get up to 1700 as quickly as it is trying to do. It has gone straight up since crossing 1600, and bulls have become gluttons in their market outlook. 
  • Traders will point at the fact that we are overbought but we have been since April - move on, nothing to see there. 
  • We are up seven straight months, the last time we saw such a rally was when the market bottomed in 2009. 
  • Markets don't care about the economy. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 
  • We haven't seen a market pullback in excess obf 4% since October/November time-frame. 

My Opinions & Trades:

Read more...

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ryan1Ryan (@shareplanner) specializes in swing trading strategies and is the founder of SharePlanner which he created to help and teach others on how to trade stocks better using multiple approaches and time frames. Each day you can count on Ryan to provide his trading advice as well as transparency in every trade that he makes. Ryan Mallory resides in Central Florida with a wife of seven years as well as one lively son. More >>

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