Trading Plan for February 13, 2012

Economic Reports Due out (Times are EST): None

Premarket Update (Updated 8:30am eastern):

• US Futures are up strong on Approval of Greece austerity measures
  
• Asian markets were up about 0.4%
  
• European markets are up about 0.8% right now. 
  

Technical Outlook (S&P):

• The S&P saw some significant selling on Friday, but the buying in the last hour of trading put a damper on things to say the least. 
• The 5-minute & 30-minute chart on the S&P forms a text book double bottom. 
• Today’s pre-market strength could create a bullish island reversal pattern, where you have over a two-day period a strong gap-down followed by a strong gap-up. 
• Volume was strong on Friday, the highest level of the month. 
• We are coming off of short-term overbought conditions. 
• The SharePlanner Reversal Indicator finally gave us a reversal signal both on the daily and weekly indicators. 
• The S&P closed in negative territory for the first time in five weeks. 
• Trend-line support is at 1300 off of the 11/28 lows. 

My Opinions:

• I am surprised we are bouncing as much as we are off of the Greece bailout. For as long as this saga has been going on for, I would have thought this whole thing would be priced in by now. 
• If we do fill the morning gap up, watch to see if we can break the 10-day moving average and then fill the gap up from 2/3 at 1325.
• While recognizing a lot of head winds facing the market from an economic standpoint, the market seems to be pricing everything that we know and expect about the European crisis, and with a solid earnings season as well as easing by the Fed, we could see continued price appreciation this year (particularly with an incumbent President up for re-election).
• The daily price action, beyond the obvious ‘buy-the-dip” action has been to breakout and move higher, followed by a few days of consolidation and slight pullback. Rinse and repeat.
• We have yet to see the “buy-the-dip” mentality cease. Each market open where weakness is present, the bulls buy the open, no matter what, and recovers most if not all of the day’s losses. As long as this persists, the bears do not stand a chance, and the bull rally will prevail.

Chart: