Trading Plan for January 3, 2012

Economic Reports Due out (Times are EST): ISM Manufacturing Index (10am), Construction Spending (10am), FOMC Minutes (2pm)

Premarket Update (Updated 9am eastern):

• Futures are up over 1% heading into the open but off of their highs. 
• Asian markets were experiencing gains between 0.7% and 2.4%
• Europe is showing mixed results in trading so far today

Technical Outlook (S&P):

• The S&P is poised to break away from the pack this morning, and away from the downward trend resistance level that plagued the markets since 7/7. 
• There may be some resistance as well at underside of the neckline of the Head and Shoulders that formed from the first 8 months of last year. Resistance is at 1275.
• A close above 1269 would be ideal for the bulls as it would also be creating a new higher-high for the market, and provide some additional momentum into the new year. 
• Today’s open will create some much needed separation from price action and the 200-day moving average. 
• The first trading day as well as the first week of trading traditionally is a gauge on the potential for the rest of the year for the market.
• We are well off of overbought conditions. 
• Volume should pick up this week after low holiday volumes the last two weeks. 
• Today’s strong open, will help, for now, to erase the bearish charts on the 5 & 30 minutes time frames. 

My Opinions:

• While I may have a bearish disposition towards this market, I have to trade what I see and not what I think, and until proven otherwise, I have look at the early morning strength and technical momentum on the charts that it provides as very bullish going forward. 
• Market is clearly in a mode of ignoring the bad economic news and rallying on the good. 

My Portfolio:

• 100% cash
• Sold Gold on Friday at $152 for a small loss (less that 1% from $152.90’s).
• I’ll look to day-trade this market today, and even possibly add some swing-trades to the portfolio as well. 

The Chart:

​