Trading Plan for January 9, 2012

Economic Reports Due out (Times are EST): Consumer Credit (3pm)

Premarket Update (Updated 9am eastern):

• Futures are slightly higher, but 10 points off of the overnight lows. 
• Asian markets were all over the board from -1.2% up to +1.5%
• Europe is trading mixed/flat.

Technical Outlook (S&P):

• The last three days have represented more consolidation than anything else, with slight upward momentum. 
• The markets are barely dipping into overbought territory. 
• Volume tapered off on Friday, continuing the pattern of sub-par volume readings. 
• A move below 1275, will move the S&P back below the head and shoulder neck line that was formed last year (but still in play).
• If price sells off hard and goes down to 1252, it would put price back inside of the Downward trend-line off of the 7/7 highs. 
• On the 30 min chart, the S&P is bull-flagging at the highs. Break Friday’s highs, and we could see a nice move higher. A move below 1275-6 area would end the short-term uptrend it is currently on. 
• Best case scenario for the bulls today would be to break 1292, which would represent the October highs. 
• We still have a gap higher from Tuesday that has seen the bears attempt to fill, but failed the last three days. 
• The S&P finished higher during the first week of trading in this new year, which the historical odds say there is an 86% chance the market finishes higher on the year. We finished higher last year in the first week of trading too, but closed unchanged for the year. 

My Opinions:

• The lack of volume in this market, has me leaning a little more bearish right now, simply because, of the lack of breakout on the break of the 7/7 downward trend-line and break of the H&S neckline break. 
• However, if the market gets a strong push higher, the shorts are likely to get very uncomfortable and forced to cover their positions (adding more buying power to the markets).
• If it can break 1293 as described above, I think we’ll a lot of buyers will start coming off of the sidelines and move back into equities.

My Portfolio:

• 100% cash
• Traded TZA for a small 1% gain on Friday, as well as HGSI which netted about 1.5%. 
• I’ll look to day-trade this market today, and even possibly add some swing-trades to the portfolio as well. 

The Chart: