Trading Plan for March 13, 2012

Economic Reports Due out (Times are EST): NFIB Small Business Optimism Index (7:30am), ICSC-Goldman Store Sales (7:45am), Retail Sales (8:30am), Redbook (8:55am), Business Inventories (10am), FOMC Meeting Announcement (2:15pm)

Premarket Update (Updated 8:30am eastern):

• US Futures are moderately higher ahead of the open. 
  
• Asian markets saw gains range from flat up to +1%.
  
• European markets are up on average 1% right now. 
  

Technical Outlook (S&P):

• The S&P is prime for a breakout above the recovery highs today. 
• It is very important that the S&P  maintains its current gains and builds upon them into the close today. A failure/reversal in price would sport a potential double top on the daily chart. 
• FOMC Statement released at 2:15pm EST today is a definite market catalyst to watch – major game changer to the upside last time, we’ll see what this time holds for us. 
• Since the rebound off of Tuesday’s sell-off (distant memory for the market) we are looking our 3rd gap higher today on the daily chart. All of which remains unfilled. 
• Volume dropped off quite a bit on Monday, and what we have seen since the bounce last Wednesday is volume levels close to what we saw the day before Christmas. 
• Huge hanging man pattern on the S&P weekly chart – very bearish. 
• Bullish island reversal pattern on the daily SPY chart. 
• Bulls will be looking to get price action above 1378 as quickly as possible. 
• The bears will need to get back below the 20-day moving average in short-order. 
• A break of Tuesday’s lows would signify the last three trading sessions of market strength being nothing more than a dead cat bounce and will lead to further action to the downside.  
• The 30-minute chart is consolidating and with today’s premarket strength is looking fairly good. 

My Opinions:

• Something tells me we might see a sucker’s gap – a lot of people will try to get back on the bandwagon today in fear of missing out of another rally higher, especially after being shaken out by the sell-off last week. 
• I wouldn’t rule out additional good news from the Fed this week – they have an unbelievable ability to play to the crowd and tell them exactly what they want to hear at the expense of long-term sustainability. 
• The market ignoring the major sell-off in the Euro lately just shows how strong this market is and determined to go higher at all costs. 

Chart: