Trading Plan for March 9, 2012

Economic Reports Due out (Times are EST): Employment Situation (8:30am), International Trade (8:30am), Wholesale Trade (10am)

Premarket Update (Updated 8:00am eastern):

• US Futures are flat ahead of the employment number. 
  
• Asian markets traded 1.4% higher.
  
• European markets were mixed/flat. 
  

Technical Outlook (S&P):

• Employment number will go a long ways in determining market strength for today and going forward. 
• Yesterday’s rally managed to wipe out the losses from Tuesday’s sell-off and within reach of making new recovery highs. 
• The S&P is already back to trading above the 10-day and 20-day moving averages again. 
• A break of Tuesday’s lows would signify the last two days of market strength being nothing more than a dead cat bounce and will lead to further action to the downside.  
• A rally that takes us above to a close above 1378, would indicate the market expanding and starting a new leg higher.
• The 30-minute chart absolutely needs the S&P to make a new high in the very near future, as it has formed lower-lows, but has strong support at the 1340 level. 
• Volume has dropped off each of the past two days. 

My Opinions:

• Bulls are clearly looking for a good employment number to resume the uptrend of this market. It could also be where even a bad employment number is received positively as a sign for additional quantitative easing (QE). 
• Fed announcing a new form of QE Wednesday, just shows you how difficult it is for anyone to short this market. Fighting the Fed, when they act this aggressive, ends up being a losing battle. 
• For more than 10 years, the first two weeks of March have been horrible for the bulls – seeing strong sell-offs (with the exception being 2010 and the second week of 2009). Second half of the month has fared much better. It is an incredible phenomenon.
• I’m using January-February of last year as my roadmap for trading this market – price action is nearly identical, as is the time frames too. With that being said, it is likely we see a pullback of worth here in the very near future. 

Chart: