Trading Plan for October 1, 2012

Pre-market update (updated 8:30am eastern):

• Europe is trading 1.2% higher. . 
• Asian markets traded mixed but with a slight bearish tilt. . 
• US futures are trading slightly ahead of the bell.

Economic reports due out (all times are eastern): PMI Manufacturing Index (9am), ISM Manufacturing Index (10am), Construction Spending (10am), Bernanke Speaks (12:30pm)

Technical Outlook (SPX):

• Friday’s action didn’t give up all of the bounce’s gains but did give up a good portion of it, leading me to believe that we may see further downside in the days ahead. 
• Potential exists that we may be forming a bear flag on the SPX daily. 
• First trading day of a new month/quarter tend to be very bullish, and in this case, you’ll likely have a lot of fund managers chasing performance as we head into the final stretch of the year. 
• Ideally, if the morning strength holds, it would do the bulls well, from a sentiment standpoint, to finish above 1462. 
• For the bears, they need to fill the morning gap and drive price below 1430, which was Wednesday’s lows, to shift sentiment. 
• 30-minute chart shows a lot of resistance in the 1458 area of SPX. 
• Despite all the selling we’ve been seeing of late, VIX is still in the 15’s. 
• Best way to use moving averages should be as sentiment indicators and not a “line-in-the-sand” type of approach. 
• Beyond that there is some (very slight support) at 1428. More significant support lies at 1396 and 1412. 
• Fed’s QE3 launch is going to add a lot of buying power to this market and drive more people out of interest-bearing assets and into equities in search of some kind of return. 
• Going back years, there really is little in the way of resistance for the markets until it tests 1500.
• Upward trend-line off of the 6/4 lows has rising support at 1421
• One area of concern is the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
• If another sell-off were to ensue, watch for a break and close below 1396 for a new lower-low in the market.  

My Opinions & Trades:

• Sold WYNN at $114.90 from 107.47 for a 6.9% gain. 
• Re-entered later that afternoon again WYNN at $115.42. 
• Bought GRPN at $4.88
• Shorted INVN at $12.14
• Bought TTM at $25.50.0
• Track my portfolio RealTime here. 

Charts: