Trading Plan for October 2, 2012

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

• Europe is trading 0.4% higher. . 
• Asian markets traded mixed/flat. 
• US futures are trading slightly higher ahead of the bell.

Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am)

Technical Outlook (SPX):

• Despite finishing up on the day yesterday, the market had a very bearish tone to it, and saw the market give up more than 80% of its gains. 
• A move where you end up near break-even on the day, despite being up over 1% early on is a strong sign the bears are aggressively shorting spikes, and are loading up on short positions. 
• Either we squeeze much higher or the bears drive this market much lower – but either way volatility is picking up. 
• After yesterday’s intraday sell-off, you have what is starting to look like a bear-flag forming on the day. Bulls need to break the previous highs, in order to nullify the pattern. 
• Volume has been average of late. 
• 30-minute chart is beginning to show the makings of a nice downward channel forming. 
• Ideally, bulls need to get price back above the highs or at least near them from yesterday. 
• For the bears, Driving price below Friday’s lows, and ultimately Wednesday’s lows, is ideal for a continuing downtrend. 
• VIX is trading back above 16. 
• 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 1423
• 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:

• I didn’t close out any trades yesterday. 
• Bought GFA at $4.48. 
• Shorted ACTV at 12.17.
• Currently still long in WYNN at $115.42, GRPN at $4.88, TTM at $25.50 and short INVN at $12.14
• Track my portfolio RealTime here. 

Charts: