Trading Plan for October 5, 2012

Pre-market update (updated 4:30am eastern):

• Europe is trading 1.1% higher.
• Asian markets trading 0.4% higher. 
• US futures are trading moderately higher ahead of the bell.

Economic reports due out (all times are eastern): Employment Situation (8:30am), Consumer Credit (3pm)

Technical Outlook (SPX):

• Strength in the market yesterday took us above minor resistance that was found at 1458-9. 
• A push above 1465, and ideally above 1474, would be incredibly bullish, and likely lead to additional squeezing of the bears. 
• This would also create a ‘higher-high’ for the market which would be extremely important and pave the way for a test of 1500. 
• Quickly approaching overbought conditions in the short-term, but not quite there yet. 
• Failure to make a new higher in the near-term, would be indicative of a topping pattern in the broader market. 
• Bear-flag pattern that had been forming on the daily of the SPX is null and void at this point. 
• We have a 10-20-day moving average crossover to the downside. Last time we saw this was in early September, and it marked a short-term bottom and subsequently bounced and sent the market nearly 80 points higher. 
• Volume has been relatively average, maybe slightly below, but nothing unusual. 
• Taking a look at the weekly chart of SPX, the conditions look very healthy with no signs of a near-term breakdown. 
• For the bulls to build confidence among investors, there needs to be less of the intraday sell-offs. And the bears, if they really want this market to push lower, they need to take advantage of the intraday weakness it continues to get handed. 
• VIX is trading below 15.
• 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. 
• Upward trend-line off of the 6/4 lows has rising support at 1428
• 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:

• Covered my short position in ACTVE at $11.56 from 12.17 for a 5% gain. 
• Day-Traded ATRS $4.03 from $4.00 for a 0.8% gain
• Day-Traded BGCP 5.13 from 5.09 for a 0.8% gain (coincidence)
• Remain long $WYNN at $115.42, TTM at $25.50, VZ at $45.68, SHLD at $54.48. 
• Stop-loss tightened to $25.90 for TTM.
• Stop-loss tightened to $45.80 for VZ.
• Track my portfolio RealTime here.

Charts: