Trading Plan for September 14, 2012

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

• European markets are trading 1.7% higher. 
• Asian markets mixed as well, finished 2.3% higher. 
• US futures are trading slightly higher ahead of the opening bell. 

Economic reports due out (all times are eastern): Consumer Price Index (8:30am), Retail Sales (8:30am), Consumer Sentiment (9:55am), Business Inventories (10am)

Technical Outlook (SPX):

• Monster day for the markets after the FOMC statement. 
• Essentially Fed provided Wall Street with the much awaited QE3 with the additional purchase of $40 billion in assets each month.
• Announcement will likely  give us a new wave of euphoria for buying stocks, as more people will be forced out of more traditional interest-bearing asset (bonds, CD’s, etc.) and into the market in search of some kind of return. 
• SPX, after yesterday’s move is well outside fo the upper bollinger band, and these kind of moves can be difficult to sustain as historically, there is usually a pullback, not too longer thereafter, to settle the markets down some. 
• Going back years, there really is little in the way of resistance for the markets until it tests 1500 (can’t believe I’m writing that). 
• Resistance at 1437 and 1440 was broken with little problem. 
• The last two times we pushed outside the upper bollinger band on the weekly chart (which we are also doing as of yesterday’s close), they came after extended rallies similar to the one we’ve seen of late, and resulted in a multi-week pullback the following week. 
• Volume was strong yesterday (relatively speaking).
• Bull-flag breakout we had been noting in recent days came to fruition. 
• SPX still remains overbought. 
• Upward trend-line off of the 6/4 lows has rising support at 1400. 
• SharePlanner Reversal Indicator shows a bearish divergence which is worth noting. 
• 30-min chart shows the same bull-flag pattern as the daily with tight consolidation at the highs. 
• VIX at 14, and could hit the 13’s today. . 
• 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
• Should a sell-off ensue after the Fed action/comments today, look for support to come in at 1438.
• 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:

• Took a long position in BEAV yesterday at $40.75. 
• Sold V at $134.89 from $127.18 for a 6.1% gain. 
• May add a short position as a hedge to the portfolio today. 
• Current stop-losses have been adjusted across the board. 
• Considering selling V after it looks very over-extended at this point. 
• ALXN stop-loss moved up to $108.00
• Stop-loss for FBHS at $26.10.
• Stop-Loss for WYNN increased to $105.50.
• Remain long WYNN at $107.47, NLSN at $28.70, CRR at $72.27, FBHS at $24.54, and ALXN at $102.53
• Track my portfolio RealTime here. 

Charts: