Trading Plan for September 26, 2012

Pre-market update (updated 12:00am eastern):

• Asian markets are trading -1.3% lower. 
• US futures are trading slightly higher ahead of the bell.

Economic reports due out (all times are eastern): MBA Purchase Applications, New Home Sales (10am), (7am), EIA Petroleum Status (10:30am)

Technical Outlook (SPX):

• Yesterday’s market action was quite a shocker overall. That was a hard move to see coming, particularly on the QE3 news of late, and strong/bullish technical analysis that suggested a move upward.
• While on the day the SPX was down -1%, that is hardly a game changer from the broader perspective of things. 
• However, it does do some damage to the charts, as the 10-day moving average has been basically decimated with a test of the 20-day moving average now looming. 
• Best way to use moving averages should be as sentiment indicators and not a “line-in-the-sand” type of approach. 
• Volume was notably higher in comparison to recent weeks which adds more validity to Tuesday’s sell-off. 
• We still remain in the upward channel off of the 6/4 lows, and we have yet to put in a lower-high. One bad day in the market doesn’t change much. But does catch your attention and therefore should be monitored closely. 
• Bulls may use the 20-day moving average like they did the 10-day moving average last Thursday, to reload on the long-positions. Careful with getting too short tomorrow. 
• Beyond that there is some (very slight support) at 1428. More significant support lies at 1396 and 1412. 
• If the bulls put together a strong rally in response to today’s action, that would be a very, very good indication to aggressively add long positions to the portfolio. But it would need to wipe out most of the previous day’s losses. 
• We’ve come well off of overbought conditions. 
• 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.
• Resistance at 1437 and 1440 was broken with little problem and now becomes support. 
• Upward trend-line off of the 6/4 lows has rising support at 1412. 
• SharePlanner Reversal Indicator confirmed the move higher this past week. 
• Nice pop in the VIX putting it back above 15. 
• 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:

• Yesterday’s sell-off took us out of 5 positions 2 profitable 3 for losses: 
• Sold NLSN at $29.80 for $28.70 for a 3.8% gain. 
• Sold BEAV at 41.60 from 40.75 for a 2.1% gain. 
• Sold TMO at 52.25 from 52.91 for a -1.1% loss. 
• Sold BIG at $29.93 from $30.84 for a -2.95% loss. 
• Sold LUK at $23.16 from $24.05 for a -3.7% loss. 
• Current stop-losses have been adjusted across the board. 
• ALXN stop-loss moved up to $112.20
• Stop-Loss for WYNN increased to $112.50.
• Stop-Loss for PNR moved to $42.50
• Remain long PNR at $43.85, WYNN at $107.47, and ALXN at $102.53
• Track my portfolio RealTime here. 

Charts: