Trading Plan for September 4, 2012

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

• European markets are trading 0.5% lower. 
• Asian markets finished -0.3% lower. 
• US futures are trading mixed ahead of the bell. 

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

Technical Outlook (SPX):

• Semi-decent recovery off of Thursday’s sell-off. 
• There is a price support level that has formed over the last month that is showing a bit of importance at 1396-1397.
• At the same time, the SPX still has the look of a bull flag to it still. 
• Keep an eye out too, on SPY where there is a bullish island reversal pattern that has formed over the past three days. The last 3 times that we have gotten these, we’ve seen an immediate boost out of the market. Let’s see whether the same thing happens again. 
• Long-term uptrend support off of the 6/4 lows now shows support at 1383.
• Friday’s volume was the highest since 8/3.
• Despite the market showing some fatigue of late, the bias should still be to the long side.
• 30-min chart shows quite a bit of consolidation and side-ways trading over the past couple of weeks. 
• Also a short-term double-bottom on the 30-min chart. 
• 10-day moving average has been rather useless of late, largely going ignored by the indices. 
• Going forward SPX needs to close above 1422 and take out 1426 recent intraday highs.
• We are well-off of overbought levels – which gives this market plenty of room to run. 
• VIX continues to climb and is at +17.
• 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 1354 for a new lower-low in the market.  

My Opinions & Trades:

• Stopped out of RHT on Friday at $56.41 from $57.56 for a -2.0% loss. 
• Adjusted (rarely do this) my stop-loss in CRM and made it a bit wider to take advantage of clear price support to $142.13. 
• Current stop-losses have been adjusted across the board. 
• Stop-loss in AMZN moved up to $245.00.
• HE Short stop-loss has been has been tightened to 27.15. 
• ALXN stop-loss moved up to $104.60
• New Stop-loss for FBHS at $24.70
• Remain long $57.56, FBHS at $24.54, ALXN at $102.53, LXP at $9.21, and AMZN at $233.90. Short HE at $28.45.
• Track my portfolio RealTime here. 

Charts: