Trading Plan for September 17, 2012

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

• European markets are trading -0.5% lower. 
• Asian markets mixed as well, finished 1.1% higher. 
• US futures are trading slightly lower ahead of the opening bell. 

Economic reports due out (all times are eastern): Empire State Manufacturing Survey (8:30am)

Technical Outlook (SPX):

• A nice follow-through on Friday after an incredible breakout from the day prior. 
• The main theme in today’s trading plan is the market being well over-extended at these levels. 
• Traders have their eyes fixed on SPX 1500, but it is more likely that this market will need to cool off some before moving higher. 
• Using a Bollinger-band overlay, SPX is trading for its second consecutive day outside the upper band, with Friday’s entire candle body outside the upper band. 
• On the weekly chart, the price has creeped (very rare) outside the upper bollinger-band which historically led to a short-term pull-back. 
• Volume  has increased for three consecutive days. 
• It goes without saying we are overbought. 
• 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 (can’t believe I’m writing that). 
• Resistance at 1437 and 1440 was broken with little problem and now becomes support. 
• Bull-flag breakout we had been noting in recent days came to fruition. 
• 30-minute chart shows key support at 1433-36 and 1396. 
• Upward trend-line off of the 6/4 lows has rising support at 1404. 
• SharePlanner Reversal Indicator confirmed the move higher this past week. 
• VIX above 14, and bucked the markets upward move. 
• 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:

• No new long positions on Friday. 
• Sold FBHS at $28.36 from $24.54 for a 15.6% gain. 
• May add a short position as a hedge to the portfolio today. 
• Current stop-losses have been adjusted across the board. 
• ALXN stop-loss moved up to $109.00
• Stop-loss for CRR at $71.83.
• Stop-loss for NLSN at $28.64..
• Stop-Loss for WYNN increased to $105.50.
• Stop-Loss for BEAV adjusted to $40.00. 
• Remain long BEAV at $40.75, WYNN at $107.47, NLSN at $28.70, CRR at $72.27, and ALXN at $102.53
• Track my portfolio RealTime here. 

Charts: