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Today's Trading Plan: Another Attempt At New Highs

Published 01/21/2014, 10:22 AM

Pre-market update:

  • Asian markets traded 0.7% higher.
  • European markets are 0.4% higher.
  • US futures are trading 0.4% higher ahead of the market open.


Economic reports due out (all times are eastern):
None

Technical Outlook (SPX):

  • SPX pulled back for the second straight day on Friday, but held the 10 and 20-day moving averages perfectly.
  • With the 10-day and 20-day moving averages converging together, it should provide extrasupport in the days ahead.
  • You also have the rising trend-line off of the October lows that is getting much closer to the price action - now at 1825.
  • Volume was noticeably higher on Friday's sell-off.
  • Consolation in this market has been the theme since 12/23. Almost a full month of it to start 2014 out.
  • January, which is often used as a barometer for the rest of the year, in terms of sentiment, remains in the red for the month.
  • VIX continues to hover around the 12 mark. In the past this has led to some minor sell-offs.
  • No clear-cut pattern on the SPX 30 minute chart - only choppiness.
  • We are coming up on a month of price action where we have been stuck in a 27 point price range.
  • SPX is back into overbought conditions.
  • Once the SPX closes above 1849, the bears will have all chances of a significant pullback temporarily suspended yet again.
  • At this point the bears need to send price lower without giving up any more ground. Doing so would create the possibility for a short-term double top using the peak from yesterday and the one from 12/31.
  • Markets don't care about the economy nor earnings. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up.
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My Opinions & Trades:

  • Did not add any new positions on Friday.
  • Remain long TRN at 56.17, IPG at 17.71, FLS at 77.75, MEOH at 60.16, BRO at 32.06
  • I will look to add 1-2 new positions today.
  • Long 50% / Cash 50%

Chart for SPX:

SPX Daily Chart

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