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Today’s Trading Plan: Bear Flag Pattern Confirmed
Thursday, November 8, 2012 22:33
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Pre-market update (updated 8:30am eastern):
- Europe is trading 0.4% higher.
- Asian markets traded -1.6% lower.
- US futures are moderately higher.
Economic reports due out (all times are eastern): International Trade (8:30am), Jobless Claims (8:30am), EIA Natural Gas Report (10:30am)
Technical Outlook (SPX):
- Biggest sell-off that we’ve seen since bouncing off of the 6/4 lows (last 30+ point sell-off was on 6/1).
- Price action went all the way down to the lower bollinger-band before closing on the day.
- Bear-flag confirmation as we had talked about in yesterday’s Trading Plan occurred at 1410.
- Price support levels at 1400 were decimated yesterday.
- A lower-low was established at 1403 as well as a previous lower-high. All bearish developments of an established downtrend.
- The 200-day moving average is definitely in play today. A break of 1380, and you can say this market’s conditions become very dire.
- Last test of the 200-day moving average came on 6/4 where the market ended up bouncing handedly and forming a bottom as well, then rallying for the next 5 months.
- Yesterday’s volume was the highest that we’d seen since 5/18/12.
- The fact that we did not see any kind of rally yesterday, despite the huge gap-down, was an obvious sign of a shift of market sentiment yesterday.
- Weekly chart also supports a breakdown in the previous channel.
- VIX at 19.
My Opinions & Trades:
Ryan Mallory is the co-founder of SharePlanner Inc, a financial website devoted to Day-Trading, Swing-Trading (both long & short) and exchange-traded funds. Ryan makes a strong emphasis on risk mitigation strategies, trading transparency, and trader education – not to mention a great set of stock screens as well.
Be Sure to Check out Ryan’s Site at Shareplanner.com
2012-11-08 22:26:43
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