News Column

Today's Trading Plan: Dips Still Being Bought

August 29, 2014

Ryan Mallory

Pre-market update:

Asian markets traded 0.1% lower.European markets are trading flat.

US futures are trading 0.2% higher ahead of the market open. 

Economic reports due out (all times are eastern): 
Personal Income and Outlays (8:30), Chicago PMI (9:45), Consumer Sentiment (9:55)

Technical Outlook (SPX):

SPX had strong sell-off initially yesterday, but the dip-buyers came in and managed to recoup about 2/3's of the day's losses. Yesterday was a good indicator of what this market still wants to do, and that is to likely move higher in the short-term. Even with SPX making new all-time highs, less than 60% of stocks are trading above their 40-day moving average. SPX managed to climb right back and above the 5-day moving average yesterday. Volume was light yesterday and should be even lighter today with this weekend being Labor Day weekend. Expect next week to be light as well. The head and shoulders pattern on SPX 30-minute chart is still looming large. A strong start out of the market this morning will be needed to nullify it. A pullback would be much needed - doesn't need to be a strong one, but enough to let prices cool off some on individual stocks. With this pullback there is some support between 1988 and 1891.A lot of nontraditional traders are starting to get interested in this stock market which usually starts to show that there is too much "froth" in the market. Continue to tighten stops and take profits where you can on positions ensuring that you don't get caught with your pants down if the market suddenly sells-off. The market doesn't care about the economy nor earnings. That is not what is driving it. The market only cares about what the Fed is doing to keep equities propped up. 

My Trades:

Closed out AMZN yesterday for a 0.1% gain. Added three new long positions to the portfolio yesterday. Remain long AAPL at 95.56, CTXS at 69.96, STT at 70.99Will look to add 1 new long position today. 60% Long / 40% CashJoin me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX:

SP 500 Market Analysis 8-29-14

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Source: Shareplanner

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