Sep08.pdf

Trading plan for Septermber 8, 2010

After the holiday the stock market was hit by increasing concerns that the stress tests for European banks were cooked to conceal the true fiscal health of the euro zone. Both the SPX and ES gave back a small portion of the gains made in the past three days. The ES closed down 12.25 points.

The short-term is overbought, and a pullback to test the break-out area is necessary to smooth out the overbought condition and make a resumption of the rally possible. Today we may see a continuation low move early in the morning if ES fails to hold above the 1087.50 line in overnight trading. 1076.75 is the key line for today. If it holds, the C top target will remain intact. A move under 1070 will eliminate the C move, and trigger declining wave 3 again.

In fundamental terms the past rally had no reason and support. In terms of technical analysis, the price rallied from an oversold condition. Now ES moves into overbought territory. Choppy and unstable moves should be expected, as we approach rollover day and the 10th anniversary of the 911 event.

We may also see government action. Preventing a price decline here may be what the Fed is really hoping for.

Date Added: 2010-09-07 18:25:47
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