S&P 500 Levels & Analysis 9/1/10

The SPY has been trading in a range of ~10440-10700 over the last six sessions and this mornings 1.3% gap higher is not enough to break it out of that range. Impressive as this gap may be, it is likely to make trading more difficult today. If the market can get above 107 and stay there it could set the stage for continued strength up towards the declining 20 day moving average near 108. My plan is to see how the market absorbs the initial strength during the first 15-30 minutes and then trade in the direction of the VWAP.