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Trading Plan for July 16, 2012

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July 16, 2012 – Comments (0) | RELATED TICKERS: SPY , DIA , QQQ

Pre-market update (updated 8:30am eastern):

European markets are trading -0.2% lower. 

Asian markets traded in a mixed/flat manner.  

US Markets are slightly lower heading into the open. 

Economic reports due out (all times are eastern): Retail Sales (8:30am), Empire State Manufacturing Survey (8:30am), Business Inventories (10am)

Technical Outlook (SPX):

Huge Friday with SPX bouncing off of it's upward trend-line from the 6/4 lows and the 50-day moving average. 

From there, SPX needs to get back above 1374 (and most importantly close above it) to form form a new 'higher-high' in the market. 

Friday's bounce came just as we were touching oversold conditions in the very short-term (weekly chart and SPRI shows a much more overbought market). 

After Thursday's elongated lower shadow, I've decided to adjust the upward trend-line off of the 6/4 lows connecting it with that day's lows. 

As a result, there is a well-defined channel that the market is trading in, and eliminates the bearish channel we had seen before. 

A break below 1329, would break the channel. 

Huge doji candle on the weekly SPX - some might say its a shooting-star, but I"d disagree, as it occurred inside of last week's candle body. 

Nonetheless, it does represent some indecision by the markets, as well as underlying weakness, evident by the long lower shadow off of the body of the candle. 

During the six-straight days of sell-off that ended last week, the entire time, the bulls managed to keep the VIX under 20. Currently it sits below 17. 

30-minute chart shows a nice bounce and breakout of the temporary downward channel. 

Breaking through the 1390's will be difficult as there are plenty of separate resistance levels in that area. 

Below 1306-1308 price level, will nullify the current rally off of the 6/4 lows - would represent a 'lower-low' in the market. 

My Opinions & Trades:

 

Charts:

 

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