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Trading Plan for July 19, 2012

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July 19, 2012 – Comments (0) | RELATED TICKERS: SPY , IWM , DIA

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

European markets are trading 0.7% higher. 

Asian markets traded 1.2% higher. 

US futures are moderately higher ahead of the open.  

Economic reports due out (all times are eastern): Jobless Claims (8:30am), Existing Home Sales (10am), Philadelphia Fed Survey (10am), Leading Indicators (10am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

We finished just a shade below that critical 1374 resistance level. Today's early morning pre-market strength has us gapping up and through this price level.

By finishing above this price level, we'll essentially put in a new higher-high in the market, but only the closing price matters. 

Yesterday we managed to break through the descending trend-line off of the 4/2 highs (see chart below). 

Weak jobless claims number may provide some headwinds for the market today .

A close below 1325 would create both a lower-high and a lower-low, and thereby turn the market bearish. 

It didn't take long but SPX is back into short-term overbought. 

SPX broke right through this resistance level yesterday. 

Weekly shows SPX coming off of overbought levels, ever so slightly. 

Not any more. There's actually the possibility that we are forming a head and shoulders pattern on the daily chart when looking at the action from the past month. 

Volume continues to provide low readings. 

Watch the SPRI - it shows a much more overbought market.

After last 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 1333, would break the channel. 

The VIX remains under 17.

30-minute chart shows somewhat of an inverse head and shoulders pattern, and support at 1356.

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

My Opinions & Trades:

Charts:

 

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