Trading Plan for July 6, 2011
Current Long Positions (stop-losses in parentheses): SPY July 130 Puts
Current Short Positions (stop-losses in parentheses): STNG (10.39)
BIAS: 7% Short
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Challenger Job-Cut Report (7:30am), ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), ISM Non-Manufacturing Index (10am)
My Observations and What to Expect:
Futures are down moderately heading into the open.
Portugal in the spotlight today, after yesterday's debt downgrade.
Asia was mixed in trading with returns ranging from -1% to +1%. Europe is down overall about -0.6%.
We remain in extreme short-term over-bought territory. On the Bollinger Bands, price action has been completely outside the upper band for 2 straight days, which is difficult and historically unable to be sustained.
Shortened holiday weeks can often prove to be a challenge when it comes to trading.
On Friday, the market convincingly broke out of the descending channel line that it had been trading within since 5/2.
Expect some resistance at 1345.
My Conclusion: Everything points to a pullback right now in the days ahead. Ideally for the bulls would be consolidation, or the formation of a short-term bull-flag.
Chart and Actions I'll Be Taking: