Trading Plan for August 2, 2012

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

• European markets are trading 0.5% higher.
• Asian markets in a mixed range from -0.7% up to +0.4%
• US futures are trading moderately higher ahead of the bell

Economic reports due out (all times are eastern): Challenger Job-Cut Report (7:30am), Jobless Claims (8:30am), Factory Order (10am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

• We saw the third straight day of mild selling in the SPX. 
• Over the last three days, the selling, has been light and without panic, which would signify more of a ‘breather’ for the markets than a legitimate change of winds for the market. 
• At this point, uptrend support rests at 1343.
• SPX trading above all significant moving averages (10,20,50,200).
• Volume has seen a steady increase since Monday. 
• Bull-flag from the past 3-days of trading has formed. But needs to bounce here, to validate it. 
• Markets remain in short-term overbought levels as well as on the weekly. 
• Very nice bull flag forming on the SPX 30-min chart. 
• VIX is a huge concern as it continues to spike higher despite the market seeing a slight sell-off over the past 3 days, sitting just a shade below 19.
• Resistance barriers have, including the down-trend off of the 4/2 highs, been broken on Friday. There aren’t any major resistance barriers in the near term for the SPX to face. Minor resistance lies around 1402-6. 
• If another sell-off were to ensue, watch for a break and close below 1329 for a new lower-low in the market.  
• At this point, the goal for the bulls has to be to continue to trade higher and challenge the 1422 highs from 4/2 which are now well within reach. 
• Solid support formed at the 50-day moving average. 
• Of concern is the bearish crossover signal found in this week’s SharePlanner Reversal Indicator. Caution is warranted. 

My Opinions & Trades:

• Shorted SONC yesterday at  $9.74. 
• Stopped out of WTW yesterday at $48.79 for a -4.5% loss. 
• My portfolio tilts slightly bearish with 3 shorts and 2 longs. 
• Remain long MDT and AMZN at $233.90. Short BRO at $25.65 and CRI at $50.76

Charts: