Trading Plan for August 7, 2012

Pre-market update (updated 7:00am eastern):

• European markets are 0.5% higher. 
• Asian markets traded 0.8% higher. 
• US futures are trading slightly higher. 

Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), Bernanke speaks (2:30pm), Consumer Credit (3pm)

Technical Outlook (SPX):

• Choppy trading session, but it was still enough to push us back above the the downtrend off of the 4/2 highs. 
• If you look at the 4 previous higher-highs in the market since the 6/4 bottom, then one could conclude that we’ve reached another temporary top, and are prime for another pullback. 
• Market quickly approaching short-term overbought status. 
• Volume extremely light yesterday. 
• We could be setting up for a run to 1422 which would mark new recovery highs for the market. 
• One area of concern are the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
• The lows from 8/2 was a 61.8% Fibonacci retracement and 26 points off of the previous highs.
• At this point, uptrend support rests at 1349.
• SPX trading above all significant moving averages (10,20,50,200).
• VIX remains under 16.
• If another sell-off were to ensue, watch for a break and close below 1354 for a new lower-low in the market.  
• Downside reversal signal still remains intact on the SharePlanner Reversal Indicator. 

My Opinions & Trades:

• Sold PWER yesterday at $5.33 from $5.05 for a 5.5% gain. 
• Covered MBI yesterday at $9.03 from $9.17 for a 1.5% gain. 
• Bought RHT yesterday at $56.19
• Bought CNQ yesterday at $28.78
• May add to my current long holdings today with 1-2 new positions. 
• Remain long MDT and AMZN at $233.90. Short BRO at $25.65 and CRI at $50.76

Charts: