Trading Plan for July 25, 2012

Pre-market update (updated 8:00am eastern):

• European markets are trading +0.8% higher. 
• Asian markets traded over -1.0% lower. 
• US futures are mixed due to weak AAPL earnings, but S&P trading higher.

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), New Home Sales (10am), EIA Petroleum Report (10:30am)

Technical Outlook (SPX):

• SPX sold off for the third straight day and closed below the recent uptrend off of the June lows. 
• Double top-formation coming together on SPX that could pose as trouble in the days ahead if confirmed with a close below 1334. 
• Volume continues to trickle higher, which is concerning for the bulls, as it shows escalating fear building in the markets. 
• Approaching short-term overbought, but intermediate and longer-term is no-where near such a reading. 
• Bulls must hold 1325. A close below that level, and you have what would begin a new downtrend. 
• On 7/18 we managed to break through the descending trend-line off of the 4/2 highs (see chart below). 
• But not this is starting to look like an incredible ‘head-fake’.
• Watch the SPRI that I posted this past Sunday and how it shows us near-ready for the reversal signal. 
• Also note the price resistance the SPX is up against on the weekly chart. 
• The VIX pushed  above 20, which typically shows mounting bearishness for the markets. 
• 30-minute chart shows a nice channel uptrend being threatened by today’s early morning action. 

My Opinions & Trades:

• Covered FB yesterday at $28.29 from $28.94 for a 2.3% gain. 
• Sold MDT at 37.49 from 38.47 for a -2.6% loss. 
• Sold AUTH at $5.19 from $5.02 for a 3.4% gain.
• Added GS yesterday as noted below. . 

Charts: