Trading Plan for July 6, 2012

Pre-market upadate (updated 9:00am eastern):

• European markets are -0.8% lower.
• Asian markets traded -0.4% lower.
• US Markets are nearly 1% lower ahead of the opening bell. 

Economic reports due out (all times are eastern): Employment Situation (8:30am), EIA Natural Gas Report (10:30am) 

Technical Outlook (SPX):

• Yesterday’s pullback was light, and without any sense of panic to it. 
• Today’s market is trading lower off of a disappointing payroll number. 
• There is plenty of ‘wiggle-room’ without causing much damage on the charts
  • As long as 1327 is held the existing upward trend-line remains in-tact. 
• Some weakness here is not surprising, considering the extent of which the market  has moved over the past six trading days (on average more than 10 points per day). 
• If today’s weakness holds, the SPX should come off of the overbought levels that it has been experiencing. 
• Gap downs in the market, like we are seeing today, are often hard to maintain, and usually attracts dip-buyers. Be very cautious and don’t get overly excited about the early morning action in the markets.
  • This isn’t the time to add new short positions – you do that on bounces. 
• Breaking through the 1390’s will be difficult as there are plenty of separate resistance levels in that area. 
• Safe to assume that volume will be light this week as it was on Monday and Tuesday, as many traders/investors will take the remainder of the week off. 
  • Volume in general continues to be relatively light during the past month of trading.
• SPX has now made new highs on the uptrend that began on 6/4.
• 30-minute chart continues to highlight the need for a pullback in the short-term.
• Below 1306-1308 price level, will nullify the current rally off of the 6/4 lows. 
  • Would represent a ‘lower-low’ in the market. 
• VIX dropping hard and is now below 18.

My Opinions & Trades:

• Good chance that today’s weakness may take me out of 1-2 long positions. 
• Will look to add new long positions on the early morning weakness. 
• Closed out NFLX yesterday at 77.68 from $70.00 for a 11% gain. 
• Covered WLT at $47.05 from $45.81 for a -2.7% loss. 
• Bought WBC at $53.98 yesterday. 
• Bought  on Tuesday .
• May add an additional 1-2 positions, as well as close out any non-performers. 
  • If UA continues to struggle, it will be a prime candidate for me to scrap. 
• I don’t see really any strong evidence to be short “right-now”. Don’t short the market right now expecting the market to come to its senses. It could be a long painful wait.  
  • Speaking from experience. 
• Still long WNR at $20.51, CMG at 378.44, UA at $93.09, HD at $51.50 . 
• Increasing my stop-loss in WNR to $22.70 locking in 10.7% in gains and providing plenty of wiggle-room for the stock. 

Charts: