Trading Plan for June 13, 2012

Economic Reports Due out (Times are EST): MBA Purchase Applications (7am), Producer Price Index (8:30am), Retail Sales (8:30am), Business Inventories (10am), EIA Petroleum Status Report (10:30am)

Pre-market Update (Updated 8:30am eastern):

• US futures are slightly lower ahead of the open. 
• European markets are trading 0.2% lower. 
• Asian markets traded on average 0.6% higher. 

Technical Outlook (SPX):

• Strong recovery for the S&P yesterday from the previous day’s sell-off. Last 3 trading sessions have found solid support at the 10-day moving average. 
• The recent bounce in the SPX, to have any merit at all, needs to break and close above 1334. 
• Potential for a bull flag forming on SPX
• Inverse head and shoulders forming over the past month – currently working on the right shoulder.
• IH&S pattern very obvious on the 30-minute chart.
• Market is coming off of short-term overbought conditions, but just slightly.
• Chopping above and below the 20-day moving average no true support/resistance there. 
• Bullish wedge breakout still intact
• Volume remains relatively average. 
• The markets in general have pulled back roughly 10% off of its recent highs which is typically considered a “pullback” in the markets. 
• Major bottoms or at the least, interim bottoms, tend to make huge gains in the initial days following the bottom. See last October and September 2010. 
• Minor support at 1249, 1209 would also represent a level of price support, should we close below 1266 support. . 
• VIX is still elevated and rests above 22 – below 20 and the bear’s hopes for a break lower is greatly hampered. .

My Opinions & Trades:

• Lots of chop in this market gives no clear edge to any side, I am becoming slightly bullish based on developing price patterns, 
• Careful about trading in and out of this market too much – I’m playing with my original stop-losses which is usually 3-4% off of the entry price and gives me enough wiggle room to weather the choppiness of this market day-to-day. 
• Covered HT at $5.15 from $5.30 for a 2.8% gain. 
• Covered ELN at $13.38 from $13.19 for a -1.4% loss. 
• No additional trades yesterday.
• Currently Long PPL at $27.65, Short GWW at $183.41, Short NUE at $36.67

Charts: