Trading Plan for June 26, 2012

Pre-market Update (Updated 9:00am eastern):

• US futures are slightly higher ahead of the open. 
• European markets are trading mixed/flat.
• Asian markets are traded in a wide range from -0.8% up to +0.5%.

Economic Reports Due out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), S&P Case-Shiller HPI (9am), Consumer Confidence (10am), Richmond Fed Manufacturing Index (10am), State Street Investor Confidence Index (10am)

Technical Outlook (SPX):

• Another hard sell-off in SPX is putting in doubt the recent sustainability of the market rally. 
• We are close to testing 1306, which is critical support. A break of this price level would officially resume the downward trend off of the 4/2 highs. 
  • Neckline of the inverse head and shoulders failed to hold support on Monday.
• The market is short-term oversold. 
• Weakness in SPX took us back below the 10-day and 20-day moving averages. 
  • Neckline of the inverse head and shoulders failed to hold support on Monday.
• Weekly chart is showing a shooting-star pattern last week, followed by weakness to begin this week
  • Very traditional bearish pattern. 
• In order to resume the rally that started off of the 6/4 lows, bulls need to drive price back above 1360. 
• There is an established uptrend in place on SPX off of the 6/4 lows with consecutive higher-highs and higher-lows now (two of each). 
  • Below 1306 ends this uptrend. 
• 30-minute chart shows an extreme sell-off that puts it in bounce territory. 
• Strong rally in the VIX yesterday puts it back above 20. 

My Opinions & Trades:

• I’ll be looking closely at what the market does here, and whether I need to flip my long bias to the short side. 
  • Will continue trading with a mixture of long and short positions. 
• Shorted ABC yesterday at $37.48.
• Bought AUTH yesterday at $4.13. 
• I’m willing to add more shorts to the portfolio at this point. 
• I am still long AMZN at $221.60 and WNR at $20.51 and short CHD at $52.74

Charts: