Trading Plan for June 28, 2012

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

• US futures are moderately lower ahead of the open. 
• European markets are trading -1.1% lower. 
• Asian markets are traded in a wide range from -0.8% up to +1.8%.

Economic Reports Due out (Times are EST): GDP (8:30am), Jobless Claims (8:30am), Corporate Profits (8:30am), EIA Natural Gas Report (10:30am), Kansas City Fed Manufacturing Index (11am), Farm Prices (3pm)

Technical Outlook (SPX):

• SPX has managed to rally for the second day in a row and there by establishing a potential new “higher-low’  since the rally off of the 6/4 lows. 
  • Unable to break through the 10-day moving average, and minor resistance at 1035. 
• Ideally, SPX needs to get back above 1360, to put to rest recent weakness, and the notion that the market is turning lower. 
• Below 1306-1308 price level, will nullify the current rally off of the 6/4 lows. 
  • Would represent a ‘lower-low’ in the market. 
• We are coming off of the oversold territory. 
• Moderate gap downs like we are seeing this morning have been problematic for SPX to hold through out the day, and ultimately results in a notable rally off of those morning lows. 
  • Recent exception was on 6/25 where SPX managed to continue selling off the initial gap-down. 
• Bulls have in place a bullish island reversal on the SPY chart, which is very similar to the one that we put in on 6/1-6/5 and rallied thereafter for a two-week period. 
• Weekly chart is showing a shooting-star pattern last week, followed by weakness to begin this week
  • Very traditional bearish pattern. 
• VIX just a shade below 20.

My Opinions & Trades:

• I’ve kept my current stop-losses in place. 
• I’d like to add new long positions to the portfolio, but will wait to see first this morning if we put in a bottom after this gap-down first. 
• 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. 
• 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, AUTH at $4.13, WNR at $20.51 and short CHD at $52.74 and ABC at $37.48

Charts: