Trade Setup For 8th July

Here are the areas I am watching for 8th July:

Resistance

1251.75-1253
1257.5-1258.50
1265-1266
1272-1272.75

Support

1243-1241.50

My Outlook

I guess one could speculate that this is going to turn soon but you could be thinking that for a long time. I'm going to keep a neutral bias as this thing could last a long time but also turn at the drop of a hat. From a longer term perspective the May highs just look like a breather in the downtrending market from Oct 07'.

The VIX continues its steady rise indicating that Put Option interest is slowly rising. What is most concerning about this rise is that it is slow and steady, just like the markets decline. I'm guessing many buyers are getting caught out mistaking the slow decline for signs of a turnaround. I know I thought that only last week.

The only positive note coming from this market right now is Oil's decline yesterday. Not a big sell off but it is a start. I suspect we could see a decent sized move lower at this juncture. Gold has moved down rather strongly from its range highs which also signals good things for the US. It is not pivotal though as we still sit in the range.

The USD has seen some strength over the past couple of days but it isn't anything to write home about. I'll keep my eye out for further declines that could signal the US economy gaining its strength and possibly some momentum.

My Focus

I want to be careful with this market now as it is in a very temperamental area. The pattern suggests further downward movement and I will stick with that until we see something stand out to say otherwise. We are currently at 1244 in the overnight market and my last support area is at 1242.

At the 1242 area I will be looking for some strength but any long positions will be kept on a tight leash right now as other areas don't suggest a strong move higher just yet. If we open beneath 1252 I would look for some weakness if we reach that area.

If we gap above the 1252 area I would think 1265 needs to be exceeded and held to turn into a buyers market. If we gap open beneath 1242, I think all bets may be off for buying and would look for some weakness at 1242.

At the s/r levels I am watching for weakness or strength seen from the Tick and Volume. All stops are placed behind strong market areas and the initial profit target will be put in an easy to reach place. The second lot will be trailed if the first lot is taken.

To address the problem I had yesterday with exiting prematurely, I will state the reasons for exiting early according to price, Tick and Volume analysis. I will also continue using the opening gap strategy with the simulation account and also the offsetting strategy.