Written by Dan Micovic
Despite showing pockets of strength and signals of being oversold, the market showed its true condition today as it sold off and closed below the critical 1040 level on the SPX.
The index is now in a clear downtrend and has put itself in a position where it has nearby resistance at 1040 and significant resistance above the 1080 level.
What is more important now is where the support lines are below us. We looking at the 1020 level followed by 985 level. This descent could be a swift one if we don’t get some decent economic numbers over the next few sessions.
It could be argued that we are short-term oversold on a number of indicators but that argument can go out the window as long as doubts remain about he strength of overseas economies.
In summary, the breakdown below 1040 is significant and bearish. We must take a bearish stance as long as the index remains under that critical level. We use any short term rallies as opportunities to add puts.
Weekly Economic Calendar:
Thursday
- The weekly initial jobless claims, as well as reports on construction spending in May and auto sales in June. Constellation Brands Inc. (STZ) will report earnings.
Friday
- We finish the week with the nonfarm payrolls and the unemployment rate for June. There are no earning reports scheduled for release on Friday.
New Trade Idea:
Buy Amazon (AMZN) July 105 Puts @ $2.60 or better:
Use $4.30 as a target and $1.30 as a mental stop loss.
Open Positions:
Buy Baidu (BIDU) July 75 call @ $4.20 or better:
This position has been closed.
Las Vegas Sands (LVS) July 26 call @ $2.10:
This position has been closed.
Crocs (CROX) July 10 Calls @1.40:
Continue to hold. Let’s continue to use $3.20 for a target and $0.50 as a mental stop-loss.
TEN Exclusive: Options Update – 6/30/10 is an article from: 
