Tricky Trading Ahead

Trading is always a puzzle. If it was easy, everyone would make money. Take real estate for example. Everyone and their brother got into it all at once. Result - possibly a decade of losses and agony. Sorry, I digressed, back to trading... We have an amazing and quick opportunity to take S&P futures down to 1320 - 30 or so, or it may rip higher to 1430 - 40. WOW, 50 - 60 handles either way!

Culprits:

Bad
1. Spanish auction went well but EZ peripheral bond yields are higher still and IBEX and FTSE MIB are cratering again,
2. MSFT earnings and/or guidance may disappoint,
3. we may have a usual weekend risk-off with Israel/Iran and N.Korea back in the news,
4. and econodata in U.S. was weak again today.

On the last point. Trend in economics is important. I will not say that we are establishing one on the downside just yet, but weekly claims above expectations for two weeks in a row, another regional mfg survey is lower (Philly Fed today after Empire earlier in the week), and existing-home sales are not buoyant after all - sequential m/m 2.6% decline in units sold. This is disappointing economic news.

Good
1. On the other hand, earnings are surprisingly good,
2. and fund managers are out there salivating right at or slightly above SPX cash 1370.
3. Also we have FOMC meeting coming up
4. and AAPL earnings next week. (OMG! Apple, again...)

To complicate things further, Fri is OpEx.

Here is my chart. A little busy, but you get the idea... Gaps above and below, channels to hold and break...

click on chart to enlarge