Overview Friday 10 July...

There isn't really much to say about Friday because it was a pretty boring day in the markets. As expected, it was your typical summer Friday. Volume was low and there really wasn't much to write home (or to the blog) about. Today really felt like a consolidation day.

I'll put up a post later talking more about what I'm thinking and expecting for the coming week.

Short-term bias: bullish (I think the oversold rally has a bit more juice, but not too much more)

Intermediate-term bias: bearish (I still think this correction will take us lower, perhaps to 800 on the $SPX)

Long-term bias: bullish (I believe we put in meaningful, long-term bottoms in March, and would use the aforementioned correction to increase long exposure)

Pick updates:

My order for DFS puts got filled. I chose the August $12.50 puts, starting small and leaving room to add. I use options when possible as a stock replacement strategy to minimize risk. I will talk more about using options in later blog posts. For those not into options, shorting the common stock will do just as fine. DFS stock was up a bit Friday and flirting with the bottom of that gap from Tuesday.

I still like BNI, FCX, and MDR as shorts. FCX was flat, BNI was slightly up, and MDR was down a bit on Friday. MDR was weak because another stock in the infrastructure sector, SGR, reported earnings that were perceived as weak and subsequently lowered guidance (on the headline, it was a bad quarter, but digging deeper, one sees that the reason for the lowered earnings and guidance revolves around some bond financing/accounting issues between SGR's Westinghouse unit and Toshiba), driving SGR down about 10% on the day and dragging the rest of the sector down with it. I still expect the oversold bounce to continue in that sector, and I think MDR will give us a better short entry.

And we really should be glad we removed AIG from the short list yesterday. It rallied about 25%. That's the oversold rally I was afraid of. We'll let it rally a little bit before revisiting it on the short side.

Postions: long DFS August $12.50 puts and $SPX index fund in 401k