Pre-market update:

  • Asian markets traded 1.2% higher.
  • European markets are 0.4% higher. 
  • US futures are trading 0.1% higher ahead of the market open. 


Economic reports due out (all times are eastern): MBA Purchase Applications (7), ADP Employment Report (8:15), Consumer Price Index (8:30), EIA Petroleum Status Report (10:30), FOMC Meeting Announcement (2)

Technical Outlook (SPX):

  • It’s Fed day folks – last time around, we had risen 10 out of 11 straight days and then the FOMC was a blow-off top which marked a temporary high followed by a multi-week pullback. 
  • Coming into today we have risen 9 out of the last 10 sessions and the conditions are identical to last time around. I think there is a real possibility that today could also mark a temporary high for the markets. 
  • The FOMC statement itself I don’t expect to be hawkish simply because they have over $2T invested in quantitative easing and they don’t want those efforts to go to waste because of ‘sloppy wording’. 
  • Typically in the FOMC statement there are two false moves before a final ‘legit’ move when it comes to the intraday movement of price following the FOMC statement. Be aware. 
  • The bigger picture has the market up 13 out of the last 15 trading sessions – incredible. 
  • Use the 10-day moving average at t his point for gauging short-term sentiment of the market. As long as we remain above it, the price action remains bullish. 
  • Fourth straight day of well-below average volume on SPY. 
  • This ‘second-leg’ of the rally’s price action is looking awfully similar to the price action from 7/16 through 7/22 of this year. 
  • The 30-minute chart continues to trend upwards since 10/23 in a near perfect manner.  
  • VIX was higher for a second straight day despite the market being up as well. A bearish divergence. 
  • The bias in this market is still to the upside and should be traded accordingly. 
  • Very little in the way of head-winds for the market as Syria has left the spot-light, shut-downs, debt-ceiling are over with for now, and the most dovish Fed chairman poised to take the helm. 
  • Markets don’t care about the economy nor earnings. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 

My Opinions & Trades:

  • Closed out MWE at 73.10 for a 4.1% gain. 
  • Closed out GES at 31.30 for a 1.1% gain.
  • Closed out BBY at 42.28 for a 2.4% loss. 
  • No new positions added yesterday. 
  • I am primarily focused on trading to the long side going forward. Will likely look to add more long exposure today. 
  • Currently 30% long / 10% short / 60% cash.  
  • Current Longs: LPX at 17.87, POR at 29.23, PRU at 81.04.
  • Current Shorts: FCX at 37.26.
  • Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX:

SP 500 Market Analysis 10-30-13