Pre-market update:

  • Asian markets traded 0.4% higher.
  • European markets are trading 1.1% lower.
  • US futures are trading 0.4% lower ahead of the market open. 


Economic reports due out (all times are eastern): MBA Purchase Applications (7), Atlanta Fed Business Inflation Expectations (10), Whole Sale Trade (10)

Technical Outlook (SPX):

  • Today will be another test for the dip buyers to see whether they are still here to support this market rally in its current form. 
  • Expect SPX to open up right at the 5-day moving average which hasn’t been closed below since 10/16. This has been a consistent area of buying power and support for this market. 
  • There is a bearish wedge, a rather big one too, that has formed on SPX. Any decent amount of weakness will confirm this pattern. 
  • Much of the reason for the bearish wedge is the fact that since 1820 SPX has rallied without the slightest of pullbacks and avoiding any kind of higher-low on the chart. 
  • A confirmed bearish wedge may just only provide that higher-low and nothing more. 
  • VIX rose 2% yesterday to 12.92. 
  • 30 min SPX chart shows some potential short-term distribution taking place. 
  • SPX continues to climb higher to new highs but in smaller increments. 
  • This market rally is very similar to the July 2013 rally. Like that rally, we are currently in the later stages where the gains become more “stair-stepped”.
  • Whether the rally continues for the foreseeable future or not, one thing remains, and that is it cannot continue for much longer, to rally at the gravity defying slope it has done for over three weeks now. 
  • As a result, consolidation will have to kick in, in order that the trend-line may flatten out some. 
  • Historically trend-lines that are steeper/greater than 45 degrees are nearly impossible to maintain over an extended period of time. 
  • The market doesn’t care about the economy nor earnings. That is not what is driving it. The market only cares about what the Fed is doing to keep equities propped up. 


My Trades:

  • Closed out LUV at 39.42 for a 12.8% gain. 
  • Closed out INFY at 67.30 for a 7.6% gain. 
  • Added one additional long position yesterday. 
  • Will consider adding 1-2 new long positions today.  
  • Remain long MS at 34.40, PHM at 19.35, CAR at $56.57, HUN at 24.73, XLE at 87.98, MAR at 76.11.
  • 70% long / 30% cash. 
  • Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX:

SP 500 Market Analysis 11-12-14