Pre-market update:

  • Asian markets traded 0.6% lower.
  • European markets are trading 0.2% higher.
  • US futures are trading 0.3% lower ahead of the market open. 


Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45), Redbook (8:55), PMI Services Index (9:45), Factory Orders (10), ISM  Non-Manufacturing Index (10)

Technical Outlook (SPX):

  • Yesterday was a solid bounce day for the SPX as it managed to wipe away some of last Thursday’s losses. 
  • On the SPY it formed a Morning Star candle pattern which is actually quite bullish. 
  • The key today for the bulls will be to buy up the early morning weakness, and add on to yesterday’s gains. 
  • The sell-off didn’t just begin last Thursday with the hard sell-off, according to indicators like the T2108 (% of stocks trading above their 40-day moving average), stocks have been selling off since the beginning of July, while the overall market was simply consolidating. 
  • As a result, there is a good chance with all the extreme readings that market indicators are providing that we are near a market bottom and ready to bounce higher. 
  • I would not be getting short on this market, as the key/opportune time to have done so would have been in early July. At this point, one is simply chasing after the recent sell-off. 
  • For the bears, their number one objective must be to wipe out yesterday’s gains. 
  • Even if this is just a dead cat bounce, these types of rallies can go hard and strong for 2-3 days without subsiding.
  • Volume has picked up in a big way for the past three days. 
  • Long-term trend-line in place that started off of the lows from November 2012, is still in place, and could be tested at 1901 if the selling were to continue. 
  • SPX extremely oversold and indicators such as the T2108 are showing strong indications the market bottom may already be in place.
  • VIX dropped 11% down to 15.12.
  • 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:

  • Did not add any new positions yesterday. 
  • Did not close out any positions yesterday. 
  • Will consider adding additional positions if the dip buyers come back into the market today. 
  • Remain long EBAY at 51.75, HPQ at 35.61, GPK at 12.00, AAPL at 95.56, FB at 72.53
  • 50% Long / 50% 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 8-5-14