Pre-market update (updated 8am eastern):

  • European markets are trading -0.9% lower.
  • Asian markets traded -0.2% lower. 
  • US futures are trading moderately lower ahead of the opening bell. 

Economic reports due out (all times are eastern): Personal Income and Outlays (8:30am), PMI Manufacturing Index (8:58am), Consumer Sentiment (9:55am), ISM Manufacturing Index (10am), Construction Spending (10am), Bernanke speaks (10am)

Technical Outlook (SPX):

  • SPX was on track for another positive finish yesterday until the last moment yesterday in the final 10 minutes of trading it dropped 5 points to close in negative territory.
  • A bearish shooting star pattern has formed as a result of yesterday’s price action. 
  • Extremely heavy volume came in as well at the last 5 minutes of trading. 
  • At this point, I would consider the action over the past three trading days a dead-cat bounce. 
  • Sequestration takes effect today. The effects on the market going forward are unknown, and yesterday’s late sell-off and this morning’s early weakness is likely due because of it. 
  • If the bulls can hit 1521 and stay above it, i think the that this becomes a legitimate rally point for the bulls to continue pushing higher. 
  • On the previous channel from June through October last year, it was the third retest of the rising channel that finally broke, which is the same retest we are on right now in the SPX.
  • Both channels and the price action within are unbelievably similar in nature. 
  • I don’t expect the 50-day moving average which currently sits at 1480, to offer any significant support if tested.
  • VIX pushed back into the 15’s. 
  • If we see a break at 1480 today of the rising channel, the next logical support level for the market rests at 1465. 
  • We haven’t seen a market pullback in excess of 4% since October/November time-frame. 
  • The channel that we are currently trading in looks very similar to the channel that we traded in last year from June through September. 

My Opinions & Trades:

Chart for SPX:

S and P 500 Market Analysis 3-01-13