Technical Outlook:
- The S&P 500 (SPX) actually attempted to make a legitimate sell-off yesterday, but then the afternoon happened and the ramp buyers emerged to lift market off of the lows and erase 60% of the day’s losses.
- The buyers are exhausted at this point. When they rally it is just within a tight 1.5% consolidation area or if it does establish new all time highs, it does so marginally.
- The last two major rallies that the market has seen has come from the Non-Farm Payrolls (NFP) report – that is the employment report. Tomorrow the report will be again furnished in the pre-market.
- Volume on SPDRs S&P 500 (SPY) increased yesterday and was at recent averages.
- SPX still trading below the 5, 10 and 20-day moving averages.
- First day of the trading month tends to trend historically bullish. Last month it finished lower, but the five months proceeding it all saw strong rallies on the first trading day of the month.
- August finished down by 2 points on SPX for the month and traded in a range that was 1.5%. Since 1928, there have only been six months that traded in a tighter range (per LPL Research).
- August was the first trading month that finished in the negative since February, ending a five month winning streak.
- Temper expectations for a major move, until the market breaks out of the current range that it is trading in.
- United States Oil Fund (USO) looks to form the right shoulder of the head and shoulders pattern that I have been mentioning.
- CBOE Market Volatility Index (VIX) has a nice base it is currently trading in, but can’t break out of it.
- Double top still in effect on the SPX 30 minute chart.
- USD/JPY continues its rally via BoJ intervention. Up another 0.4% this morning and up seven of the last eight trading sessions.
- Stocks are continuing to lose momentum under the surface despite the market within points of its all-time highs. This can be most clearly seen by looking at the percentage of stocks trading above their 40-day moving average. Since July 18th, that number has dropped from 80% down to 54%.
- The market is showing a decoupling from oil as the rise and fall of the commodity in June, July and now August has not impacted the market substantially.
- Three support levels to watch going forward on SPX is 2168, 2155, and 2147. The breaks are only valid if the price can close below those support levels.
- Dow Jones Industrial Average (DJIA) has a double top that confirms on a move below 18247.
My Trades:
- Sold SPXU yesterday at $23.45 for a 2% gain.
- Covered MCD yesterday at $115.70 for an 0.4% loss.
- Did not add any new trades to the portfolio yesterday.
- May add 1-2 new swing-trades to the portfolio today.
- Will consider adding additional short positions to the portfolio as the market warrants it.
- Currently 20% Long / 20% Short / 60% Cash
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
