Pre-market update:

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


Economic reports due out (all times are eastern): Jobless Claims (8:30), Chicago PMI (9:45), EIA Natural Gas Report, Farm Prices (3)

Technical Outlook (SPX):

  • FOMC Statement yesterday ushered in a moderate level of selling and only the 3rd bearish day in the past 16 trading sessions. 
  • Those trying to dip buy the sell-off yesterday was very obvious, but the bulls were not able rally the troops enough to get a sustainable rally off of the intraday lows. 
  • I’m beginning to look for a more legitimate sell-off from the markets  here, much like we saw after September’s rally. However, I will let the price action come to me and stay nimble with my portfolio allocation to the short-side, just in case the market chooses to continue its euphoric rally. 
  • Watch the 10-day moving average at 1756 today. A very telling sign will be if price can break and close below this level since we haven’t done so since the rally began on 10/9. 
  • Volume was well above average and almost twice what we had seen recently on the SPY. 
  • VIX rose for a third straight day to 13.65. 
  • 30-minute chart on the SPX already shows a pullback in play. 
  • 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. 
  • 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:

  • Added two new positions to the portfolio yesterday: Both shorts. 
  • Closed out LPX at 17.46 for a 2.3% loss. 
  • Currently 20% long / 30% short / 50% cash.  
  • Current Longs: 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 10-31-13