Pre-market update (updated 9am eastern):

  • European markets are trading 1% higher. 
  • Asian markets traded flat and mixed. 
  • US futures are significantly higher. 

Economic reports due out (all times are eastern): Employment Situation (8:30am), Factory Orders (10am),  ISM Non-Manufacturing Index (10am)

Technical Outlook (SPX):

  • Huge beat on the Employment number has the market gapping much higher from yesterday’s close. 
  • Strong news-driven gaps like this, especially when expectations were very low, tend to hold throughout the day. 
  • While I expect we will hold on to the gap-up move today, I’m not as optimistic we will see much more in gains added to the move we have already seen. 
  • More than likely the market will consolidate for most of the day after we get past the first 30 minutes of trading. 
  • The SPX will also be gapping through the 1600 level which is a significant milestone for the market. 
  • If the SPX does end up filling the gap, that would be very bearish scenario, a major head fake, and you will want to tighten your stops dramatically. 
  • SPX firmly in overbought territory.
  • 1575 remains a key rising support level that was formed off of the channel that started back in November. 
  • VIX settled in at 13.6.
  • Markets don’t care about the economy. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 
  • Both channels (July October 2012) and the price channel we are currently in are very similar in nature. 
  • We haven’t seen a market pullback in excess of 4% since October/November time-frame. 

My Opinions & Trades:

Chart for SPX:

SP 500 Market Analysis 5-03-13