Pre-market update:

  • European markets are trading 0.7% higher. 
  • Asian markets traded 0.3% lower.
  • US futures are trading flat.  

Economic reports due out (all times are eastern): MBA Purchase Applications (7), Wholesale Trade (10), EIA Petroleum Status Report (10:30), FOMC Minutes (2)

Technical Outlook (SPX):

  • The market has been strong for four solid days and has rallied 47 points from the markets lows. 
  • Price action is running into a major road block with the underside of the previous uptrend and price level resistance at 1654. 
  • I think that there is a chance we could pullback for a few days or at least consolidate considering the heavy resistance overhead and how overextended we currently are. 
  • Short-term SPX is overbought now. 
  • Volume was much lighter than what we saw on Monday. 
  • SPY chart is showing a ton of gaps in the chart that have so far gone unfilled – that is something worth keeping a eye out for. 
  • SPX has finished higher 8 out of the last 10 trading sessions. 
  • The next task at hand is to break through 1654 or the 6/18 highs, and by doing so, the market would put an official end to the sell-off by establishing a higher-high. 
  • The one thing you are not seeing that typically accompanies a major market sell-off is continuous bad news coming out. We had the FOMC Statement and that has been it. 
  • I simply do not think the bears can keep driving this market lower without some form of a catalyst besides the tapering comments made before by the FOMC. 
  • 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. 

My Opinions & Trades:

Chart for SPX:

SP 500 Market Analysis 7-10-13