Pre-market update:

  • European markets are trading flat. 
  • Asian markets traded 0.2% higher.
  • US futures are trading slightly higher. 

Economic reports due out (all times are eastern): None

Technical Outlook (SPX):

  • Massive sell-off yesterday, and the biggest that we’ve seen since 8/8/11, when we dropped 80 points on the SPX. 
  • This kind of volatility hasn’t been seen since the summer of 2011. 
  • In the last 8.5 hours the market has opened, the SPX has tumbled 64 points. 
  • I’d suspect we’ll get a bounce out of this market today, simply because, the market has yet to even see the slightest of intraday bounces even since the Fed’s FOMC Statement. 
  • The major technical development from yesterday is that we breached major price support at 1601. 
  • As a result of that, we have now established a lower-high and lower low for the first time in this market. 
  • Any bounce higher at this juncture should be considered a dead cat bounce. 
  • The bias should be to the short side for trading, but the entries must be well-times. Chasing the short side right out of the gate this morning is an ill-fated strategy. Wait for a short-term pop to get short on. 
  • With yesterday’s sell-off we are now trading well below the 10,20, and 50-day moving averages. 
  • We are also trading well below the lower Bollinger Band, which is a prime opportunity for a short-term bounce as well.
  • However, unlike trading above the upper Bollinger Band, the market can trade for extended periods in very bearish sell-offs, well below the lower band. See 2008, 2009, and Summer of 2011 for reference. 
  • This is the result of what happens when the fate of the market is put into one man’s hand (i.e. Ben Bernanke) where anything he says can make a market sink or soar. 
  • VIX is now trading above 20. Huge for the bears. 
  • We are looking at having our first down month of the year. 
  • 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:

  • Sold HUM at 83.36 for a 3.4% gain. 
  • Sold APA at 85.61 for a 0.8% gain. 
  • Stop-outs included DSW at 73.3 for -1.4% loss, TRIP at 62.38 for a -3.1% loss. GRA at 81.85 for a -2% loss. 
  • Added AMZN long at 273.44. 
  • Added CLR at 84.5. 
  • Long BWLD 98.85
  • Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX:

SP 500 Market Analysis 6-21-13