Pre-market update:

  • Asian markets traded mixed & flat.
  • European markets are trading 0.1% higher. 
  • US futures are trading 0.2% lower ahead of the market open. 


Economic reports due out (all times are eastern): Treasury Budget (2)

Technical Outlook (SPX):

  • SPX closed out a successful bounce last week to finish above the 10-day moving average and poised to take on 1849 yet again. 
  • The market lacks any sustainable direction in the short-term until it breaks 1823 to the downside or 1849 to the upside. 
  • Right now if the markets were to do the former, it would look  highly problematic as a short-term lower-higher and lower-low would be firmly in place. 
  • Volume remains unnoticeable. Average volume persists. 
  • The well defined inverse head and shoulders pattern on the SPX 30-minute chart has confirmed. 
  • SPX has been stuck in a 20 point range over the past 6 trading days – that is tight by any measure. 
  • The current price pattern comes across to me as having the potential to get very bearish very fast if the bulls don’t remain steadfast. 
  • It could be that we are seeing ‘zero’ market direction at the moment due to the torch being passed from Bernanke to Yellen for the Fed Chair. Once that transition is complete, traders may become more comfortable with the market. 
  • A break below 1823 would become a huge problem for the SPX short-term as it would create a new lower-low for the index. This is where the bears should have their sights set on. 
  • VIX dropped hard to 12.14 on Friday – which is a good sign for the equities markets. 
  • Once 1849 clears, SPX should see a very strong push higher thereafter. 
  • 1809 from longer-term perspective becomes the critical price level in the short-term that the SPX must not drop below. 
  • January is starting off in much the same way as December 2013 did – so keep that in mind. 
  • Trend-line support off of the October lows lies at 1809 – and currently out of reach for the bears. 
  • There is absolutely no reason at all to be net-short this market. 
  • 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:

  • Sold GT at $26.08 for a 9.5% gain. 
  • Sold EWBC at 33.98 for a 1.5% loss. 
  • Sold SBGI at $35.47 for a -2.1% loss. 
  • Added one new position to the portfolio on Friday. 
  • Remain long CAT at 89.14, AIG at 51.54, CX at 11.80, UA at 87.44. 
  • I will look to add 1-2 new positions today. 
  • Long 50% / Cash 50% 
  • Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX:

SP 500 Market Analysis 1-13-14