Pre-market update:

  • Asian markets traded 0.2% lower. 
  • European markets are trading 0.5% lower..
  • US futures are trading 0.1% lower. 


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

Technical Outlook (SPX):

  • SPX finished its second straight day out side of the lower Bollinger band.
  • The 50-day moving average, which has been a strong support/resistance level in recent past, closed below the MA on Friday but just a shade.
  • Often times, the SPX will spend 2-3 days outside the lower Bollinger Band, but in extreme bearish markets, it can live outside of it (see Summer 2011).
  • We are firmly entrenched in oversold territory.
  • Head and shoulders pattern on the 30-minute chart looks like it has fully played itself out, and at the least a small bounce is due.
  • Volume has picked up each of the past three trading sessions, with Friday being notably higher.
  • When short the market in this fed-induced market, you have to to take profits quickly, otherwise you risk being dead-cat bounced out of your positions.
  • Rising support off of the November 2012 lows is at 1616 today. That is the nearest significant support level on the daily chart.
  • Dead cat bounce sees no resistance until 1684.
  • I’m still not looking to short this market. Sell-offs in this market environment are quick and hard to capitalize on – better off holding on to the long side and buying on the dips.
  • It is arguable that the SPX is simply trying to form its first higher-low off of the 6/24 lows.
  • For the market to continue its drop, there needs to be a steady stream of bad news –  a pipe line per se, to keep driving this market lower.
  • 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 8-19-13