Pre-market update (updated 8:00am eastern):
- European markets are trading mixed/flat.
- Asian markets traded 1.7% higher.
- US futures are slightly higher ahead of the bell.
Economic reports due out (all times are eastern): Housing Starts (8:30am), Jobless Claims (8:30am), Philadelphia Fed Survey (10am), E-Commerce Retail Sales (10am), EIA Natural Gas Report (10:30am)
Technical Outlook (SPX):
- The SPX managed to creep higher, just barely, but remain within a 5-day consolidated range.
- Volume dropped back down to Tuesday’s extremely low levels.
- We’ve managed to come off of overbought levels in the short-term. But remain extremely overbought longer-term.
- Last 5 days in the market has shown sideways consolidation and a bit of distribution, leading me to believe we’ll probably push lower in the coming days.
- Should a pullback occur, watch the 10-day moving average – its been a popular destination for bulls to reload at.
- Since the pullbacks off the 6/4 bottom, the pullbacks have ranged around 30-60 points each time, which would give us a range of 1380-50.
- With these low volume levels, continue to expect choppiness in the market.
- Such low volume levels leads me to believe that we may be weakening under the surface and that the slightest bit of bad news accompanied with volume will trigger a stop-order raid on the bulls.
- Next level for bulls to overtake is the 1422 recovery highs on the SPX.
- It’s not uncommon to see large market rallies going into an incumbent re-election.
- If you look at the 4 previous higher-highs in the market since the 6/4 bottom, then one could conclude that we’ve reached another temporary top, and are prime for another pullback.
- One area of concern is the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
- At this point, uptrend support rests at 1359.
- SPX trading above all significant moving averages (10,20,50,200).
- VIX has moved below 15 for the first time since March but spiked noticeably higher on Tuesday (+8%)
- If another sell-off were to ensue, watch for a break and close below 1354 for a new lower-low in the market.
My Opinions & Trades:
- Day-Traded UEC yesterday and sold at 2.38 from 2.31 for a 3% gain.
- Sold AIG yesterday at $34.05 from $32.46 for a 4.9% gain.
- Bought ARUN at $16.79 yesterday.
- Moved my stop-loss in MDT up to $39.61.
- Keeping a perfectly hedged portfolio, until we get a better feel for market direction going forward.
- Going to consider any sell-off as opportunities to buy stocks on the cheap. Dip buying should be the norm until a lower-low is put in place.
- Remain long MDT at 38.15 and AMZN at $233.90. Short BRO at $25.65, HE at $28.45, COG at $42.01
Charts:
