Pre-market update (updated 7:00am eastern):
- European markets are trading 0.5% lower.
- Asian markets traded 0.8% higher.
- US futures are trading slightly lower.
Economic reports due out (all times are eastern): MBA Purchase Applications (7am), Productivity and Costs (8:30am), EIA Petroleum Status Report (10:30am)
Technical Outlook (SPX):
- After seeing the SPX sell-off 4 straight days last week, we are now attempting to move higher for the 4th straight day this week.
- SPX managed to close above the mental hurdle of 1400 yesterday, and poised to make a move to 1422 and challenge the year’s highs.
- Market is back to being short-term overbought after rallying more than 35 points in 3 days.
- Biggest news so far this week, technically, has been the SPX breaking out of the descending trend-line off of the 4/2 highs (as noted below).
- Volume continues to be extraordinarily light over the past few days and if you compare it to this time last year, it is as much as 30% less.
- It’s not uncommon to see large market rallies going into an incumbent re-election – (post later on this today).
- Very strong rally in place on the 30min chart of the SPX.
- 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 are 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 1350.
- SPX trading above all significant moving averages (10,20,50,200).
- VIX has now bucked the trend during the last two trading sessions – should be of concern for the bulls as a divergence.
- If another sell-off were to ensue, watch for a break and close below 1354 for a new lower-low in the market.
- Downside reversal signal still remains intact on the SharePlanner Reversal Indicator.
My Opinions & Trades:
- Covered CRI at $51.94 from $50.76 for -2.3% loss.
- Bought AIG yesterday at $32.46
- If the market shows signs of getting top heavy and a possible pullback, I may consider adding 1-2 short positions to hedge my 5 current long positions.
- Remain long RHT at $56.19, CNQ at $28.78, MDT at 38.15 and AMZN at $233.90. Short BRO at $25.65
Charts:
