Economic Reports Due out (Times are EST): MBA Purchase Applications (7am), Producer Price Index (8:30am), Retail Sales (8:30am), Business Inventories (10am), EIA Petroleum Status Report (10:30am)
Pre-market Update (Updated 8:30am eastern):
- US futures are slightly lower ahead of the open.
- European markets are trading 0.2% lower.
- Asian markets traded on average 0.6% higher.
Technical Outlook (SPX):
- Strong recovery for the S&P yesterday from the previous day’s sell-off. Last 3 trading sessions have found solid support at the 10-day moving average.
- The recent bounce in the SPX, to have any merit at all, needs to break and close above 1334.
- Potential for a bull flag forming on SPX
- Inverse head and shoulders forming over the past month – currently working on the right shoulder.
- IH&S pattern very obvious on the 30-minute chart.
- Market is coming off of short-term overbought conditions, but just slightly.
- Chopping above and below the 20-day moving average no true support/resistance there.
- Bullish wedge breakout still intact
- Volume remains relatively average.
- The markets in general have pulled back roughly 10% off of its recent highs which is typically considered a “pullback” in the markets.
- Major bottoms or at the least, interim bottoms, tend to make huge gains in the initial days following the bottom. See last October and September 2010.
- Minor support at 1249, 1209 would also represent a level of price support, should we close below 1266 support. .
- VIX is still elevated and rests above 22 – below 20 and the bear’s hopes for a break lower is greatly hampered. .
My Opinions & Trades:
- Lots of chop in this market gives no clear edge to any side, I am becoming slightly bullish based on developing price patterns,
- Careful about trading in and out of this market too much – I’m playing with my original stop-losses which is usually 3-4% off of the entry price and gives me enough wiggle room to weather the choppiness of this market day-to-day.
- Covered HT at $5.15 from $5.30 for a 2.8% gain.
- Covered ELN at $13.38 from $13.19 for a -1.4% loss.
- No additional trades yesterday.
- Currently Long PPL at $27.65, Short GWW at $183.41, Short NUE at $36.67
Charts:
