Economic Reports Due out (Times are EST): Consumer Price Index (8:30am), Jobless Claims (8:30am), Current Account (8:30am), EIA Natural Gas Report (10:30am)
Pre-market Update (Updated 8:30am eastern):
- US futures are flat ahead of the open.
- European markets are trading -0.5% lower.
- Asian markets traded on average -0.6% lower.
Technical Outlook (SPX):
- SPX had the look of breaking out yesterday, but ultimately succumbed to the bears again by selling off into the close.
- 5 days of consolidation and counting. So far it has the look of a bull-flag, but very choppy market nonetheless.
- Despite yesterday’s sell-off the bulls really haven’t given up much in gains.
- 1335 is the number the S&P needs to reach and close above to break out of the range bound trading of the last 5 days. A close above 1327 would help that cause as well.
- Sold support remains at the 10-day moving average – testing it 3 out of 4 days.
- 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 during this consolidation period.
- Chopping above and below the 20-day moving average no true support/resistance there.
- 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 23 – below 20 and the bear’s hopes for a break lower is greatly hampered. .
My Opinions & Trades:
- A bit cautious with creating new long positions because the crazy developments in Spain seem to be just now getting started.
- 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 NUE at $36.04 from $36.67 for a 1.7% gain
- Covered GWW at $180.41 from $183.41 for a 1.6% gain.
- No additional trades yesterday.
- Currently Long PPL at $27.65.
Charts:
