Economic Reports Due out (Times are EST): Housing Market Index (10am)
Pre-market Update (Updated 8:30am eastern):
- US futures are moderately lower ahead of the open, after giving up their modest overnight gains.
- European markets are trading mixed/flat, with STOXX 50 trading -1.2% lower.
- Asian markets traded on average 1.5% higher.
Technical Outlook (SPX):
- Great day for the S&P on Friday as they managed to put in a ‘higher-high’ in the market, and establish an uptrend in the market off of the 6/4 lows
- Though I wouldn’t consider it to be a strong one at this point.
- The opportunity exists (if we bounce off of the gap-down) for the S&P to test the 50-day moving average.
- Quite a ways from current price, but ultimately, if the price can clear 1401 we’ll have a market that is very bullish.
- Represents the slightly descending resistance level off of the 4/2/12 highs.
- SPX confirmed the inverse head and shoulders pattern on Friday.
- Of late, respectable support lies at the 10-day moving average.
- Has touched it multiple times in the past 2 weeks and held each time.
- IH&S pattern very obvious on the 30-minute chart.
- Confirmed on Friday.
- SPX is no longer overbought.
- 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.
- Measured by recent highs to its most recent lows.
- A break below 1306 would represent a resumption of the downward trend.
- VIX is still elevated and rests above 21 – below 20 and the bear’s hopes for a break lower is greatly hampered. However, it did take a pretty solid hit yesterday.
My Opinions & Trades:
- If we bottom out and show signs of filling the morning gap down, I’ll look to add 1-2 new long positions to the portfolio.
- 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.
- Bought WNR at $20.51 on Friday
- Bought VCI at $19.41 on Friday.
- I am still long PPL at $27.65 and PCYC at $40.66
Charts:
