Pre-market Update (Updated 8:30am eastern):

  • US futures are slightly down ahead of the open.
  • European markets are trading mixed/flat. 
  • Asian markets traded in a wide range from -1.3% up to +0.9%

Economic Reports Due out (Times are EST): Jobless Claims (8:30am), PMI Manufacturing Index Flash (8:58am), Existing Home Sales (10am), Philadelphia Fed Survey (10am), FHFA House Price Index (10am), Leading Indicators (10am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

  • SPX finally had a pullback yesterday that was done in a controlled and mild manner. 
    • Uptrend still remains in place.  
  • We could see a pullback to 1340 today without affecting the the uptrend currently in place. 
  • Market remains short-term overbought, and tends to remain in that area for weeks and months if the SPX’s uptrend is indeed legit. 
  • 50-day moving average yesterday ended up being the zone for the market’s bounce off lows. 
  • 1360 resistance will be in play again today. 
    • After that resistance level is cleared, then our next resistance level hovers at 1401 – represents the slightly descending resistance level off of the 4/2/12 highs.
  • The FOMC Statement became a non-news event. 
  • The move off of the June 4th lows is very similar to the bullishness that we saw in October of last year and September 2010. 
  • Also important is the angle of the 10-day moving average, when it turns suddenly steeper in slope like it has over the past four trading sessions, it can be a good indication that the market is ready to rally for an extended period of time. 
    • By steep I mean by more than 45 degrees. Refer to price action from late December 2011 and January 2012. 
  • There is now an established uptrend in place on SPX off of the 6/4 lows with consecutive higher-highs and higher-lows now (two of each). 
  • SPX confirmed the inverse head and shoulders pattern last 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. 

    • 30-minute chart showing a solid uptrend is in place. 

  • A break below 1306 would represent a resumption of the downward trend. 
  • VIX, despite yesterday’s sell-off, continued to drop all the way down to 17. 

My Opinions & Trades:

  • Yesterday’s pullback looks like a solid opportunity for buying stocks on the dip – not a reason for panic.
  • I don’t see, based on the charts, any notable reasons to be short this market. 
    • I can tell you a million economic/fundamental reasons, but as a chartist, I have to leave personal biases behind, and simplify read the charts. 
  • I’d like to wait for a controlled, light volume pullback to go higher than my current portfolio of 6 positions. 
  • Sold VCI yesterday at $20.40 from $19.41 for a 5.1% gain. 
  • Sold BX yesterday at $14.10 from $13.71 for a 2.8% gain. 
  • Bought AH at $12.50
  • I am still long AMZN at $221.60, CHD at $53.95, PCYC at $40.66, WNR at $20.51

Charts:

SP 500 Market Analysis 6-21-12