Pre-market update (updated 9am eastern):
- Europe is trading -0.5% lower.
- Asian markets traded 0.2% higher.
- US futures are slightly lower ahead of the opening bell.
Economic reports due out (all times are eastern): Existing Home Sales (10am)
Technical Outlook (SPX):
- Yesterday saw the S&P head fake a breakout. Now price remains below the price channel and resistance.
- We remain overbought short-term in this market.
- A close above 1462 on the SPX would result in a breakout of the bull flag pattern that has been forming off of the 9/14 closing price.
- Slight increases in the volume level over the last three days consecutively.
- 30 minute chart looks extremely choppy, but mirror image of daily price action.
- So despite the Monday-Wednesday rally, we have yet to see any technical improvement on the chart. Therefore its best, at this point, to be considered a dead-cat bounce until proven otherwise.
- Multiple ways to look at this market… I’ll detail both perspectives
- Technically, we are in a downtrend. Since September highs, we have 1) formed a slightly lower-high 2) formed a subsequent lower-low
- This creates a SLIGHT downtrend, but the channel is barely trending lower.
- On the other hand, considering the larger uptrend that we were in from the 6/4 lows, one could consider this to be a developing bull-flag before moving higher.
- I’d recommend not drawing a conclusion on either scenario – let the market do that eventually.
- We confirmed the double-top pattern on SPX and closed below critical support at 1430 last Friday.
- VIX is at 15.
- Fed’s QE3 launch is going to add a lot of buying power to this market and drive more people out of interest-bearing assets and into equities in search of some kind of return.
- One area of concern is the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
My Opinions & Trades:
- Day-Traded FB for a 0.58% loss from $19.07 to $18.96
- Shorted EXPD at $35.65.
- Remain long AAPL at $637.69, MCD at $94.00.
- Remain short CPRT at 27.00
- Track my portfolio RealTime here.
Charts:
