Pre-market update (updated 8:00am eastern):

  • Europe is trading 0.2% lower.
  • Asian markets traded 0.5% higher.
  • US futures are slightly higher.

Economic reports due out (all times are eastern): Jobless Claims (8:30am), Producer Price Index (8:30am), Retail Sales (8:30am), Business Inventories (10am), EIA Natural Gas Report (10:30am),   

Technical Outlook (SPX):

  • Yesterday the SPX had what looked like a solid day of gains in the books only to give up over 90% of those gains before the end of the day. 
  • The candle stick pattern formed yesterday on the SPY would typically be considered bearish, but I don’t think it will weigh much on market direction going forward. I’ve seen patterns like this like on 6/7 and 6/11 and the market primarily ignores the bearish candles. 
  • I mentioned the need for a pullback yesterday, and yesterday’s pullback may have been exactly that, it just occurred on an intraday basis. But the move was in excess of 10 points which is significant. 
  • So  yesterday’s intraday pullback may have been all the bulls needed for a pullback in this market. 
  • It has been six days since we finished a day in the red. That’s hard to do and ultimately sustain. Last time we saw this back in August, we traded slightly lower for the next 3 days in a consolidating manner. 
  • Volume remains steady. 
  • Just a hair-away from being short-term overbought. 
  • 8-day exponential moving average has provided a lot of rising support for this trending market. A break and close below it, would be a cause for concern. 
  • There’s a negative divergence on the RSI and other similar indicators where it failed to make a higher high against the previous highs of this month. 
  • We are seeing similar price action to what what occurred off of the June lows. Assuming as much, it would lead me to believe we’ll see a mild pullback in the next 3 days. 
  • There’s an inverse head and shoulders pattern forming on SPX daily chart that is confirmed at 1422. 
  • Price action showing a downtrend off of the October highs was broken Monday on SPX. 
  • Current uptrend off of the November lows is steep, but not atypical for new rallies. Overtime the up-ward trend-line will flatten out some. 
  • 8-day EMA continues to provide rising support for the markets in the short-term. 
  • Ideally for the bulls, if price action can close at or above 1429, the downtrend off of the September highs would be officially done and over with, as a new higher high would be established for the first time. 
  • Fiscal Cliff discussions continues to dominate the news. 
  • SPX currently has recaptured the 10, 20, 50, and 200-day moving averages. 
  • VIX closed below 16.

My Opinions & Trades:

Chart for SPX:

S and P 500 Market Analysis 12-13-12