Pre-market update (updated 9am eastern):

  • European markets are trading 0.1% higher.
  • Asian markets traded 1.1% higher.
  • US futures are mixed ahead of the bell. 

Economic reports due out (all times are eastern): Jobless Claims (8:30am), Import & Export Prices (8:30am), EIA Natural Gas Report (10:30am), 5-year TIPS Announcement

Technical Outlook (SPX):

  • Huge breakout day yesterday for the markets, as we broke out of consolidation and into all-time highs for the SPX. 
  • Volume was not great, but was adequate compared to recent weeks. 
  • Today is important for the markets, because it needs to avoid at all costs allowing for the bears to push the market lower from here. 
  • At the very least, SPX needs to consolidate in order that the Bollinger bands can expand some in the coming days and give the market some room to run. 
  • We are back to being short-term overbought. 
  • The good thing about reaching new highs for the bulls, is that there is little in the way of price resistance. Though rising support levels can exist. 
  • 1538 still holds as a must hold level, but the likelihood of a near-term move that threatens that level is highly unlikely. 
  • Any thought of a short-term double-top on SPX yesterday was quickly laid to rest. 
  • Only a marginal move out of the VIX yesterday sending it into the lower 12’s. 
  • Be careful of holding stocks that are overextended in their price movements. Best way to determine this is by using Bollinger Bands and monitoring the stock’s behavior once it get’s outside the upper band. 
  • Typically I sell a stock if historically, it tends to sell off once it goes outside the upper band. 
  • Any close below 1538, would breakdown the market below the consolidation level and usher in a new wave of bearishness.
  • Markets don’t care about the economy. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 
  • Ideally, we are still in need of a more sustained pullback to 1500-1510 level simply for the reason, that it would once again bring stocks back to a place with more ideal setups and opportunities for trading. 
  • Both channels (July October 2012) and the price channel we are currently in are very similar in nature. 
  • We haven’t seen a market pullback in excess of 4% since October/November time-frame. 

My Opinions & Trades:

Chart for SPX:

SP 500 Market Analysis 4-11-13