Pre-market update (updated 4:30am eastern):
- Europe is trading 1.0% lower.
- Asian markets traded in mixed fashion, ranging from -0.9% up to +0.4%.
- US futures are trading moderately lower ahead of the bell.
Economic reports due out (all times are eastern): None
Technical Outlook (SPX):
- Gap down markets: highly luring for the bears, but often a trap. Simply gap downs more times than not push lower for the first hour of trading and then miraculously recover and sometimes finish green on the day.
- Huge reversal on Friday's price action.
- If we indeed see a large pullback, 1430 would mark critical support as it represents the uptrend that we've been on since the 6/4 lows.
- While the 20-day moving average has been violated on a number of occasions, price action doesn't tend to drop that far below it before popping back higher again.
- Volume continues to remain on average.
- Most discouraging aspect about this market is the fact that it pushed above resistance at 1466 and then came back underneath it before the market's close.
- Another push above 1465, and ideally above 1474, would be bullish, and possibly lead to some squeezing of the bears.
- This would also create a 'higher-high' for the market which would be extremely important and pave the way for a test of 1500.
- Quickly approaching overbought conditions in the short-term, but not quite there yet.
- Failure to make a new higher in the near-term, would be indicative of a topping pattern in the broader market.
- We have a 10-20-day moving average crossover to the downside. Last time we saw this was in early September, and it marked a short-term bottom and subsequently bounced and sent the market nearly 80 points higher.
- Taking a look at the weekly chart of SPX, the conditions look very healthy with no signs of a near-term breakdown.
- For the bulls to build confidence among investors, there needs to be less of the intraday sell-offs. And the bears, if they really want this market to push lower, they need to take advantage of the intraday weakness it continues to get handed.
- VIX is trading below 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
- If another sell-off were to ensue, watch for a break and close below 1396 for a new lower-low in the market.
My Opinions & Trades:
- Day-traded JRCC from $2.98 to $2.99 for a 0.3% gain.
- Stopped out of NTE at $10.72 from 11.38 for a -5.8% loss.
- Shorted DRC at $52.38
- Remain long $WYNN at $115.42, TTM at $25.50, VZ at $45.68, SHLD at $54.48.
- Stop-loss tightened to $25.90 for TTM.
- Stop-loss tightened to $45.80 for VZ.
- Track my portfolio RealTime here.