Pre-market update (updated 8:30am eastern):
- Europe is trading mixed/flat.
- Asian markets traded in mixed fashion, ranging from -1.3% up to +0.5%.
- US futures are slightly higher ahead of the bell.
Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am)
Technical Outlook (SPX):
- Low volume day, due to Columbus Day holiday kept the market uneventful... but lower nonetheless.
- On the SPY, you basically have a bearish island reversal over the last three days, with the gaps on day 2 and day 3 in opposite directions.
- SPX continues to ride the 20-day moving average higher. Let's see if it holds yet again today.
- After Friday's breakout failure and back below key resistance, it is important to recognize that the market is in a broader market consolidation range.
- There is an obvious double top pattern forming on the S&P. Below 1430 would confirm the pattern and represent a market breakdown.
- If we a 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.
- 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.
- 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 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:
- Closed out TTM at $25.90 from $25.50 for a 1.6% gain.
- Bought Apple (AAPL) at $637.69.
- Bought PNR at $45.06.
- Remain long $WYNN at $115.42, VZ at $45.68, SHLD at $54.48.
- Remain short DRC at $52.38
- Stop-loss tightened to $45.80 for VZ.
- Stop-loss tightened to $56.45 for SHLD.
- Track my portfolio RealTime here.