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Pre-market update (updated 8:30am eastern):

  • Europe is trading -0.2% lower.
  • Asian markets traded in -1.5% lower. 
  • US futures are flat ahead of the bell. 

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), Wholesale Trade (10am), Beige Book (2pm), Treasury Budget (2pm)

Technical Outlook (SPX):

  • Heavy sell-off yesterday that brings us very close to testing the rising uptrend-off of the 6/4 lows at 1434.
  • Yesterday alone saw the SPX move below the 10-day and 20-day moving average. 
  • Double-top on the daily chart coming very close to fruition. 
  • Beyond 1434, the 1430 level on SPX remains key for the SPX - break that level and selling will very likely accelerate. 
  • On the SPY, you basically have a bearish island reversal from 10/4-8 with the gaps on day 2 and day 3 in opposite directions and was confirmed by yesterday's follow-through. 
  • 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. Break of 1430 changes that though. 
  • 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. 
  • Failure to make a new high 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 now trading above 16.
  • 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:

  • Stopped out of WYNN at $111.75 from $115.42 for a -3.2% loss. 
  • Bought AET at $42.12. 
  • Remain long AAPL at $637.69, PNR at $45.06, 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 $57.75 for SHLD.
  • Track my portfolio RealTime here.

Charts:

SP 500 Market Analysis 10-10-12

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ryan1Ryan (@shareplanner) specializes in swing trading strategies and is the founder of SharePlanner which he created to help and teach others on how to trade stocks better using multiple approaches and time frames. Each day you can count on Ryan to provide his trading advice as well as transparency in every trade that he makes. Ryan Mallory resides in Central Florida. More >>

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