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Pre-market update (updated 9am eastern):

  • Europe is trading +0.8% higher. 
  • Asian markets traded mixed/flat.
  • US futures are moderately higher ahead of the opening bell. 

Economic reports due out (all times are eastern): International Trade (8:30am), Jobless Claims (8:30am), Import and Export Prices (8:30am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am)

Technical Outlook (SPX):

  • The four days of gradual  intraday selling has been quite impressive in terms of consistency and steadiness. 
  • No where in the selling are we really seeing panic. It's more like a leaky faucet that continues to just drip...drip...drip...
  • 1430 was tested yesterday and held as expected. That doesn't mean though it won't eventually break. Just held today. 
  • SPX closed right on the lower bollinger band. Last time the lower BB was tested we saw an eight day move that took us from 1396 to 1473. 
  • Over the past year, a re-test of the lower bollinger band has been a great opportunity to get long at. Beyond a year, you have last summer's sell-off that paid no attention to the breach price made on the lower BB. 
  • What is astounding is that over the past four days, volume has grown increasingly weak. Like what we saw this summer. 
  • SPX is short-term oversold. 
  • 50-day moving average is in play at 1425. 
  • Double-top on the daily chart coming very close to fruition. 
  • 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. 
  • 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 PNR at $44.03 from 45.06 for a -2.3% loss. 
  • Bought GWW at $210.00. 
  • Bought LMCA at $107.00. 
  • Shorted CPRT at 27.00
  • Remain long AET at $42.12, AAPL at $637.69, 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 10-11-12

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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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