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Pre-market update (updated 9am eastern):

  • Europe is trading -0.5% lower. 
  • Asian markets traded 0.2% higher. 
  • US futures are slightly lower ahead of the opening bell. 

Economic reports due out (all times are eastern): Existing Home Sales (10am)

Technical Outlook (SPX):

  • Yesterday saw the S&P head fake a breakout. Now price remains below the price channel and resistance
  • We remain overbought short-term in this market. 
  • A close above 1462 on the SPX would result in a breakout of the bull flag pattern that has been forming off of the 9/14 closing price. 
  • Slight increases in the volume level over the last three days consecutively. 
  • 30 minute chart looks extremely choppy, but mirror image of daily price action. 
  • So despite the Monday-Wednesday rally, we have yet to see any technical improvement on the chart. Therefore its best, at this point, to be considered a dead-cat bounce until proven otherwise. 
  • Multiple ways to look at this market... I'll detail both perspectives
  • Technically, we are in a downtrend. Since September highs, we have 1) formed a slightly lower-high 2) formed a subsequent lower-low 
    • This creates a SLIGHT downtrend, but the channel is barely trending lower. 
  • On the other hand, considering the larger uptrend that we were in from the 6/4 lows, one could consider this to be a developing bull-flag before moving higher. 
  • I'd recommend not drawing a conclusion on either scenario - let the market do that eventually.
  • We confirmed the double-top pattern on SPX and closed below critical support at 1430 last Friday. 
  • VIX is 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:

  • Day-Traded FB for a 0.58% loss from $19.07 to $18.96
  • Shorted EXPD at $35.65.
  • Remain long AAPL at $637.69, MCD at $94.00.
  • Remain short CPRT at 27.00
  • Track my portfolio RealTime here.

Charts:

SP 500 Market Analysis 10-19-12

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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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