by Ryan Mallory

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

• Europe is trading 0.3% higher. 
• Asian markets traded mixed.
• US futures are trading moderately higher. 

Economic reports due out (all times are eastern): MBA Purchase Applications (7am), PMI Manufacturing Index Flash (8:58am), New Home Sales (10am), EIA Petroleum Status Report (10:30am), FOMC Statement (2:15pm)

Technical Outlook (SPX):

• Major sell-off in the SPX yesterday, which has taken price action well below the 50-day moving average. 
• A bounce here becomes all the more likely as price on SPX is well below the lower bollinger band. Which is something we haven't seen since the extended sell-off in May. 
• We also broke below the critical 1425 support level. This creates an obvious lower-low in the market, but also break down out of current price channel. Very bearish. 
• Market shows signs that it is short-term oversold. 
• Volume has been 'average' over the past couple of days. 
• Next support level lies at 1400. 
• Weekly chart also supports a breakdown in the previous channel, and end to its longer-term uptrend off of the June lows. 
• Watch the trend-line on the weekly chart by drawing a trend-line off of the October 2011 lows. This trend-line breaks at 1398-1400 as well. 
• 30-minute chart shows a beautiful triple top that has confirmed. 
• Don't forget, there is a FOMC statement, which makes things even more interesting since it is the last one before the election. 
• VIX is a shade below 19.
• 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 my short positions
• Covered UBRN at $35.94 for a 1.1% gain. 
• Covered CAKE at $33.75 for a 0.7% gain.
• Covered EXPD at $36 for a -1% loss. 
• Sold WLT at $37.89 for a -3.7% loss. 
• Remain long AGU at $106.23. 
• Track my portfolio RealTime here.

Chart for SPX: