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

  • Europe is trading 0.5% higher. 
  • Asian markets traded 0.5% higher. 
  • US futures are trading moderately higher. 

Economic reports due out (all times are eastern): Durable Goods Orders (8:30am), Jobless Claims (8:30am), Chicago Fed National Activity Index (8:30am), Pending Home Sales (10am), EIA Natural Gas Report (10:30am), Kansas City Fed Manufacturing Index (11am)

Technical Outlook (SPX):

  • Despite opening higher, the market quickly gave up those gains, and finished lower for the fourth time in the last five days. 
  • We remain extended outside the lower Bollinger Band. Back in May, we managed to do this for five straight days. Eventually it leads to a hard snap-back, causing bears to be squeezed. 
  • There is strength in pre-market trading, but expect for some resistance to kick in at around 1422, which is the underside of the channel that the market broke down and out of this week. 
  • There's a trend-line off of the 2011 October lows, that would represent rising long-term support, and today's that level sits at 1400. 
  • We also broke below the critical 1425 support level. This creates an obvious lower-low in the market, but also a break down and out of current price channel. Very bearish
  • Market is short-term oversold. 
  • Volume has been 'average' over the past few days. 
  • Price support also exists at 1400.
  • Weekly chart also supports a breakdown in the previous channel, and end to its longer-term uptrend off of the June lows. 
  • 30-minute chart shows a beautiful triple top that has confirmed. 
  • FOMC Statement was a non-event. 
  • VIX is above 18. 
  • 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:

Chart for SPX:

SP 500 Market Analysis 10-25-12

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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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