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

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

Economic reports due out (all times are eastern): Employment Situation (8:30am), Factory Orders (10am)

Technical Outlook (SPX):

  • Strong bounce out of the market yesterday as the market pushed its way into key resistance levels between 1425-32.
  • A pop from the employment report has the market pushing through this resistance level at the open but keeping price above that level will remain a challenge.
  • Volume was notably light yesterday, adding skepticism to the idea that the rally was more of a dead-cat bounce. 
  • Short-term we are off of the oversold conditions. Longer-term we are definitively oversold.
  • 1400 held as a solid level of support for the past week. 
  • If conditions are to get bearish, it can't do so until it breaks this 1400 level. 
  • Triple-top confirmed on the SPX over the past two months. 
  • Weekly chart also supports a breakdown in the previous channel, and end to its longer-term uptrend off of the June lows. 
  • VIX dropped hard yesterday and below 17.
  • 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 SVU yesterday from 3.19 up to 3.24 for a 1.6% gain. 
  • Remain long AGU at $106.23. 
  • Remain Short MCP at  $10.34, ESRX at 61.51

Chart for SPX:

S and P 500 Market Analysis 11-02-12

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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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