by Ryan Mallory

Pre-market update (updated 8:00am eastern):

• Europe is trading -0.8% lower. . 
• Asian markets traded -0.2% lower. 
• US futures are flat ahead of the open. 

Economic reports due out (all times are eastern): ISM Non-Manufacturing Index (10am)

Technical Outlook (SPX):

• On Friday, the market delivered a rather bearish performance after having a solid open, resulted in a massive bearish engulfing pattern on the SPY. 
• It's worth noting that the reversal on Friday occurred right at the retest of the 20 and 50-day moving averages. Also happens that the 20-day moving average is dipping below the 50-day moving average for the first time since 7/6/12. 
• A key price level for the bears is 1403 (recent lower-lows).
• Uptrend off of the  6/4 lows finds support at 1409. The last two attempts testing this trend line have held. 
• Over the past three weeks we've seen a slight uptick in the overall volume of the market. 
• Price also reversed on Friday where the confirmation of the triple top confirmed (resistance). 
• 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 above 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. 

My Opinions & Trades:

• Covered MCP short at $9.95 from $10.34 for a 3.8% gain. 
• Remain long AGU at $106.23. 
• Remain Short ESRX at 61.51

Chart for SPX: