Pre-market update (updated 9am eastern):
- Europe is trading mixed/flat.
- Asian markets traded mixed/flat.
- US futures are trading significantly higher.
Economic reports due out (all times are eastern): Dallas Fed Manufacturing Survey (10:30am), Farm Prices (3pm)
Technical Outlook (SPX):
- SPX finished lower on Friday for the fifth straight day and for the six time in the last seven sessions.
- Fair value for the market is significantly off this morning after a major drop in after hours trading on Friday due to a breakdown in the Fiscal Cliff talks. Fair value is about 12 points lower than where we closed at.
- We are likely to test at some point the lower Bollinger Band on SPX. Often times we will repeatedly test this level before actually bouncing.
- We could see a test of the 200 day moving average. There hasn't been anything significant about this moving average over the past year in terms of support/resistance so I wouldn't expect much of it today or going forward.
- The S&P is going to finish the year in positive territory and likely in excess of 10%.
- Expect light volume levels considering it is New Year's Eve today.
- SPX is currently trading in oversold territory.
- We finished Friday below the critical level of 1411 which thereby ends the trend off of the November lows and creates a new lower-low.
- SPX is continuing to price in the strong possibility that we are going over the "Fiscal Cliff" tomorrow.
- On the flip side, if we are surprised by some kind of mutual agreement between now and the end of the year, expect a major rip higher in the markets - likely 30-40 points on the SPX.
- Weekly chart still looks bearish overall with the failure at overhead resistance keeping the market from progressing higher.
- The 30-min chart had gone decidedly bearish with a new lower-low and end to the previous uptrend.
- VIX finished above 22 - a level that hasn't been reached since June.
My Opinions & Trades:
Chart for SPX: