Technical Analysis:

  • The S&P 500 (SPX) did little to nothing on Friday as price maintained the status quo while also upholding support at the August 2016 highs. 
  • There exists still the potential for a test of the 20-day moving average. 
  • Volume on SPDRs S&P 500 (SPY) fell for a second consecutive day, and came in below recent averages. 
  • Overall, the market is coming off of its recent overbought levels, but still has plenty of room that it can take to the downside, without overextending itself. 
  • Yesterday’s Italian referendum is having its effect on the market, with futures initially selling off hard, then to find immediate buying interest once the European markets opened. As a result, traders are looking at a gap higher this morning. 
  • United States Oil Fund (USO) showing strength today ahead of the market open and looks ready to test the October highs, once again. If that happens, there is a real chance for a breakout with this commodity. 
  • CBOE Market Volatility Index (VIX) rose for a third straight day, but the slight increase in strength is at risk of stalling out here at current levels. 
  • Slight bounce out of the Nasdaq (COMPQ). The path least resistance going forward still appears to lie to the downside. 
  • Lower highs continue to be made on the T2108 (% of stocks trading above their 40-day moving average) and has established lower-highs on each major surge to new highs that occurred in July and again in November. This should be a major concern for traders as the the highs aren’t being made on substantial breadth across the market. Typically I would expect well over 80% of stocks trading above their 40-day moving average when price is at all time highs. Right now it is at 62%.
  • With the election behind us, the market should start to turn its attention to the Federal Reserve and the eventual rate hike that will come on December 14th when the next FOMC statement is released. 

My Trades:

  • Did not close out any swing-trades on Friday. 
  • Added one new long position to the portfolio. 
  • Will look to increase my stop-losses on existing positions today, where necessary. 
  • I will look to add 1-2 new swing-trades to the portfolio today.
  • I am currently 30% Short / 10% / 60% Cash

Chart for SPX:

SP 500 Market Analysis 12 5 16

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