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

• European markets are trading flat/mixed. 
• Asian markets traded 0.5% higher. . 
• US futures are trading moderately lower ahead of the opening bell. 

Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), S&P Case Shiller HPI (9am), Consumer Confidence (10am), State Street Investor Confidence Index (10am)

Technical Outlook (SPX):

• The SPX finished its run in positive territory yesterday at eight straight days, though it came pretty close to extending its streak. 
• Yesterday’s slight pullback kept price inside of the rising upper channel. 
• WIth this mornings weakness, if the dip buyers fail to prop the market up, could mark the beginning of a long awaited pullback for this market. 
• So far, this January is the best we’ve seen since 1994. The best January in 19 years. 
• Volume was on par yesterday. 
• VIX shot up notably higher, and finished in the green for a fourth straight day – a glaring bearish divergence for this market. 
• The 10-day moving average continues to trail the current price action in the market. That should be the first layer of support on a market pullback. 
• We are only 76 points away from the SPX hitting an all-time high at 1576, which was achieved on 10/12/07.
• SPX on the weekly is just about as overbought as one can get. 
• Be very careful about adding long positions to your portfolio today. This market is at major extremes on every time frame, and on every noteworthy indicator. 
• The last three times we were this overbought on the weekly chart, the following weeks we saw anywhere between a 2-4 week pullback in the markets. 
• T2108 posted in the Market Group shows a market that has only been this ‘overbought’ a few times in the past three years. 
• At 1451, you have a significant inflection point for the markets. If the market pulls back and price dips below this price level, there is a significant gap to fill (on the SPY) and will likely see a push below 1430. 
• The channel that we are currently trading in looks very similar to the channel that we traded in last year from June through September. 
• I’m concerned by this market because now we have one very large gap and one smaller gap (formed 1/17) that has yet to be filled on the SPY, not to mention the large unfilled gap from November ’12.
• Of late, there have been quite a few market rallies/sell-offs in the last hour of trading, much like what we saw yesterday and Friday.
• It will take a significant move, but below 1398, the trend will be very bearish. 
• Be aware of upcoming news events and discussions that will permeate the markets: Debt Ceiling Debate, Fiscal Cliff Part II, Employment Recovery. 

My Opinions & Trades:

• No new trades. Not going long on this market, and waiting for some kind of weakness to emerge before adding new shorts. 
• Remain Short TEVA at $38.10, TGT at $61.03, HDB at $40.71.
  
• Remain Long RDS.B at $70.25.
• Changes made to stop-losses in the portfolio. 
• May add a new short position if we can get some renewed weakness in the market today. 
• Here is my real-time swing-trading portfolio and past-performance

Chart for SPX: