• S and P 500 Market Analysis 11-08-12

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

  • Europe is trading 0.4% higher. 
  • Asian markets traded -1.6% lower. 
  • US futures are moderately higher. 

Economic reports due out (all times are eastern): International Trade (8:30am), Jobless Claims (8:30am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

  • Biggest sell-off that we’ve seen since bouncing off of the 6/4 lows (last 30+ point sell-off was on 6/1). 
  • Price action went all the way down to the lower bollinger-band before closing on the day.
  • Bear-flag confirmation as we had talked about in yesterday’s Trading Plan occurred at 1410. 
  • Price support levels at 1400 were decimated yesterday. 
  • A lower-low was established at 1403 as well as a previous lower-high. All bearish developments of an established downtrend. 
  • The 200-day moving average is definitely in play today. A break of 1380, and you can say this market’s conditions become very dire. 
  • Last test of the 200-day moving average came on 6/4 where the market ended up bouncing handedly and forming a bottom as well, then rallying for the next 5 months. 
  • Yesterday’s volume was the highest that we’d seen since 5/18/12. 
  • The fact that we did not see any kind of rally yesterday, despite the huge gap-down, was an obvious sign of a shift of market sentiment yesterday. 
  • Weekly chart also supports a breakdown in the previous channel.
  • VIX at 19. 

My Opinions & Trades:

  • Shorted SODA at $35.69.
  • Will look to add new shorts to the portfolio today. 

Chart for SPX:

S and P 500 Market Analysis 11-08-12

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