• SP 500 Market Analysis 1-31-14

Pre-market update:

  • Asian markets traded -0.4% lower.
  • European markets are 1.5% lower. 
  • US futures are trading 0.7% higher ahead of the market open. 


Economic reports due out (all times are eastern): Personal Income and Outlays (8:30), Employment Cost Index (8:30), Chicago PMI (9:45), Consumer Sentiment (9:55), Farm Prices (3)

Technical Outlook (SPX):

  • Solid gains yesterday look to get wiped out at the open with today’s pre-market weakness. 
  • 1772 level is key for the markets today, break and close below it, and SPX is in some serious trouble. 
  • This week has represented one of the choppiest and most volatile weeks in years with the down-up-down-up-down action. 
  • VIX looking to climb toward the “20” mark. 
  • 30-minute chart of the SPX shows a a lot of choppiness and a strong base above 1772 as well. 
  • SPX still remains short-term oversold. 
  • Five out of the last seven trading sessions have seen heavy sell-offs. 
  • For the bulls, any bounce today needs to take price back above 1795 at the close. 
  • For the bears any legitimate sell-off needs to take price below 1772 at the close. 
  • The potential for a major short squeeze is very possible – traders are getting sucked into the short trade and it is already becoming very crowded. 
  • Over the last two months – you have a beautiful double top that has formed. 
  • Until 1772 is broken there is not a significant lower-lower put in place for SPX.
  • Three out of the last four Red January’s have resulted in a bullish market for the year. So the January barometer really isn’t that much to rely on. 
  • Markets don’t care about the economy nor earnings. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 

My Opinions & Trades:

Chart for SPX:

SP 500 Market Analysis 1-31-14

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