• S and P 500 Market Analysis 3-14-13

Pre-market update (updated 9am eastern):

  • European markets are trading 1.0% higher..
  • Asian markets traded flat/mixed. 
  • US futures are trading slightly higher ahead of the opening bell.

Economic reports due out (all times are eastern): Jobless Claims (8:30am), Producer Price Index (8:30am), Current Account (8:30am), EIA Natural Gas Report (10:30am)

Technical Outlook (SPX):

  • The growing trend is to trade higher and higher on lesser and lesser volume. 
  • Dow finished higher for the 9th straight day. 
  • After a 1-day pullback, in the SPX, it seems to be all that is needed anymore for a market to continue a strong bullish uptrend. 
  • There is a nearby gap to still be filled on the SPY – on the SPX it would equate to about a 40 point move. The gap-up occurred on 3/5. 
  • VIX continues to sit near historic levels at 11.83. 
    • Fear has completely escaped this market which puts investors, unknowingly in a very vulnerable position.
  • Tuesday represented the first day of weakness in the SPX for the month of March, The Dow has yet to experience such a day. 
  • Ideally, we are still in need of a more sustained pullback to 1500-1510 level simply for the reason, that it would once again bring stocks back to a place with more ideal setups and opportunities for trading. 
  • Also the amount of margin being used to buy stocks are at levels that historically have led to notable reversals in the market. 
  • We are extremely overbought in the short-term. 
  • While we can still move higher from here, I believe there is far more risk over the next 2-3 days in doing so. 
  • Significant bearish divergence on the T2108 as the market is putting in recovery highs, the T2108 (% of stocks trading above their 40-day MA) is significantly lower.
  • Both channels (July October 2012) and the price channel we are currently in are very similar in nature. 
  • We haven’t seen a market pullback in excess of 4% since October/November time-frame. 

My Opinions & Trades:

Chart for SPX:

S and P 500 Market Analysis 3-14-13

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