• trend is your friend

Technical Outlook:

  • SPX continues its epic rise yesterday, now up 160+ points in the last ten trading sessions. trend is your friend
  • VIX prior to this week, had dropped 8 out of 9 trading sessions down to key support in the lower 13’s. Last two days the VIX has refused to drop lower despite the market rallying hard during these two days. See exactly how the VIX keeps managing to find key support here.
  • T2108 (% of stocks trading above their 40-day moving average) finally established a higher-high, rising 13.5% to 78%. 
  • Strong increase in volume yesterday on SPY, and coming in at recent averages. 
  • SPX exhibited a great deal of follow through yesterday following Monday’s new higher-highs. 
  • There is a great deal of bullishness to this market right now despite the prevalent amount of worry. It has been over two years since the market has actually seen a legitimate rally and so it wouldn’t be surprising to see this market continue its current trend higher as shorts are forced to face the new reality of the market. 
  • In the very near term, the market is getting stretched, so some profit taking could be in store, though I don’t expect it to be enough to drag prices significantly lower. 
  • One catalyst that the bears could have in their favor is if Q2 earnings come up short. 
  • Dow Jones Industrial joined the record highs parade by closing at new record highs yesterday. The Russell and Nasdaq still have a significant way to go before doing so themselves.
  • Oil bounced hard yesterday. 
  • At this point, I would track the market as it continues to make new highs against the 5-day moving average. There may be some short squeezing still as the shorts have their stops run above all-time highs and it will provide a good short-term reading on the strength of the market. 
  • Mondday marked the fourth consecutive year that SPX make a new all-time high, going back to 2013. 
  • At this point, it can be said that the market is climbing the “Wall-of-Worry”.
  • Market is assuming that rate hikes are pretty much off the table for all of 2016. 

My Trades:

Chart for SPX:

SP 500 Market Analysis 7-13-16

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