Pre-market update:

• Asian markets traded 0.1% higher.
• European markets are trading 0.4% lower.
  
• US futures are trading 1.0% higher ahead of the market open. 
  

Economic reports due out (all times are eastern): GDP (8:30), Employment Cost Index (8:30), Chicago PMI (9:45), Consumer Sentiment (10), Farm Prices (3)

Technical Outlook (SPX):

• Strong bounce by the bulls yesterday, rallying 33 points off of its lows of the day. Unlike previous bounces where follow through the following day was a bull ritual, the bears are managing to wipe out all those gains when the market gaps down this morning. 
• Three key price levels to watch on SPX today: 1989 (yesterday’s low), 1988 (January’s lows), 1972 (December’s lows). A violation and close below any of these is problematic for the bulls going forward. 
• A move above 2064 would have been ideal for the bulls to break the market out of the month long congestion pattern we have been stuck in. It would also confirm an inverse head and shoulders pattern on the daily.
• VIX dropped 8.2% down to 18.76. 
• T2108 (% of stocks trading above their 40-day moving average) rose 11.4% to 48.45%. 
• The 200-day moving average (currently at 1973) could also come in play in the coming week. 
• The difficult issue with this market is the Fed regularly releasing dovish comments that temporarily stabilizes the market and thereby squeezes the bears out of their short positions. This was clearly seen yesterday afternoon. 
• A move below 1988 would spell bad news for the bulls and create a new lower-low in the market. 
• On the spectrum of trade-able markets, January will rank as one of the most difficult types you can experience as a trader. 
• The market doesn’t care about the economy nor earnings. That is not what is driving it. The market only cares about what the Fed is doing to keep equities propped up. 

My Trades:

• Added one new position yesterday. 
• Did no close out any positions yesterday. 
• Will watch for a break to the downside of price levels mentioned above before adding any new short positions today. 
• 10% Long / 90% cash. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: