• SP 500 Market Analysis 1-28-14

Pre-market update:

  • Asian markets traded -0.5% lower.
  • European markets are 0.5% higher. 
  • US futures are trading 0.1% higher ahead of the market open. 


Economic reports due out (all times are eastern): New Home Sales (10), Dallas Fed Manufacturing Survey (10:30)

Technical Outlook (SPX):

  • SPX bounced yesterday off of the key 1772 support level nearly 20 points intraday before giving up 1/2 of those gains before the close. 
  • Overnight strength suggests SPX is looking to bounce today – and it is long overdue. 
  • A multi-day bounce could easily take the SPX back up to 1809 without much resistance. 
  • Volume has been heavy over the last three days of trading adding validity to the sell-off. 
  • Bearish sentiment is already at extremes among traders. 
  • Over the last two months – you have a beautiful double top that has formed. 
  • VIX dropped a good chunk yesterday and back into the 17’s. 
  • I’m not a huge fan of chasing short positions here in this market situation. I would rather play the bounce first and then use the bounce to position new shorts. 
  • The boxed consolidation that we had been trading in for over a month has been broken as well as the trend-line off of the October lows. 
  • Until 1772 is broken there is not a significant lower-lower put in place for SPX.
  • SPX sliced right through the 50-day moving average. 
  • Bulls need to do whatever it can to close in the green today.
  • SPX in oversold territory.  
  • January, which is often used as a barometer for the rest of the year, in terms of sentiment, remains firmly in the red for the month. 
  • 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 1-28-14

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