Pre-market update:

• Asian markets traded 1.3% lower.
• European markets are trading 1.3% lower.
• US futures are trading 0.1% higher ahead of the market open. 
  

Economic reports due out (all times are eastern): MBA Purchase Applications (7), Quarterly Services Survey (10), EIA Petroleum Status Report (10:30), Treasury Budget (2)

Technical Outlook (SPX):

• Yesterday was the largest amount of selling that didn’t include an intraday rally to lessen the losses, in almost a month (2/19 to be exact). 
• Volume has been light on the last two days of selling. 
• We are going to test the 10-day moving average today and should we see the market close below the MA, a potential sell-off could follow, similar to what we saw in late January. 
• Below the 10-day moving average I suspect that there should be a respectable amount of support at the 1850 level. 
• When you are shorting this type of market, want a huge pullback is one thing, but trading like you are going to get it is entirely ill-advised as you have to assume at any given point, the dip buyers can rush in and squeeze the shorts. 
• So don’t short heavily this market stay nimble and manage a handful of positions rather than maxing out the portfolio to the short-side. 
• Price action yesterday formed a bearish engulfing candle pattern that covered the previous four days of trading. 
• VIX only spiked 4.2% to 14.8. 
• A break below 1835 – 1840 would represent a major milestone for the bears. 
• I am cautious towards this market as recent history suggests 140+ point rallies is on the extreme high end of what a market can do in a month’s time. 
• 30-minute SPX chart has a double top in place and confirmed. 
• On the SPY you have a huge gap now that needs to be filled at some point from 3/4 – there is also the gap up from 2/7 that has gone unfilled as well. 
• The biggest technical support level is the strength SPX found from the trend line that started off of the August ’13 lows. 
• The Market doesn’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:

• Covered Short position in F at $15.26 for a 2% gain. 
• Sold CTSH at 52.70 for a 1.2% gain. 
• Sold MAN at 77.27 for a 1.3% loss. 
• Added two new short positions yesterday to the portfolio. 
• Remain short JCI at 48.90
• Will look to add 1-2 new additional position today. 
• Short 30% / Cash 70% 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: