• S and P 500 Market Analysis 1-22-13

Pre-market update (updated 8:30am eastern):

  • European markets are trading 0.4% lower.
  • Asian markets traded mixed. 
  • US futures are trading mixed and flat ahead of the opening bell. 

Economic reports due out (all times are eastern): Chicago Fed National Activity Index (8:30am), Existing Home Sales (10am), Richmond Fed Manufacturing Index (10am)

Technical Outlook (SPX):

  • SPX finished for the fourth straight day in the green. 
  • Price action is up against the upper channel band. Last time this occurred we saw a slight pullback in the markets. Upper channel resistance today sits at 1493. 
  • Continues support sits at the 10-day moving average, as we have managed to trade above it now for 13 straight days. 
  • At 1451, you have a significant inflection point for the markets. If the market pulls back and price dips below this price level, there is a significant gap to fill (on the SPY) and will likely see a push below 1430. 
  • Volume was strong on Friday, but primarily due to options expiration. 
  • The channel that we are currently trading in looks very similar to the channel that we traded in last year from June through September. 
  • Markets are extremely oversold, and this greatly increases the odds of a pullback in the market. 
  • I’m becoming somewhat concerned by this market because now we have one very large gap and one smaller gap (formed yesterday) that has yet to be filled on the SPY. 
  • Huge drop in the VIX on Friday taking us below 13 and resting at 12.46, which is the lowest we’ve seen since June ’07. 
  • Of late, there have been quite a few market rallies/sell-offs in the last hour of trading, much like what we saw yesterday and Friday.
  • There’s really no significant level of resistance for the market above 1466 until you get to 1501. 
  • It will take a significant move, but below 1398, the trend will be very bearish. 
  • Be aware of upcoming news events and discussions that will permeate the markets: Debt Ceiling Debate, Fiscal Cliff Part II, Employment Recovery. 

My Opinions & Trades:

  • Bought RDS.B on Friday at $72.05. 
  • Sold VMC at $56.45 from $53.35 for a 5.8% gain. 
  • Sold UAL at $25.20 from $26.05 for a -3.2% loss. 
  • Remain Short TEVA at $38.10 and Long WCC at $68.24, BG at $75.11, LO at $39.16.
  • Stop-Losses have been updated for a number of positions.  
  • Here is my real-time swing-trading portfolio and past-performance

Chart for SPX:

S and P 500 Market Analysis 1-22-13

You Might Like

  • South Korea and its impact on the US stock market.

    South Korea: The Hidden Driver of US Tech Volatility

  • Learn to trade within your means.

    Stop Trying to Hit Home Runs: Start Trading Within Your Means

  • Avoiding traps on stock breakout plays.

    How to Trade Breakouts Without Getting Trapped