• SP 500 Market Analysis 4-09-13

Pre-market update (updated 9am eastern):

  • European markets are trading 0.4% higher.
  • Asian markets traded 0.7% higher.
  • US futures are slightly higher ahead of the bell. 

Economic reports due out (all times are eastern): NFIB Small Business Optimism Index (7:30am), ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), Wholesale Trade (10am)

Technical Outlook (SPX):

  • The way the market is shaping up at the open, we should see price push through 1564 on the SPX and re-attempt to break out of consolidation and to the upside. again. 
  • The Bollinger Bands are likely to restrict any significant moves, but should also start expending more as price movements upward become more aggressive. 
  • A finish in the green today would break the ‘Christmas Lights’ scenario over the past 14 trading days where we alternate between red and green. 
  • Be careful of holding stocks that are overextended in their price movements. Best way to determine this is by using Bollinger Bands and monitoring the stock’s behavior once it get’s outside the upper band. 
  • Typically I sell a stock if historically, it tends to sell off once it goes outside the upper band. 
  • VIX sold off from its highs yesterday continuously throughout the day.
  • Volume was below average, as has been much of the case during this period of consolidation. 
  • If we are to experience a significant sell-off today, watch the 1532 level which represents the upward rising channel underneath the price action as well as the 50-day moving average. 
  • Any close below 1538, would breakdown the market below the consolidation level and usher in a new wave of bearishness.
  • On Friday, this level was tested and it held. 
  • Markets don’t care about the economy. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up. 
  • Ideally, we are still in need of a more sustained pullback to 1500-1510 level simply for the reason, that it would once again bring stocks back to a place with more ideal setups and opportunities for trading. 
  • Both channels (July October 2012) and the price channel we are currently in are very similar in nature. 
  • We haven’t seen a market pullback in excess of 4% since October/November time-frame. 

My Opinions & Trades:

Chart for SPX:

SP 500 Market Analysis 4-09-13

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