• SP 500 Market Analysis 8-21-13

Pre-market update:

  • Asian markets traded flat.
  • European markets are trading 0.3% lower.
  • US futures are trading 0.2% lower


Economic reports due out (all times are eastern): MBA Purchase Applications (7), Existing Home Sales (10), EIA Petroleum Status (10:30), FOMC Minutes (2).

Technical Outlook (SPX):

  • A rather solid day yesterday until the final 30 minutes of trading which led to 1/2 the day’s gains evaporating.
  • Yesterday’s bounce took us into the underside of the 50-day moving average which it was unable to break.
  • Any significant rally over the next few days will face heavy resistance at the 1684 level of price resistance.
  • Only 34 points removed from long-term rising support off of the November 2012 lows at 1618.
  • Despite the bounce in SPX, RUT and Nasdaq yesterday, the Dow finished lower for a 5th straight day and 10 out of the last 12 days. The need for a larger bounce is necessary. 
  • SPX remains well oversold.
  • 30-minute chart remains entrenched in a downtrend.
  • Volume has been light last two sessions.
  • When short the market in this fed-induced market, you have to to take profits quickly, otherwise you risk being dead-cat bounced out of your positions.
  • Dead cat bounce sees no resistance until 1684.
  • I’m still not looking to short this market. Sell-offs in this market environment are quick and hard to capitalize on – better off holding on to the long side and buying on the dips.
  • It is arguable that the SPX is simply trying to form its first higher-low off of the 6/24 lows.
  • For the market to continue its drop, there needs to be a steady stream of bad news –  a pipe line per se, to keep driving this market lower.
  • 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. 

My Opinions & Trades:

Chart for SPX:

SP 500 Market Analysis 8-21-13

 

You Might Like

  • How to use Moving Averages for Swing Trading

  • Swing Trading Venezuela following the Maduro capture.

    When Geopolitics Hits the Wires: Lessons from Iran to Maduro

  • analyzing volume in your trade setups.

    Swing Trading Using Volume Analysis