• S and P 500 Market Analysis 11-20-12

Pre-market update (updated 9:00am eastern):

  • Europe is trading flat/mixed. 
  • Asian markets traded mixed/flat. 
  • US futures are slightly higher.  

Economic reports due out (all times are eastern): ICSC-Goldman Store Sales (7:45am), Housing Starts (8:30am), Redbook (8:55am) 

Technical Outlook (SPX):

  • Strong market bounce yesterday, that took the SPX 2% higher on the day. 
  • We remain fixed in the downward channel, but the SPX was nonetheless able to reclaim the 200-day moving average. 
  • Short-term we are also well off of oversold conditions, while long-term we remain firmly oversold. 
  • I believe over the course of the next 2-3 trading sessions, it is not entirely impossible to see price move another 14-20 points before the rally runs out of momentum (assuming this rally can’t last). 
  • The prospects for additional rallying is very strong, particularly on a week where volume is very light and manipulative. 
  • Don’t expect the strength of any near-term rally to be as strong as what we saw yesterday. The first day is usually the strongest. 
  • 20-day moving average at 1395ish is also in play today. 
  • This current market bounce should essentially forming a ‘lower-high’ in the market. 
  • If you still are short heading into today, I’d avoid being short longer than you have to be. The likelihood of the market  pushing lower throughout the week, is possible but not likely. 
  • On Friday, the SPX bounced off of the lower line of the downward channel it has been trading in. 
  • As an initial target, I would expect that this market could go as high as 1404 before encountering any significant push back from the bears. 
  • Thursday the market is closed, and Friday it is only open until 1pm. 
  • Also worth noting, is that this bounce will came off of the lower bollinger band on the weekly chart, as previously noted, and similar to what we saw on 6/1. 
  • 30-min chart confirmed the IH&S pattern mentioned yesterday, and is in full rally/breakout mode. 
  • VIX dropped hard again and now in the low 15’s. 

My Opinions & Trades:

  • Sold MWE at $49.57 from $48.00 for a 3.3% gain. 
  • Day-traded ODP from $2.98 to $3.00 for a 0.7% gain. 
  • No new swing-trades to report. 
  • May add an additional 1-2 new long positions on intraday dips. 

Chart for SPX:

S and P 500 Market Analysis 11-20-12

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