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

  • European markets are trading in a mixed fashion. 
  • Asian markets traded mixed/flat. 
  • US futures are trading break-even.  

Economic reports due out (all times are eastern): None

Technical Outlook (SPX):

  • Late afternoon rally managed to lift the markets into positive territory for a sixth consecutive day. 
  • Volume, despite the strength in the market, is seeing holiday-like volume, which to put it plainly, is incredibly weird. 
  • We remain well-overbought on all time frames. 
  • If we were to rally for a 7th day in a row, it would be an event that hasn’t happened in years. 
  • Watch the 10-day moving average for minor support at 1390. 
  • The six-day rally the market is on, hasn’t occurred since 3/7-3/12. 
  • However, the gains that are being made are sluggish at best, and without much fanfare. 
  • Setting up for a pullback at the very least heading this week as buyers seem to be lacking conviction at these levels (just look at…yes…volume!)
  • SPX poised to make a move to 1422 and challenge the year’s highs. 
  • It’s not uncommon to see large market rallies going into an incumbent re-election.
  • 30-min chart has us primarily trading in a sideways channel. 
  • If you look at the 4 previous higher-highs in the market since the 6/4 bottom, then one could conclude that we’ve reached another temporary top, and are prime for another pullback. 
  • One area of concern is the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
  • At this point, uptrend support rests at 1355.
  • SPX trading above all significant moving averages (10,20,50,200).
  • VIX has moved below 15 for the first time since March. 
  • If another sell-off were to ensue, watch for a break and close below 1354 for a new lower-low in the market.  

My Opinions & Trades:

  • Bought EL at $55.07 on Friday
  • Moved my stop-loss in MDT up to $39.61. 
  • Bought OSK at $23.74. 
  • Going to consider any sell-off as opportunities to buy stocks on the cheap. Dip buying should be the norm until a lower-low is put in place.
  • Remain long OSK at $23.74, RHT at $56.19, AIG at $32.46, MDT at 38.15 and AMZN at $233.90. Short BRO at $25.65, HE at $28.45


SP Market Analysis 8-13-12