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

  • European markets are trading 0.6% 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), Producer Price Index (8:30am), Retail Sales (8:30am), Redbook (8:55am), Business Inventories (10am)

Technical Outlook (SPX):

  • S&P finished lower for the first time in seven sessions. 
  • Volume has become nearly obsolete and in line with holiday like volume. In fact volume has decreased 8 out of the last 9 sessions. 
  • Such low volume levels leads me to believe that we may be weakening under the surface and that the slightest bit of bad news accompanied with volume will trigger a stop-order raid on the bulls. 
  • The choppiness that has been a part of the trading action is due in large part to the low volume levels as well. 
  • We remain well-overbought on all time frames. 
  • Watch the 10-day moving average for minor support at 1392. 
  • Next level for bulls to overtake is the 1422 recovery highs on the SPX. 
  • It’s not uncommon to see large market rallies going into an incumbent re-election.
  • 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 1356.
  • 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:

  • Closed out position in EL ahead of earnings at $54.95 from 55.07 for a -0.2% loss.
  • Shorted COG at $42.01 yesterday. Still holding. 
  • Closed out RHT at $55.85 from $56.19 for a -0.6% loss. 
  • 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, 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 8-14-12