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

  • European markets are trading 0.3% higher. 
  • Asian markets traded 0.8% higher.
  • US futures are mixed ahead of the opening bell. 

Economic reports due out (all times are eastern): Consumer Sentiment (9:55am), Leading Indicators (10am)

Technical Outlook (SPX):

  • Yesterday’s rally was quite a shocker for most market participants and broke out of the 5-day trading range. 
  • The 10-day moving average has come right up underneath the bottom of price action. Use this level as the first support level for the markets should a pullback occur. 
  • Volume picked back up yesterday, but still at historically low levels. If you take out volume for ETF’s and high frequency trading, there a relatively low amount  of traders in this market. 
  • The next destination for this market is a move towards 1422  – which represents the recovery highs. 
  • You may also see a pullback to 1405, which is the top consolidation range the market pulled out of. That too may offer a level of support for SPX as well. 
  • We’ve managed to come off of overbought levels in the short-term. But remain extremely overbought longer-term. 
  • Since the pullbacks off the 6/4 bottom, the pullbacks have ranged around 30-60 points each time, which would give us a range of 1390-60.
  • With these low volume levels, continue to expect intraday choppiness in the market. 
  • 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.
  • 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 1361.
  • 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:

  • Stopped out of COG at $43.20 from $42.01 for a -2.8% loss. 
  • Bought RHT at $57.27. 
  • Stop-Loss in ARUN moved up to $17.10
  • Stop-loss in AMZN moved up to $230.90
  • Stop-loss in RHT move up to $56.70. 
  • Moved my stop-loss in MDT up to $39.99. 
  • Portfolio with the addition of RHT and removal of COG has given my portfolio a more bullish tilt going forward. 
  • 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 ARUN at $16.79, MDT at 38.15 and AMZN at $233.90. Short BRO at $25.65, HE at $28.45, COG.


SP Market Analysis 8-17-12