Pre-market update (updated 8:30am eastern):
- European markets are trading -1.1% lower.
- Asian markets were off -0.7%..
- US futures are slightly lower ahead of the opening bell.
Economic reports due out (all times are eastern): MBA Purchase Applications (7am), Existing Home Sales (10am), EIA Petroleum STatus Report (10:30am), FOMC Minutes (2:30pm)
Technical Outlook (SPX):
- For the first time in a long time we saw a pullback after rallying strong in the morning, and a subsequent sell-off to finish lower on the day.
- What’s significant about this is that it occurred after breakign above 1422.
- At this point, I’d consider yesterday’s sell-off to be profit-taking and perhaps even a pre-determined profit-taking level in which once that 1422 level was triggered the wayve of selling orders came in an reversed the market.
- Volume increased to the highest volume in weeks.
- Watch the 10-day moving average today at 1409-10 – this has represented a regular point for dip buying in the market to occur.
- It’s not uncommon if we consolidate below the 1422 resistance level for a while. You just don’t want to see a steep sell-off after touching the 1422 level.
- We remain overbought both in the short and long-term time frames.
- Strong spike in the VIX pushing it back up above 15.
- 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 before eventually breaking through 1422.
- 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 1370.
- SPX trading above all significant moving averages (10,20,50,200).
- 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:
- Sold MDT at $41.09 from $38.15 for a 7.7% gain.
- Stopped out of AFFY at $16.89 from $17.26 for a -2.1% loss
- Day-traded XCO yesterday: sold at $7.43 from $7.63 for a loss of -2.6%
- Bought WOOF at $19.01
- Current stop-losses have been adjusted across the board.
- Stop-Loss in ARUN moved up to $17.07
- Stop-loss in AMZN moved up to $236.00.
- HE Short stop-loss has been has been tightened to 27.73.
- BRO Short stop-loss has been has been tightened to 25.85.
- 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 LXP at $9.21, ARUN at $16.79, and AMZN at $233.90. Short BRO at $25.65, HE at $28.45.