Pre-market update (updated 7:00am eastern):

  • European markets are trading 0.3% higher on average.
  • Asian markets traded 1.8% higher. 
  • US futures are trading slightly higher. 

Economic reports due out (all times are eastern): Ben Bernanke speaks (9am), Treasury STRIPS (3pm)

Technical Outlook (SPX):

  • Amazing day for the markets, where after 4 days of straight selling, the SPX wiped out all 4 days of and formed an intraday higher-high in the markets. 
  • SPX finished right below the downtrend off of the 4/2 highs.
  • Needs to see some continuation today to see a close for the first time above that downtrend. 
  • Last time we experienced a large bounce off of a 4-day pullback (7/26) the large rally was followed up up with another substantial gain the next day too. 
  • We could be setting up for a run to 1422 which would mark new recovery highs for the market. 
  • One area of concern are the 3 large gaps off of the 6/4 lows that remain unfilled, including 6/6, 7/26, 8/3
  • The lows from 8/2 was a 61.8% Fibonacci retracement and 26 points off of the previous highs.
  • 1391 will represent resistance for the markets as the recent high for the markets to try closing above. 
  • We’ve come well off of the short-term overbought levels in the market, but on the weekly/mid-term we are still overbought. 
  • At this point, uptrend support rests at 1345.
  • SPX trading above all significant moving averages (10,20,50,200).
  • VIX was crusted on Friday dropping back below 16. 
  • If another sell-off were to ensue, watch for a break and close below 1329 for a new lower-low in the market.  
  • Downside reversal signal still remains intact on the SharePlanner Reversal Indicator

My Opinions & Trades:

  • Covered BAC at $7.37 from $7.14 for a -3.2% loss. 
  • Shorted MBI at $9.17
  • Long PWER at $5.05
  • Depending on how we close today, I may end up closing out 2 of the 3 short positions. 
  • May add to my current long holdings today with 1-2 new positions. 
  • Remain long MDT and AMZN at $233.90. Short BRO at $25.65 and CRI at $50.76


SP Market Analysis 8-06-12