Economic Reports Due out (Times are EST): Consumer Price Index (8:30am)

Premarket Update:

  • Futures showing moderate strength heading into the open.
  • Asian markets were mixed in trading with Hang Seng leading the way at 1.4%
  • Europe is trading as a whole, slightly higher at 0.2%

Technical Outlook (S&P):

 

  • The bounce the market was experiencing early on quickly faded at the open, and finished with only a fraction of the day’s potential gains.
  • 1225 on the 30 min chart, represents strong resistance.
  • Nearest support for the S&P lies at 1209, but after that it comes in at 1185.
  • We are oversold, particularly commodities, in the short-term. I’d look for a dead cat bounce here soon before resuming the downward trend.
  • Volume tapered off a bit from where we were at the last two days.
  • Intraday we traded temporarily above the 20-day and 50-day moving averages before selling off hard.
  • Watch the VIX – it’s not on board with this sell-off at all.
  • Trend-line off of the 7/7 highs, just above the 200-day MA on the S&P, continues to act as resistance to price as well.
  • Note the larger downward channel that we are in as noted below.

My Opinions:

  • After 3 straight days, we get a slight bounce, but I don’t believe that will be the end of it, not when you consider the kinds of bounces that we’ve seen this year.
  • I’d like to see another day higher, before adding new short positions to the portfolio.
  • Commodities are likely setting up for a strong bounce as well, but don’t be fooled that it is some kind of bottom, particularly in oil.
  • The sell-off that we are seeing is by no means ‘panicky’ – but very orderly. That is favorable towards the bulls in that there doesn’t seem to be a lot of fear in this market despite the selling taking place.
  • The only way I could bring myself to adjust my bearish outlook on this market is if we break above the aforementioned trend-line. Then the entire outlook would be different for the market.

My Portfolio:

  • 13% Long
  • Made two trades in (TZA) that added an additional 0.25% to the portfolio.
  • Traded (TNA) on two separate occasions – both were failures.
  • Covered my day-trade in UltraShort Crude Oil (SCO) at $43.23 and $42.66 for a 3.3% and 2.1% gain respectively.
  • Added/initiated a new position in the Gold ETF (GLD), looking for a bounce off of the weekly long-term trend-line dating back to 2008.

The Chart:


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