Current Long Positions (stop-losses in parentheses): None

Current Short Positions (stop-losses in parentheses): SPY (131.35), ALXN (95.61), VAR (66.75)

BIAS: 72% Short

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), New Home Sales (10am), EIA Petroleum Status (10:30am)

My Observations and What to Expect:

  • Futures are moderately higher heading into the open. 
  • Asian markets were flat, while European Markets were up on average over 1%.
  • With the early morning strength, we are looking at opening above 1300, and at or above the 50-day moving average on the S&P.
  • Volume was once again below average, which makes it hard to validate the rally we have seen over the last 5 days.
  • Yesterday’s rally off of the lows was impressive but did little to repair the technical damage on the charts.
  • S&P resistance barriers to watch today is 1302 (20-day moving average), 1304 (50-day moving average), 1311 (descending trend line).
  • Tough call whether this market will be heading back up to previous highs, or whether there will be a retracement back to the lows seen last week.
  • Failure to break above and close above the 20 & 50-day moving averages as well as the 1300 level, would mark a failure for the bulls today.
  • Bulls have a text book inverted head and shoulders pattern working in their favor on the hourly intraday charts.
  • S&P also struggling with the 10-week moving average on the weekly charts which was previously a major support level off of the September lows.
  • Remember we are in a  confirmed downtrend. You cannot be as trusting of market dips as being a ‘buying opportunity’ – instead, as traders you have to reverse course and sell-the-rips.
  • My conclusion: Hard to get bullish until we see some breakthrough on the technical side, which is why I am much quicker to take profits on trades to the long side.

Here Are The Actions I Will Be Taking:

  • Added VAR and ALXN to the portfolio yesterday.
  • Should the market surge higher, today, I will likely cover my position in SPY.
  • Any long positions I take on will be on an intraday basis.
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.

You Might Like

  • South Korea and its impact on the US stock market.

    South Korea: The Hidden Driver of US Tech Volatility

  • Learn to trade within your means.

    Stop Trying to Hit Home Runs: Start Trading Within Your Means

  • Avoiding traps on stock breakout plays.

    How to Trade Breakouts Without Getting Trapped