Pre-market update (updated 8:30am eastern):
- European markets are trading -0.5% lower.
- Asian markets mixed as well, finished 1.1% higher.
- US futures are trading slightly lower ahead of the opening bell.
Economic reports due out (all times are eastern): Empire State Manufacturing Survey (8:30am)
Technical Outlook (SPX):
- A nice follow-through on Friday after an incredible breakout from the day prior.
- The main theme in today’s trading plan is the market being well over-extended at these levels.
- Traders have their eyes fixed on SPX 1500, but it is more likely that this market will need to cool off some before moving higher.
- Using a Bollinger-band overlay, SPX is trading for its second consecutive day outside the upper band, with Friday’s entire candle body outside the upper band.
- On the weekly chart, the price has creeped (very rare) outside the upper bollinger-band which historically led to a short-term pull-back.
- Volume has increased for three consecutive days.
- It goes without saying we are overbought.
- Fed’s QE3 launch is going to add a lot of buying power to this market and drive more people out of interest-bearing assets and into equities in search of some kind of return.
- Going back years, there really is little in the way of resistance for the markets until it tests 1500 (can’t believe I’m writing that).
- Resistance at 1437 and 1440 was broken with little problem and now becomes support.
- Bull-flag breakout we had been noting in recent days came to fruition.
- 30-minute chart shows key support at 1433-36 and 1396.
- Upward trend-line off of the 6/4 lows has rising support at 1404.
- SharePlanner Reversal Indicator confirmed the move higher this past week.
- VIX above 14, and bucked the markets upward move.
- 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
- Should a sell-off ensue after the Fed action/comments today, look for support to come in at 1438.
- If another sell-off were to ensue, watch for a break and close below 1396 for a new lower-low in the market.
My Opinions & Trades:
- No new long positions on Friday.
- Sold FBHS at $28.36 from $24.54 for a 15.6% gain.
- May add a short position as a hedge to the portfolio today.
- Current stop-losses have been adjusted across the board.
- ALXN stop-loss moved up to $109.00
- Stop-loss for CRR at $71.83.
- Stop-loss for NLSN at $28.64..
- Stop-Loss for WYNN increased to $105.50.
- Stop-Loss for BEAV adjusted to $40.00.
- Remain long BEAV at $40.75, WYNN at $107.47, NLSN at $28.70, CRR at $72.27, and ALXN at $102.53
- Track my portfolio RealTime here.