Today's Trading Plan: Another Monday Gapper-Downer
Ryan Mallory | Oct 14, 2013 09:05AM ET
Pre-market update:
- Asian markets traded 0.4% higher.
- European markets are trading 0.1% lower.
- US futures are trading 0.8% lower ahead of the market open.
Economic reports due out (all times are eastern): None
Technical Outlook (SPX):
- For the 7th straight Monday we are looking at a large market gap. For the 3rd straight week futures are giving us a significant gap down to being the week.
- Market volatility continues to increase in the current market. Whiplash is extreme and until the political nimrods in DC can step out of the picture and become less relevant they will be the ones driving this market.
- There is a strong chance, at any moment for news, rumors, false rumors to rock the market in the opposite direction with the ongoing talks in Washington between Republicans and Democrats.
- If we truly plan on on holding Wednesday's lows, then this market bounce will be very strong, much like we saw off of recent lows in late June and late August.
- 30-minute Head and Shoulders pattern on the SPX is no longer valid after last week's rally.
- VIX dropped an additional 4% to finish back at 15.72.
- Key for bears is to take price back below 1687 which would take price back below the risking trend-line off of the November 2012 lows.
- A move below 1627 would mark a new lower-low in the market and confirm a downtrend for the first time since the November 2012 lows were established.
- Volume was very light on Friday.
- Markets don't care about the economy nor earnings. That is not what is driving them. The markets only care about what the Fed is doing to keep equities propped up.
My Opinions & Trades:
- Added one additional position on Friday.
- Sold CSE at 12.73 for a 7.3% gain.
- Despite current conditions, the likelihood that Congress will move beyond the alleged default deadline is a low probability. One side will cave. Remember you're dealing with a bunch of cowards in DC.
- Currently 30% long / 70% cash.
- Current Longs: GNW 12.82, ATI at 10.11
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
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