Technical Outlook:
- SPX almost had two days of consecutive selling. Instead, it managed to rebound in afternoon trading and actually finish in the green.
- The last time the market saw two consecutive days of selling was on April 5th.
- SPX tested the 10-day moving average, held on, and rallied thereafter.
- PowerShares QQQ Trust Series 1 (NASDAQ:QQQ) has been stuck in a trading range for the better part of 4 weeks. A drop below last week's lows could jump start the acceleration to the downside.
- SPX has closed above the previous week's lows for 10 straight weeks. The record is 13 weeks - as you can see, we are in some rare air here, and the likelihood that it persists isn't very favorable.
- A break below 2073 on SPX would end the streak.
- There was relative weakness in the VIX yesterday despite the weakness in Nasdaq. Needs to stay above 13 today.
- United States Oil (NYSE:USO) failed to breakout above recent highs, instead retracing much of Friday's gains.
- SPX still has a set of higher-highs and higher-lows, but must guard against breaking 2073 in order to keep the current trend in place.
- Heavy news week - Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) report earnings, to name a few, followed by central bank meetings from the Federal Reserve and Bank of Japan. Finally there is US GDP on Thursday.
- Volume on SPDR S&P 500 (NYSE:SPY) ticked higher on Friday and came in at recent averages.
- It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly.
- April has been bullish in nine of the last ten years.
- Yellen's dovish outlook as it pertains to interest rate hikes has been, in large part, the reason for the massive rally off of the February lows.
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My Trades:
- Closed out ProShares UltraPro Short S&P500 (NYSE:SPXU) at $27.55 on Friday for a 0.2% gain.
- Did not add any new trades on Friday. .
- Currently 20% short / 80% cash
- Remain short QQQ at $110.40, USO at $10.72.
- Should the market finally start to give up some of its recent gains, I will look to add more short exposure. Otherwise, I'll have to follow the current trend.
