Technical Outlook:
- There is only so much that can be said about a market that isn't going any where. Yesterday, S&P 500 (SPX) went right up to the all time highs and then proceeded to spend the rest of the day shaving off around 70% of the day's gains.
- Volume on SPDRs S&P 500 (SPY (NYSE:SPY)) fell for a second consecutive day, and well below recent averages.
- The difficulty in this market is holding on to a long position for any length in time because of the market's natural tendency for "mean reversion during mid-July and August trading.
- It is concerning that SPX is making new, (but marginal), highs on a near daily basis, yet only 2/3's of stocks are even managing to trade above their 40-day moving average. Individual stocks are not showing the same enthusiasm for this market run as the indices are.
- Possible double top on the SPX 30 minute chart. Needs to break the August highs to nullify the pattern.
- SPX attempting to sell off for a second consecutive week, which is something that hasn't been seen since the 3 week Brexit sell-off (also counting the two weeks that led up to it).
- If SPX finishes in the red for the week, there is a good chance it will be the lightest sell-off you've ever seen.
- Janet Yellen speaks at Jackson Hole on Friday. The market seems to be in a holding pattern until then.
- CBOE Market Volatility Index (VIX) is just about as boring as the broader market. It rose 0.9% yesterday, but still trading in the 12's and little motivation at this point to break above resistance in the 13's or below support in the 11's.
- Oil rebounded sharply yesterday and off of its lows yesterday. The current rally is running into some headwinds here, and even on the United States Oil Fund (NYSE:USO) you have a possible head and shoulders pattern being formed.
- The market is begging for a sell-off but with the central markets accommodating continuously, that also gets in the way of any kind of meaningful pullback. Not to mention it is blatantly obvious that they are shelving any kind of rate hike until after the election.
- Dow Jones Industrial Average (DJIA)is keeping the double top pattern in play here. However it is coiling just underneath resistance which leads me to believe it wants to break through.
- Overall, August is the worst performing month for the Dow Jones 30 and S&P 500.
- At this point, and with the election ahead, I'd expect the market to keep rallying higher. I don't expect there to be a rate hike between now and the election. To do so would impact the market and thereby the election. I don't think the Fed wants that, particularly since Trump has indicated that he would replace Yellen.
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My Trades:
- Sold Huntsman Corporation (NYSE:HUN) yesterday at $17.42 from $16.72 for a 4.2% profit.
- Sold Marriott International Inc (NASDAQ:MAR) yesterday at $73.17 from 72.33 for a 1.2% profit.
- Sold ProShares UltraPro Short S&P500 (NYSE:SPXU) yesterday at $22.75 for a 1.6% loss.
- Added one new long position yesterday.
- Added one new short position yesterday.
- May add 1-2 new swing-trades to the portfolio today.
- Will consider adding additional short positions to the portfolio as the market warrants it.
- Currently 40% Long / 20% Short / 40% Cash
