Current Long Positions (stop-losses in parentheses): QID (10.49), SDS (22.29)

Current Short Positions (stop-losses in parentheses): T (28.74), EXPD (55.26), DKS (35.79)

BIAS: 28% Short (counting QID and SDS as shorts)

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), New Home Sales (10am), EIA Petroleum Status Report (10:30am), FOMC Meeting Announcement (2:15pm)

My Observations and What to Expect:

  • Futures are up moderately heading into the open. 
  • Asian market returns range from -0.6% to 1.2% and European markets are trading with strength in excess of 1%
  • The FOMC Statement to be released this afternoon, will dictate the ultimate direction of the market. 
  • There has been a lot of sell-the-news reactions of late, especially when it comes to earnings. Watch the Fed Statement to see if there is a similar reaction. 
  • The S&P broke below the 10-day moving average and lower band of the narrow, rising price channel on an intraday basis, but rallied in the final hour to reclaim those important price levels. 
  • Dip buyers continue to provide incredible support to this market, where even the most solid of sell-offs get bought up in afternoon trading. 
  • Volume was average yesterday. 
  • Watch the highs on the S&P today, as a break of those highs would put the bear argument to rest in the short term. 
  • We are poised to break the short-term intra-day price resistance on the S&P at 1291. 
  • From a candle pattern perspective, the S&P and Nasdaq are putting in, what looks like, a bear flag pattern. 
  • Nasdaq continues to look much weaker than the S&P and is running into resistance still at the 10-day moving average.
  • In order for this market to see a correction at this point, the bears need to break the 20-day moving average on the S&P.
  • Evening star formation from 1/17-1/19 should indicate at least a short-term top is in place in this market.
  • 1261 represents the short-term ‘higher-low’ on the daily charts.
  • For the bears – Simple – push the market lower, erase the early morning gains, and keep dip buyers from erasing the day’s losses.
  • For the bulls – Break to new highs, and in particular 1300 on the S&P. 

Here Are The Actions I Will Be Taking:

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