1:00pm (EST)

The bears are continuing their attack on the bulls as they try to pin the market under support before the close.  Economic news has been light this week but is picking up starting with today’s Existing Home Sales.  The report showed sales increased 2.3% from the prior month which was below expectations for an increase for 3.2%.  The supply of homes dipped to 6.4 million from 6.5 million while the average home price slipped to $187,300 from $188,800.  

Of course, today’s FOMC minutes should have a much bigger impact on the market when it is released at 2pm (EST).  The suit-and-ties will be looking for clues on which new twist the Fed can pull out of its hat if more quantitative easing were to be enacted.  We doubt the report will provide much ammo which could be a disappointment as the Fed will be real careful with their wording ahead of Ben Bernanke’s end of month speech in Jackson Hole.

There were a number of “famous” analysts who stepped in front of the bull train as it was reaching new highs yesterday which could also be weighing on the indexes.  Goldman Sachs (GS, $104.65, down $0.67) warned its “muppets” to abort stocks ahead of a possible fiscal cliff saying the market could fall 10%-12% if the zombies can’t come up with an agreement before the elections.

Another slick talking pro said the S&P could tank 20%-25% and trade down to 1,075.

Of course, other Wall Street analysts came out and said the S&P 500 could trip 1,575 by the end of the year.  Another analyst said without a doubt the S&P would power past 1,600.

We did a lot of chart work over the weekend and we aren’t sure if these people did the same but we went on record saying the market will move 5% in September and 10% by yearend.  However, we are watching support and resistance to help us find the next trend and it is too early, in our opinion, to side with either the bulls or bears at this point.

We mentioned in our Weekly Wrap the market was poised to test its 52-week highs and we used that opportunity to cash out a number of call option trades this week.  We thought there would have been a more gradual climb to the highs which was going to last until today, ahead of the Fed minutes, and then we would see the “fluff” past the 52-week highs but yesterday’s pullback made us cash out a little earlier than we expected as we wanted to lock-in profits.

We are still trading light but once the next trend is in place, we plan to get really aggressive.  We have plenty of room to go long or short and we would rather use the technical clues to figure out where the market is headed rather than buy or sell into the hype of QE3 or a saved euro.  Technical analysis will always trump headlines which is why we say it’s too early to tell which direction the market is headed.  Support and resistance will play a bigger role than the actual news.

We will know soon but it’s not too early to see a major move could be coming.

The market is at session lows with the Fed minutes due out in an hour.  As we head to press, the Dow is down 80 points to 13,123 while the S&P is lower by 6 points to 1,407.  The Nasdaq is off 10 points to 3,057.  The bulls are holding support so let’s see how this plays out.

Subscribers, check the Members Area for the updates as we are taking action on a trade that is up nearly 40%.  Also, stay locked-and-loaded in case we take action on other trades or open new ones.