Swing Trading Strategy:

Enter the Fed (again)…

You’re seeing a massive swing in the stock market today, after seeing futs limit down, and SPX looking at an 80 point gap lower, the Federal Reserve announced a slew of programs aimed to help stabilize the financial system. It may help the stock market today, but my biggest concern is how we’ve seen some pretty bold moves made by the Fed of late, and the price bump ultimately all fall apart before the market can even close the day out. Possibly the same is seen again here, I’m not sure, but I’m not going to jump right in, right away. 

Worth noting too, that these kind of announcements is what you come to expect during turmoil like this. I bought SH on Friday which was an inverse of the SPY (1:1), and I ended up making about +1.6% on it. It was a day-trade that really played out nicely. I could have held over the weekend, but would have been burned incredibly by doing so. 

As for today, I wait and see how this market responds to the Fed news, and whether it can hold the gains. If so, perhaps the market will finally put together a multi-day run. 

You can check out all of my trades that I have made in 2020 – where I have been solid in the green both months by clicking here. 

Indicators

• Volatility Index (VIX) – Heavy pullback of 8.2%, despite the fact SPX was down 104 points. That is not normal and a massive bullish divergence on the index to pay attention to. Currently sitting at 66.04. 
• T2108 (% of stocks trading above their 40-day moving average): A 22% drop taking the indicator back below 2% again. It has been phenomenal how long it has managed to close below 4% in the past 8 days .
• Moving averages (SPX): Currently trading below all the major moving averages. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Energy showed life in a very bearish tape, with 2% in gains, while every other sector fell apart. The weakness in Utilities and Staples was an eye opener, while Technology and Discretionary showed relative strength. 

My Market Sentiment