Swing Trading Strategy:

Another bear flag or building upon last week’s rally?

Last week’s rally off of the Monday lows was incredible but Friday’s afternoon sell-off left plenty worried about the new week ahead. Surprisingly another big Sunday futures sell-off has resulted in a rally ever since with price now looking at a respectable gap higher. Whether that momentum can be sustained throughout the trading day remains a complete mystery. 

Now the market will be moving on from the news of last week as the stimulus plan is more than likely priced in, and will have to figure out whether it can stand on its own with the coronavirus numbers piling up. It will be another week filled with drama for sure, and the final outcome is anyone’s guess, though I am leaning towards this market eventually selling back off again and retesting those lows from last Monday at some point. 

Be sure to check out my Stock Market Crash Update #5 that I posted this weekend. 

Indicators

• Volatility Index (VIX) – A 7.4% jump on Friday, and creating a bull flag scenario on the chart that acts like it may try breaking higher in the near future. 
• T2108 (% of stocks trading above their 40-day moving average): A 14% decline on Friday keeps the indicator under 4%. 
• Moving averages (SPX): A 5/10 day MA cross over, but still trading below the 20-day moving average. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Energy and Materials continue to get hammered while Real Estate showing relative strength on Friday. Last week’s bounce has created more of a bear flag look on most of the sector charts, so be aware of the potential for another leg down in this market. 

My Market Sentiment