My Swing Trading Approach

I closed my position in SPXU for a +5.9% profit and my short position in QQQ for a +2% profit. Not bad for a day where the Dow was down 600 points. I’m sitting in cash now  and looking to deploy some of it today, should the market bounce hold. 

Indicators

• Volatility Index (VIX) – Strong burst higher yesterday, sending VIX back above 20 to 20.45. Could certainly see a retest of the October highs here, in the coming days, if the bearishness continues. 
• T2108 (% of stocks trading above their 40-day moving average): Another 15% decline down to 30%, but well off the October lows. Could see further deterioration to 20%. 
• Moving averages (SPX): Broke the 5, 10, 20 and 200-day moving averages yesterday. Brutal day for the moving averages as none of them offered even a hint of support. 
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Sectors to Watch Today

Technology was as ugly as you could possibly get and setting up for a test of the October lows. Hard sell off in Staples that broke apart the bullish flag it had been displaying. Materials also looks like another sector that wants to test its October lows. Possible that we are seeing an inverse head and shoulders pattern in Discretionary. But must bounce today – same with Financials and Healthcare. Energy by far the poorest of all the sectors – Avoid! 

My Market Sentiment

Possible bounce area for the market that should that happen, would create an inverse head and shoulders pattern scenario, which as traders we should certainly love seeing. If the IH&S pattern holds and ultimately confirms, could lead to a retest of the all-time highs in the short-to-intermediate time frames. All speculation at this point. If that doesn’t happen, look for a retest of October’s lows.  

S&P 500 Technical Analysis

Current Stock Trading Portfolio Balance

• 100% Cash

Recent Stock Trades – See My Past Performance Here.