My Swing Trading Strategy
I attempted to play the bounce in the Nasdaq yesterday, but as the day were on, it became obvious that no such bounce was going to happen. I got out of the trade for a whopping $0.01/share profit. I won’t brag too much about it. I also was knocked out of two other trades as well. I am skeptical of the pre-market bounce, because the bears will often use that as an opportunity to short the market even more.
Indicators
- Volatility Index (VIX) – A 28% move yesterday and a bullish kicker, gave the VIX its first close above 20 since 1/22/19. More upside does seem possible for the indicator in the days ahead.
- T2108 (% of stocks trading above their 40-day moving average): A 28% decline took the indicator down to 36%. Still not oversold though. Even general stochastics on SPX daily isn’t oversold yet.
- Moving averages (SPX): The 50-day MA was broken and never even retested yesterday. Now a test of the 200-day MA seems all but likely here.
- RELATED: Patterns to Profits: Training Course
Sectors to Watch Today
Utilities finished in the green for a second straight day, and setting up for a test of all-time highs. The bull flag in Staples took a hit, but still hanging on. Energy has been oversold for almost a month and of all the sectors this is one that seems primed for a bounce of any kind. Discretionary setting up for a test of its 200-day moving average and Technology is in a bit of a free fall right now.
My Market Sentiment
I tend to be skeptical of gap ups in a bearish market, as I expect them to usually be sold off. Typically there is one final push lower that can’t be sustained that usually results in the eventual rally higher and it comes in extreme oversold conditions which we are not currently in right now. Even the Q4 sell-off and bottom was formed intraday with similar price action where it attempted to push lower before eventually getting bought back up.
S&P 500 Technical Analysis
Current Stock Trading Portfolio Balance
- 10% Long
