My Swing Trading Strategy
I’m coming into today 100% in cash. Tried shorting the intraday bounce yesterday, but quickly realized that wasn’t going to work, while also booking profits in McDonalds (MCD) too. To say the least, I am quite suspicious of this market bounce, and highly doubt that the worst is behind us at this point.
Indicators
- Volatility Index (VIX) – A huge sell-off in the VIX indicator that saw its reading as high as 23.67, only to close the day at 19.49. Still very elevated, but people are already licking their chops about seeing this indicator fall even more in the days ahead.
- T2108 (% of stocks trading above their 40-day moving average): A 6.6% rally yesterday to take the indicator back up to 32%. Personally, I don’t think this is the bottom of the sell-off, and getting long here, when just yesterday we saw that the market could still sell off 60 handles on SPX within a blink of an eye, would suggest otherwise as well.
- Moving averages (SPX): SPX looks to reclaim 5-day moving average at the open here.
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Sectors to Watch Today
Interestingly, it was Staples that led the market rally yesterday, followed by Real Estate. That doesn’t mean nothing else rallied, but they essentially beat the next closest sector’s returns, Technology, by a 2:1 margin. A lot of sectors are showing the potential for a short-term bottom, as the bulls have managed to hold the lows from Monday, however, this is more than likely just a dead cat bounce. 
My Market Sentiment
Bearish wedge pattern formed on the longer-term chart of SPX. Rally off the December lows have been broken. With that said, the market became very stretched following Monday’s sell-off, and as a result, there has been somewhat of a reflexive bounce that has followed, and will try to continue into today. Despite the last three days of trading strength, little to no improvement has emerged on the chart.
S&P 500 Technical Analysis
Current Stock Trading Portfolio Balance
- 100% cash.
