My Swing Trading Strategy

I closed out my short position in Western Digital Corp (WDC) for a a +3.1% profit. Market pointed lower this morning, but I’m more interested in seeing how long the bears can hold the early losses and whether the bulls step in and buy the dip once again as seen on Friday and many other days before. 

Indicators

• Volatility Index (VIX) – $VIX fell apart all day long, Friday, dropping all the way down to 12.07. Lowest closing since July 24th. 
• T2108 (% of stocks trading above their 40-day moving average): While SPX continues to create new all-time highs, day-after-day, the T2108 has fallen for a fourth straight day, and really puts in question the sustainability of this market rally, long-term. 
• Moving averages (SPX): Trading above all major moving averages.  
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Heathcare and Technology was pretty much the entire reason for Friday’s rally. Outside of Utilities and possibly Real Estate, there isn’t any sectors showing signs of breaking down here. Today will be very instrumental in what the sectors do going forward. 

My Market Sentiment

All Three Indices are showing over extensions and a need to pullback. When that happens is anyone’s guess, though pre-market weakness heading into the week, breaks a three week trend a gapping tremendously higher on Monday’s. Watch to see whether the bulls can buy the dip today successfully. A failed attempt at doing so would signal lower prices in the near term.

• 100% Cash

Recent Stock Trades – See My Past Performance Here.