Technical Outlook:
- SPX had a major sell-off yesterday that saw the index drop back below the 5 and 10-day moving averages. More importantly the 20-day moving average was breached yesterday with close below the MA.
- SPX close to trading below the lows from last week. It would be a first for the index in the last 11 weeks.
- SPY volume saw a notable uptick yesterday and close right at average levels.
- VIX saw one of its biggest moves in a very long time – rising 10.5% to 15.22 and a break of the downtrend off of the February highs.
- T2108 (% of stocks trading above their 40-day moving average) dropped 6.9% – will need to see further decay to call for a breakdown in the indicator.
- Most important development yesterday on the chart was the confirmation (just barely) of the head and shoulders pattern on the 30 minute chart of SPX by closing below 2077.
- Another sell-off today and close below 2059 would result in a negative month for April for SPX – not even considered a possibility just two days ago.
- Dip buyers were present in the early going for the market yesterday morning, but noticeably absent yesterday afternoon.
- Commodities, notably Gold, Silver and Crude continue to surge in a major way.
- Advancers have been incredibly strong of late despite weak or minimal moves from the market as a whole. This is a rare phenomenon.
- It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly.
- April has been bullish in nine of the last ten years.
- Yellen’s dovish outlook as it pertains to rate hikes has been, in large part, the reason for the massive rally off of the February lows.
My Trades:
- Added one new short position to the portfolio yesterday.
- Currently 30% Short / 70% Cash
- Remain Long: SPXU at $27.67 (Bearish ETF)
- Remain Short: IWM at $114.05
- Will look to add 1-2 new short positions today if the market seeks to push lower. Will flip to the long side if price action can break out of the current trading range.
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
