Technical Outlook:
- SPX gapped and ran hard yesterday back above 1972 resistance and is nearly 2000 again.
- Late day antics saw SPX drop 40 points two hours prior to the close, only to rally back 40 points in the final hour – insanely volatile and not indicative of a healthy market.
- At this point, I suspect that the dead-cat bounce is going to show signs of running out of steam.
- When this happens, I’ll be expecting another leg down in the market.
- Volume on this bounce remains well above average but continues to drop for a third consecutive day on SPY.
- I don’t see this rally going any higher than 2046.
- VIX dropped another 13.9% yesterday down to 26.10. A large drop from the intraday highs seen on Monday.
- Another big leap in T2108 (% of stocks trading above their 40-day moving average) jumping 65% to 15.9%.
- The major intraday swings in both directions makes taking on legitimate swing-trades to be very difficult. Much of my trading has shifted over to day-trading ETFs.
- Here is what you should be asking yourself – in six days, SPX drops 234 points non-stop – over 10%. Are we really to assume the sell-off is now over in just six days and we are all going to be back on the road to new all-time highs? I think not.
- Still the objective for the bears will be to 1) resume the downtrend and stop the dead-cat bounce 2) Break below the October 2014 lows of 1820.
- Trade nimble, be careful about holding positions overnight, because the volatility is still at extreme levels and much of the daily moves are happening before the market ever opens.
- The current market conditions makes it very difficult to swing-trade positions overnight simply because the risk cannot be contained with the trade parameters. That doesn’t mean that I won’t consider holding a position overnight, but it has to be aligning well technically.
- It stands to reason at this point that the Fed will not raise rates in September – possibly not even this year.
My Trades:
- Did not add any new swing positions yesterday.
- Did not close out any swing positions yesterday.
- Shorted SPY yesterday as a day-trade for a 1.1% loss.
- 100% cash
- We have a bounce that is underway, with the rally of the last two days. Ultimately I think it will prove to be an opportunity to short.
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
