Technical Outlook:
- Dead cat bounce started yesterday resulting in one of the year’s best rallies.
- These bounces, if it remains part of a larger sell-off, can last anywhere between 2-4 days.
- The VIX is melting away at an incredible rate. Over the last two days, has gone from almost tagging 27, down to 18.75. Yesterday saw a decline of 21.4%. A push back below 20 historically has been where stock prices are deemed more stable.
- The T2108 (% of stocks trading above their 40-day moving average) rebounded nicely with a 29% move of its own all the way back up to 35.2.
- The 200-day moving average was reclaimed in SPX and Dow yesterday. Still trades significantly below it on the Nasdaq and was rejected at the 200-day MA on the Russell.
- SPY managed to fill the gap on Monday’s decline. The larger gap left unfilled, of course, is the Friday’s gap following the Brexit vote.
- SPX managed to break back above the double top confirmation level.
- Russell 2000 had a solid bounce off of the 1090 level.
- As price creeps back into the 2050-2090 range on SPX, you have to be concerned with price action giving way again to bearish tendencies.
- Market is assuming that rate hikes are pretty much off the table for all of 2016.
- Volume was well above average yesterday, but still dropped for a second consecutive day.
- Biggest issue for the time being for the bears is that the Brexit vote to leave, may not generate a ton of additional headlines and there is no guarantee, that the politicians, who are against such a move, would even allow it to happen.
My Trades:
- Added three new long positions to the portfolio yesterday.
- Did not close out any positions yesterday.
- 30% Long / 70% Cash
- Cognizant of the fact that the market may run hard into resistance today and ultimately reversing.
- Bounces like the one tha started yesterday, typically lasts 2-3 days.
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
