Technical Outlook:
- Major reversal to the downside following Tuesday’s rally. But now today, SPX looking at gapping higher and challenging Tuesday’s highs once again.
- Back in play is the head and shoulders pattern, particularly if today’s strength and gap up cannot hold.
- Just a reminder, the market has not played well with gaps of late. Yes, Tuesday’s gap held quite well, but more times than not, these gaps are getting filled the same day that they are created.
- Volume on SPY yesterday was higher than what had been seen the last two days, and was pretty close to recent averages.
- SPX looking to test the 20-day moving average again or the middle band. A rejection here would validate yesterday’s move.
- On the SPX 30 minute chart, you actually have a potential inverse head and shoulders pattern forming, which runs in the face of the head and shoulders pattern on the daily chart.
- From 2040 to 2138 – you have a price range that is insanely choppy and continues to be such. As a result, profits have to be taken quickly and often.
- Oil continues to rally in a major way, particularly after yesterday’s surprise drop in oil inventories when analysts were expecting an increase (way to go analysts – you’re doing a great job!)
- Now USO is ready to make a run at new rally highs.
- VIX popped almost 8% yesterday following a nice bounce in the lower 13’s.
- The 50-week and 100-week moving average have crossed last week to the downside. Last time this happened was 2001 before the tech correction and again in June 2008 before the mortgage crisis saw its major correction.
- T2108 (% of stocks trading above their 40-day moving average) dropped 9% yesterday back down to 61%. A very bearish chart overall.
- Right shoulder on SPX 30 minute chart still intact, going back to late-March.
- Bears must defend the 20-day moving average and close the gap on the morning’s price action.
- I believe at this point, profits have to be taken aggressively, and avoid the tendency to let the profits run – the market is in a very choppy range that has mired stock price for the past two years. Unless it breaks out of it and onto new all-time highs, then taking profits aggressively is absolutely important.
- The number one objective for the bears coming into today is to break price back below last weeks lows of 2039. Do that and you have the head and shoulders pattern.
- Next objective for the bulls is to break through 2100 price level and on to new all-time highs after that.
- Historically the May through October time frame is much weaker than the rest of the year.
My Trades:
- Sold GM yesterday at $31.34 for a 1.0% profit.
- Sold AAPL yesterday at $92.90 for a 0.3% profit.
- Added one new short position to the portfolio yesterday.
- Currently 10% Long / 10% Short / 80% Cash
- Remain Long: JNJ at $112.65
- Will look to add to my long exposure if the market can follow through on yesterday’s rally.
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
