Technical Outlook:
- SPX looking at a massive gap lower this morning, in excess of 2% at around the 1920’s.
- If the weakness holds today the dead-cat bounce that I have been mentioning this rally likely being, is over, and the downtrend has now resumed.
- Resistance has taken hold at the Fibonacci 50% retracement level.
- Volume was still light yesterday, but did show a slight uptick.
- VIX rose yesterday 9.1% yesterday back up to 28.43.
- T2108 (% of stocks trading above the 40-day moving average continues to bounce hard by rising 3.2% to 19%.
- The main objective for the bears today will be to push SPX to close below Thursday’s lows, which it will already be trading below at the opening bell.
- From there, the bears will need to take out the recent lows from 8/24 at 1867. Unless it does that (obviously it doesn’t have to be today, that would be asking for a lot) this sell-off we are seeing right now will only be regarded as a higher-low in the market.
- The first hour of trading will be interesting to watch today, as to whether the dip buyers come in and try to stabilize this market sell-off.
- On the SPX 30 minute chart, the gap down today will confirm the head and shoulders pattern I am seeing on that time frame.
- Reminder from yesterday’s Trading Plan: “Be very careful of the market levels here. The tendency is to start buying out of fear that the rally is being missed only to find out later this was a dead-cat bounce that you went long at the end of.”
- 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. ~ Looks like the answer has been given to us.
- 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.
My Trades:
- Did not add any new positions yesterday.
- Did not close out any positions yesterday.
- 10% Short/100% cash
- I am using a ultrashort ETF for my position.
- Long SDS from $22.26 (2x Ultra Short position).
- Current rally has run out of steam and now I will look for opportunities to add 1-2 new short positions to the portfolio.
- Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone
Chart for SPX:
