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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:

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Technical Outlook:

  • SPX has rallied three straight days and taken price all the way up to the 50% Fibonacci retracement level. 
  • Volume has returned back to average levels on SPY, falling for a fourth consecutive day.  
  • Considering the 50% retracement, and if this truly is just a dead cat bounce, the resumption of the downtrend should begin here, but no later than 2048.
  • With the gap down tomorrow, the bear's objective should be, at least, a push below Thursday's lows at 1942.
  • The bulls will need to close the likely gap down the market is facing this morning, and push SPX closer to the 20-day moving average. 
  • VIX has leveled off some of late at the 26 level, only dropping 0.2% on Friday. 
  • T2108 (% of stocks trading above their 40-day moving average) has continued its rally, by moving up 16% to 18.5%. 
  • SPX 30 minute chart shows a nice level of consolidation at the bounce highs. A break below 1948, would confirm a double top in the pattern. 
  • 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. 
  • End of day rally occurred on Friday in the last 15 minutes to actually push the market into the positive by a hair, rallying 13 points in the last 15 minutes. 
  • 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. 
  • 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:

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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:

SP 500 Market Analysis 8-28-15

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ryan1Ryan (@shareplanner) specializes in swing trading strategies and is the founder of SharePlanner which he created to help and teach others on how to trade stocks better using multiple approaches and time frames. Each day you can count on Ryan to provide his trading advice as well as transparency in every trade that he makes. Ryan Mallory resides in Central Florida. More >>

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