Swing Trade Approach:

I closed out Nuance Communications (NUAN) at $19.82 for a nice +11% profit. I held the stock since before Christmas when I got in at $17.87. Also, I covered my short position in Advanced Auto Parts (AAP) after some crazy call action on the options started to pile in this afternoon. If someone knows something, I’m not playing that, I won’t even risk it. So I got out for a paltry +0.4% profit after just getting in it a couple of days ago. But not all stocks were fabulous, as I was stopped out of my Johnson Controls (JCI) short for a -3% loss that I had been holding on to since mid-December of last year. Considering all the profits being made on my long positions right now, like the +24% in UBER that I am still holding, I’m not too worried about the couple of short positions that I have getting stopped out here and there. 

Indicators

• Volatility Index (VIX) – The short sellers on the VIX pounced on it once again, driving it from above 14, back below 13, to 12.98. Not much of a gain on this index, and sets up for further downside. 
• T2108 (% of stocks trading above their 40-day moving average): Heavy selling early with T2108, dipping below 54% at one point, but managing to close at 60% on the day. Still it is down for a fourth straight day. 
• Moving averages (SPX): Trading above all the major moving averages. 
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Sectors to Watch Today

Energy may finally be ready for a bounce. This sector has been destroyed since the beginning of the year, falling nice of the last twelve sessions. I could see this sector attempting to rally tomorrow. Utilities is begging for a pullback here, I think, as it trades higher for a 10th straight day. By far the strongest sector of late. Industrials looks like it is ready as well to bounce off of the 20-day MA and back to new all-time highs. It’s probably prudent here to add some exposure. 

My Market Sentiment

Look, buy-the-dip or “BTFD” is still in full effect. Once it takes hold intraday, then the “fear of missing out” or “FOMO” takes full effect. The market has been sluggish of late, but enough for the bears to push this market substantially lower, and with the volume coming in light, the bears are unlikely to sustain any move lower, until the volume increases substantially.