Swing Trading Strategy:

How am I now 100% cash!?! 

My two remaining long positions were stopped out – that stunk. Both were contained with AbbieVie (ABBV) being the worst at -6% and the other, Northrop Grumman losing -3%. But Short positions were straight fire – I covered United Parcel Service (UPS) for +10%, Caterpillar for +5%, Walt Disney (DIS) +7%, Discover Financial (DFS) +5%, and CarGurus (CARG) for +3%. 

That has me 100% cash. Here’s the thing when you are shorting the market you are fighting all the governments and market forces that are predisposed to drive it higher. 2000 points on the Dow and more than 200 points on SPX in just a couple of days, I’m not going to push my hand any further and will get completely out. If the market had only dropped 20 or 30 points instead, I’d still be in, but at this point, the market is priming for a hard bounce, even if the coronavirus remains on the forefront. When it does, play the bounce then short the next leg down. 

That is what I’ll attempt to do. 

You can check out all of my trades that I have made in 2020 – where I have been solid in the green both months by clicking here. 

Indicators

• Volatility Index (VIX) – I wasn’t too sure how much higher it could climb, but it managed to run 11% more today and even breach 30 at one point, to close at 27.85. I think the market is setting up for a bounce in equities, even if it is short-lived, so this index is prime to get knocked down again. 
• T2108 (% of stocks trading above their 40-day moving average): A 38% move all the way down to 21%. That is the lowest closing reading since January 4th of last year. Starting to hit extreme levels, but could even drift lower if need be. 
• Moving averages (SPX): Another sell-off like today, and you’ll have the market testing the 200-day moving average. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Industrials unseated Energy as the worst sector today, and in the process broke through the 200-day moving average. This has been a huge bounce area the last six times it has been tested, so it could easily see a push back higher tomorrow. Energy sector as a whole is at its lowest levels since April of 2015. Financials haven given up all of its gains since November, while Real Estate finally buckled and broke the rising uptrend from the December lows. Discretionary testing key support going back to the May highs of last year. 

My Market Sentiment