Swing Trading Strategy:

One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These are the most expensive eighths in the world. ~Jesse Livermore

Perfectly timing bottoms or tops is insanely risky business and they usually come with a cost. I’m 100% cash right now, and yeah, it felt lonely missing out on that rally in the last 14 minutes of trading on Friday, but I don’t regret it one bit. After watching the Sunday night futures open up and the Banana Republic action that has ensued since, confirms that I made the right decision. Shorting at this juncture is incredibly risky business as the market is due for a bounce, and I have no intention being caught on the wrong side of that trade. For now, I will continue to focus my efforts on the long side of the trade, and to get long incrementally when the market conditions are more more favorable for doing so. 

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) – Most of the gains for the VIX on Friday were lost. It reached a high of 49.48, and came within a breath of taking out the highs of February 6, 2018 highs, which would have been all around amazing in its own right. However, it pulled off 20% off the highs, and creates a little bit of a shooting star pattern going forward. 
• T2108 (% of stocks trading above their 40-day moving average): At massive extremes – hitting 5% at the lows and settled at 7%. Declined 25% over all, and a nice hammer candle has formed. Potential bottom candle, but still a very high risk trade for the broader market. December 2018 reached 3%.
• Moving averages (SPX): Still trading below all the major moving averages. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Energy and Technology on Friday led the market higher. It was impressive reverses for the sectors, while the defensive sectors were the most bearish all day long, which indicates that investors may be warming up to the idea of taking on some new risk. 

My Market Sentiment