Swing Trading Strategy:

Dead cat bounce or Buy the dip?

You’re asking that question to yourself right now aren’t you? The price action today embodied that of a possible bottom in the market. I’m not overly confident that the bears are going to kill this market rally right away, but tomorrow will be a key day for the bulls. I don’t necessarily expect as much buying as we did today, but even if we get a tenth of what we saw today, it would still be a good sign for the market. 

I added two new long positions to the portfolio. I’m not digging myself out of the trenches like a lot of other traders and investors are having to currently do, following last week’s stock market crash. Instead I am building my portfolio that is already at all-time highs and remains there. I’ll add more positions tomorrow, if this rally can hold, and if it can’t, then my exposure to another market sell-off is minimal. I don’t have to know what this market is going to do, nor do I care to. I just manage the freakin’ risk and that is all you should concern yourself with too. 

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) – The index got taken to the cleaners today. Down 17% to 33.42. Way off of its almost 50 reading from Friday. 
  • T2108 (% of stocks trading above their 40-day moving average): A 63% rally in the indicator – strong move and typical of a temporary bottom. Out of the single digits and up to 11%. 
  • Moving averages (SPX): Back above the shortest and longest moving averages – the 5-day and 200-day moving average. 
  • RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Still blown away that the top three sectors of a +130 point rally on SPX was Utilities, Staples and Real Estate. If this rally is to continue into tomorrow, there will be plenty of opportunity in Technology, Industrials and Discretionary. They lagged the market rally today, which I find absolutely mind blowing. 
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My Market Sentiment

swing trading strategy outlook 604

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