Swing Trading Strategy:

What a roller coaster – This is what they call the chop.

The 10 year treasury yield simply won’t rally and again this morning you are looking at another drop in the rate. That of course has the futures again in a tale-spin. Yesterday, the market, rallied in impressive fashion, taking out the 5-day and 200-day moving averages seemlessly, with a 126 point rally on SPX. Today, it is trying to give it all back before the market even opens. At this point, the bounce, if today’s sell-off wipes out the previous day’s gains, would being looking more like a dead cat bounce. I may add some short exposure, but I am going to wait and see how the market open shapes up and go from there. 

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) – Since Friday’s peak, it has almost dropped 40% off the highs to settle at 31.99. No doubt it will spike in the early going today, but a retest of Friday’s highs would warrant some extreme bearish market conditions. 
• T2108 (% of stocks trading above their 40-day moving average): This indicator has rallied over 200% since Friday’s lows and rallied 86% yesterday. The move in this indicator is suggesting a potential bottom would be in, at least in the short term, but so far, considering this morning’s futures, that is no back in doubt. 
• Moving averages (SPX): Reclaimed the 5 and 200-day moving averages but unable to break through the 10-day MA. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

For a third straight day, Utilities were near the top followed by Staples. Healthcare tied the former in terms of gains, but still interesting that any bounce attempt has Utilities and other defensive sectors attracting the most buyers. Energy and Financials are hard pressed to trade or invest in right now and should continue to be avoided. 

My Market Sentiment