Swing Trading Strategy:

Kicking off Earnings…

The earnings weren’t good at all from the banks, and while no one really expected them to be, they were even worse than expected. JPM’s EPS came in at $0.78/share despite analysts expecting $2.16/share. However the market was not phased by this at all. The market right now is sitting at 50% retracement levels. This is similar to retracements found in 2001, 2007, and if we really want to go back in time – 1929. That means the market is at a dangerous crossroad here, and that should certainly be respected.

As the month unfolds, more and more companies will report their earnings, and will provide a better flavor for how this market intends to digest the news. For now, the market is simply buying as fast as it can and without a care in the world. 

Indicators

• Volatility Index (VIX) – After peaking during the lunch hour, it spent the rest of the day giving up its gains and finishing lower on the day while the bulls bought the dip in equities, finishing at 41.17, and 1.2% lower. 
• T2108 (% of stocks trading above their 40-day moving average): An 18% decline yesterday, following an 80% rally the previous trading session. Currently sitting at 20% overall. 
• Moving averages (SPX): Tested the 5-day MA yesterday and immediately bounced off of it. Currently above the 5, 10 and 20-day MA’s, with the potential for a 50-day MA test. 
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Sectors to Watch Today

Technology practically kept the market from falling apart singlehandedly yesterday, as the only sector to finish in the green. Real Estate, continues to lead market direction, and yesterday it was to the downside. Energy held up well following the oil production cuts agreed upon over the weekend. 

My Market Sentiment