Swing Trading Strategy:

A potential cure from GILD…

Perhaps the greatest counter rally anyone will ever see, the bounce off of the March 23rd lows in many ways has been unexplainable and perplexing, and if you are keeping watch at home, the Nasdsaq 100 is now up +2% on the year, and only 8% away from new all-time closing highs. With an economy that has been closed longer than it has been open in 2020, if the year was to close today, NDX would have been a respectable return. 

So the market is getting to the point here, where one has to ask himself, has the Fed made it impossible to ever short another stock ever again? If the back drop is always going to be, “we got your back and will always keep stocks rallying”, well then I’m not sure that there actually is. It is sad that is the case with the financial market, but quickly it is becoming that way. 

The biggest issue is that usually when there is a bottom that is in, the initial few days you have a bunch of extreme gaps, but eventually that starts to lessen and the gaps become smaller and more tradeable. Here we are still seeing +/-90 point moves in overnight trading in both directions. Chasing the market higher every time there is a major gap often times leads to fades back lower. 

Indicators

• Volatility Index (VIX) – An end of day rally in stocks, took the VIX from positive territory to -1.79% on the day and back to 40.11. VIX has not seen back-to-back gains since 3/25. 
• T2108 (% of stocks trading above their 40-day moving average): A 9.5% rally higher, keeps this indicator in a consolidation pattern over the last five trading sessions. Current reading is 23%. 
• Moving averages (SPX): Recaptured the 5-day MA and now poised to test the 50-day moving average at the market open. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Less than half of the sectors finished in the green yesterday, despite the market rallying in the final hour of trading to close green. The three sectors that continue to lag market action is Energy, Financials, and Real Estate. To the Upside, Discretionary, Technology and Healthcare continues to torch the market with gains. 

My Market Sentiment