Swing Trade Approach:

Here’s the thing, if you get in on a day like today, where the market was contained, pretty much, in a five point range, you aren’t playing for today, but for the expectation that the market is going higher in the days ahead and you don’t want to find yourself chasing a gap higher. I’m not against it, but you are doing so in overbought conditions, with the expectations that the market will continue moving higher before moving lower first.

Indicators

• Volatility Index (VIX) – I mean, 1% bounce is nothing. Nothing at all. talk to me when it can sustain a +20% move. This indicator is still in the low 12’s and yet to go anywhere. Hasn’t been above 20 since the beginning of October, and not likely to see that level with dimininshing volume into year’s end. 
• T2108 (% of stocks trading above their 40-day moving average): Back at the top end of the range, but wouldn’t be surprised to see a move back into the mid-50’s here with the market being overbought. 
• Moving averages (SPX): Currently trading above all the major moving averages. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Only a one point move on SPX today, but with that only five of eleven sectors traded higher. Energy continues to break out and provide the most opportunity with Materials in the wings. Keep an eye on eye on Utilities as this sector continues to show relative strength in the market. The Financials closed one penny below the all-time highs, but did establish new closing highs. The first time this has happened since 2007. 

My Market Sentiment

Finishing higher eight of the last ten days, SPX is closing at new all-time highs day-after-day. Determining when a pullback may happen and how far it will pullback is a fool’s game at this point. There is very little willingness for the market to book gains at this point. Volume continues to bring in above average readings for a sixth straight day. Bulls are searching for reasons to push the market higher at this point, and until that happens, it is likely the market will simply trade sideways.