My Swing Trading Approach

I hate these gaps higher, as it carries a far greater amount of risk coming into the trading session, considering how many of them the market has faded over the past two months. Nonetheless, I’m 100% cash, and didn’t participate in Friday’s sell-off. I am looking to trade in either direction depending on how the market behaves in the early going. 

Indicators

• Volatility Index (VIX) – Minor pop higher of 3.5%, which wasn’t overly impressive and still putting in lower-highs since October’s highs. Not nearly the pop I would have suspected considering recent market weakness.  
• T2108 (% of stocks trading above their 40-day moving average): This one continues to leave me scratching my head as it diverges against the market’s will. Despite Friday’s sell-off, T2108 actually managed to rally higher to the tune of 2.2% to 28%. 
• Moving averages (SPX): Currently trading below all the major moving averages here. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Healthcare continues to garner interest and now back above the 200-day moving average. Utilities continue their three day pullback and a strong rally today in the market will likely drive it further lower. Overall though, the sector is probably the strongest of all the sectors. Technology well off their recent lows, but outside of energy, the most problematic sector, while Energy has yet to show any desire to bounce and likely to test the February lows as support from February through April is currently being tested. 

My Market Sentiment

One of the most traditionally bullish trading weeks of the year, resulted in the worst trading week for the bulls since March. There are some support levels below that seems likely to be tested, so be leery of the gap higher this morning and the potential for it to fade and push lower. 

S&P 500 Technical Analysis

Current Stock Trading Portfolio Balance

• 100% Cash.

Recent Stock Trades – See My Past Performance Here.